TMI Blog1973 (7) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee the following two questions of law are referred to us for our determination : " 1. Whether, on the facts and in the circumstances stated in the statement of case, the income derived by letting oat the space on Ambalal (sic Jhaverbhai) Patel Bridge at Chowpatty is exempt from tax under section 4(3)(i) of the Indian Income-tax Act, 1922 ? 2. Whether, on the facts and in the circumstances stated in the statement of case, the income from the advertisements on the said overbridge could be added as income of the assessee ? " The questions referred for our determination relate to the assessment years 1954-55, 1955-56, 1959-60 and 1957-58, for which the previous years are calendar years ending December 31, 1953, 1954, 1958 and 1956, respectively. Assessee, Ambalal J. Patel, died in June, 1961. During his lifetime he was assessed in the status of an " individual ". He used to derive income from several sources, such as salary from M/s. Patel India (Private) Ltd. (a family limited concern), M/s. Associated Film Industries Private Ltd., dividends, director's fees and a dairy farm. For all these sources of income, the previous year was the calendar year. While completin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsonal income of the assessee or it is exempt in view of the provisions of section 4(3)(i) of the Act. Section 4(1) of the Act specifies the income, profits and gains which are liable to be included in the total income of any previous year of any assessee. Subsection (3) thereof provides for exemption and we are concerned with clause (i) of that sub-section. Under that clause, inter alia, subject to the provisions of clause (c) of sub-section (1) of section 16, any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, in so far as such income is applied or accumulated for application to such religious or charitable purposes as relate to anything done within the taxable territories, shall not be included in the total income of the person receiving the same while calculating his income, profits and gains for the purpose of assessment. In order that the benefit of this exemption cap be claimed by any assessee, the following conditions must be fulfilled : 1. The income must be derived from property. 2. Such property should be held under trust or other legal obligation. 3. Such trust or other legal obligation should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome from prospective advertisers. Thereafter, on January 30, 1952, the assessee wrote a letter to the chairman of the works committee of the Bombay Municipality stating that when the bridge was constructed be was prepared to offer the complete savings from his income (in view of the fact that the Municipality or other departments will not levy any tax) towards any charitable cause which might mutually be decided upon. Had the matter rested at this stage it could have been argued with some force on behalf of the revenue that as indicated by this letter the income that was to be received from advertisements was to be treated as the income of the assessee and it was thereafter to be applied by him towards any charitable cause which might be mutually decided upon. The resolution of the works committee as well as the letter of the assessee dated January 30, 1952, were considered by the Corporation at its meeting held on February 21, 1952. After referring to the same the Corporation, inter alia, resolved that the Commissioner's proposal to accept the offer of the assessed to provide at his cost a foot over bridge across the Marine Drive in front of the Mafatlal Swimming Pool near Chowpat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to the advertisement, including rates, and other questions and making rules and regulations in connection therewith provided that in issuing permits for advertisements prior consent of the superintendent of licences of this Corporation shall be taken and all taxes and licence fees are duly paid. 8. The revenue realised by and as a result of the advertisement shall be credited to a fund which will be held in trust. The fund shall be administered under the control of the trustees, the donor being the manager during his lifetime. 9. The amount to the credit of the fund shall be utilised solely for providing works of public amenities and in furtherance of this object at the discretion of the trustees provided that sanction of the competent municipal authorities as may be required under the provisions of the Bombay Municipal Corporation Act shall be always taken in every such case." Even though these revised terms and conditions were duly agreed upon between the assessee and the Municipal Commissioner, an actual trust deed was not executed at any time prior to the relevant assessment years with which we are concerned. In fact it was much later that a draft of the trust deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the character of trust. In fact under an agreement arrived at between the assessee and the Municipal Commissioner the right to exploit the advertisements was vested in the trustees as such and that was not to be done by the assessee in his personal capacity. The trustees were authorised to settle all matters in regard to advertisements including the rates and everything. This term, therefore, clearly shows that the property which was impressed with the trust was the right to exploit either side of the over bridge as advertising space so as to yield income. It was urged on behalf of the revenue that in the absence of a proper deed of trust the property cannot be regarded as held under trust or other legal obligation. It is well-settled that in, order that a property may be impressed with trust or legal obligation as contemplated under secti6n 4(3)(i), a formal document is unnecessary. The forwarding of the revised terms and conditions which were agreed upon as a result of the discussion between the assessee and the Municipal Commissioner itself is sufficient to show that the property, namely, the right to exploit either side of the over bridge as advertising, space so as t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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