ANANDILAL GOENKA Vs. TAX RECOVERY OFFICER

JUDGEMENT

(1.) In this writ application, the petitioners, who are the trustees of a public charitable trust known as the Birla Seva Trust (in short "the Trust"), have challenged an order of attachment dated June 7, 1977, under Rule 26(1)(ii) of the Second Schedule to the Income-tax Act, 1961 '(in short "the Act"), issued by the Tax Recovery Officer-II (Income-tax), Jaipur (in short "the TRO"), on the trust in respect of an alleged demand bt tax against a private trust, known as Raja Baldeodas Birla Santatikosh Trust (in short "the private trust"). The petitioners have also challenged an order dated June 22/27, 1977, passed by the said Tax Recovery Officer rejecting the claim of the trust that the said shares were not liable to be attached for the alleged tax dues of the said private trust. The petitioners have also challenged a notice of attachment dated February 15/17, 1977, under rule 31, and a letter dated November 9, 1977, of the Tax Recovery Officer in respect of the said shares and/or dividend accruing thereon.

(2.) The facts of the case are that the Birla Seva Trust was created under a deed of trust dated June 15, 1977. The office of the trust is situated at Calcutta. The trust is the owner of, inter alia, 2,01,875 ordinary shares of Pilani Investment Corporation Ltd. (in short the "said shares"). The shares were received by the trust from another public charitable trust called Birla Jankalyan Trust which in its turn had received the same from a private discretionary trust known as Raja Baldeodas Birla Santatikosh (in short the "private trust"). In respect of the said shares owned by the trust a declaration under Section 153B(1) of the Companies Act, 1956, was duly filed with the public trustee on August 14, 1972. The income from the said shares has been received by the trust and utilised for public charitable purposes in accordance with the objects of the valid trust.

(3.) The facts and circumstances giving rise to the alleged tax demand against the said private trust are, inter alia, as under :