TMI Blog1969 (4) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... o the races, plus a surcharge of 0-8-0 which will go to the Red Cross fund. The price of admission for officers and other ranks to remain at Rs. 5 (rupees 4-8-0 Plus 0-8-0 surcharge) and Re. 1 respectively. " Thereafter, in November, 1950, a further resolution was passed as follows : " 9. (a) Gymkhana.- The following recommendations of the senior steward, Mr. A. R. Foster, were approved with effect from the first day of the Spring Meeting 1950 : (i) The present surcharge of 0-8-0 on entrance tickets to be earmarked for local charities and not solely for the Indian Red Cross. Specimen copies of the tickets are to be found at pages 5-6 of the paper book. One ticket states that the ticket holder has to be admitted and the price is indicated as Rs. 4.50 inclusive of tax. In the body of the said ticket it has been stated that the ticket has been issued subject to the rules and regulations governing the Tollygunge Club Gymkhana Races and also to the Special Condition printed on the back of the ticket. The other ticket states that the surcharge on admission to Tollygunge Gymkhana Races for local charities, Rs. 4-8-0 of the enclosure, it is written on the ticket as surcharge 0-8-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case, the Appellate Tribunal was right in holding that the assessee's receipts from the surcharge levied on admission tickets for purposes of charity could not be included in the assessee's taxable income for the assessment year 1960-61 ? " The main question that requires consideration, therefore, is whether the amounts realised as surcharge from the tickets for the purpose of local charities result in income for the assessee. In this context it is important to bear in mind the following observations of the Supreme Court in the case of Commissioner of Income-tax v. Shoorji Vallabhdas and Co.: " Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt ; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a " hypothetical income ", which does not materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the incomie of the recipient, even though given up, the tax may be payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee or whether the resolution was of such a nature that a trust in respect of the same was created as a result whereof these amounts had never become income of the assessee. Strong reliance was placed by Mr. B. L. Pal, learned counsel for the revenue, on the decision of the Supreme Court in the case of Commissioner of Income e-tax v. Thakar Das Bhargava. There what had happened was that the assessee, who was an advocate, had been originally reluctant, but later on agreed to defend certain accused persons in a criminal trial, on condition that he would be provided with the sum of Rs. 40,000 for a public charitable trust which he would create. When the trial was over the assessee was paid a sum of Rs. 32,000 and he created a trust of that amount by executing a trust deed. The question that arose was whether the sum of Rs. 32,000 was the assessee's professional income. It was held by the Supreme Court that the sum of Rs. 32,000 paid to the assessee was his professional income at the time when it was paid to him and no trust or obligation in the nature of a trust was created at that time and when the assessee created a trust by executing the trust deed he applied part of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction in computing the taxpayers' profits for the purposes of income-tax. The payments were not moneys expended wholly and exclusively for the purpose of the company's trade, and, therefore, deduction was prohibited by the Income Tax Act, 1918. At page 635 of the judgment Vaisey J. observed : " I am wholly unable to find any agreement here, whether of agency or otherwise, and I am equally unable to spell out of what was done or said any trust." It is important to remember in this case that as in the Supreme Court case referred to hereinbefore, that on the facts it was found by the court that no trust had in fact been created and there was no legally enforceable obligation at the time when the money was received by the assessee. Mr. Pal contended that, in the instant case, the position was the same. He further contended that when the people go to the race course buying the tickets they have to pay the surcharge for admission. They do not agree to pay for charities. They merely agree, according to Mr. Pal, to pay the charge for the admission. Mr. Pal further submitted that, therefore, there was no legally enforceable obligation by the racegoer to pay the amounts to local chari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n mentioned. The intention has also been expressed. Section 8 of the Indian Trusts Act which deals with the subject-matter states that the subject-matter of the trust will be a property transferable to the beneficiary. The question is, what property is transferable to the beneficiary ? Section 5 of the Transfer of Property Act deals with the transfer of property and section 6 deals with what may be transferred. It is true that it has been observed by Bhagwati J. in the judgment of the Supreme Court in the case of Jagalkishore Saraf v. Raw Cotton Co. that the words " in the present or in the future ", in section 5 of the Transfer of Property Act, qualify the word " convey " and not the word " property ". But a transfer of property not in existence operates as a contract to be performed in future which is specifically enforceable as soon as the property comes into existence. As the learned editors of the third edition of Halsbury's Laws of England, in volume 38, at page 835, in article 1398, observe, a trust may be declared of a fund contingently on the fund subsequently coming into existence. In this case, therefore, a trust was created. Learned counsel for the revenue contended ..... X X X X Extracts X X X X X X X X Extracts X X X X
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