TMI Blog1950 (5) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... order to defray the expenses of the daily sheva and the periodical festivals of the said deity. The deed made provision for meeting the expenses of the sheva and puja of the deity out of the income of the dedicated properties and then went on to provide as follows:-- During my lifetime I, in my capacity as shebait will remain in possession of the said debutter properties, subject to the conditions or trusts attached thereto and out of the income of the houses and bazar aforesaid, I will pay the rates and taxes and the costs of repairs of the houses etc. and all other necessary expenses and apply the surplus income to the sheva or service etc. of the illustrious Thakoor. Provision was also made by the instrument for devolution of shebaitshi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o make reference. Suffice it to say that exemption was claimed on the footing that the properties were held under a legal obligation wholly for religious purposes within the meaning of Section 4(3)(i) of the Act. The Appellate Assistant Commissioner rejected that contention and observed as follows:- A perusal of the Arpannama shows that the properties were dedicated to the deity for the maintenance of the worship and for other religious purposes. The shebait holds the property as trustee for the spiritual benefit of Rani Kalyani's descendants. I hold it is a private religious trust. On appeal the Appellate Tribunal held that the deed created a private religious trust for the upkeep of the deity and as no part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the poor, education, medical relief and the advancement of any other object of general public utility, (but nothing contained in clause (i), clause (ia) or clause (ii) shall operate to exempt from the provisions of this Act that part of the income of a private religious trust which does not enure for the benefit of the public) . The words within brackets were introduced by the amendment of 939. Leaving out portions not material for purposes of this reference, the section grants exemption from assessment to income-tax in respect of income derived from property, (a) held under trust, (b) held under other legal obligation, and wholly for religious purposes. The explanation contained in the last paragraph of tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for or dedicated to these purposes. See Mulla (10th ed.) page 492, art. 407(2). By the instrument of dedication Rani Kalyani made an absolute and complete grant of properties to the deity. On such dedication the Rani became divested of the ownership of the properties which vested in the deity. No trustee was appointed nor was any property vested in any trustee. After the dedication, the deity held the properties as the owner thereof though in an ideal sense. The shebait appointed by the instrument had no legal ownership in the dedicated properties or the funds of the endowment. The shebait had the right of possession and management of the endowed properties because, in the nature of things, the deity can only act through a human ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e endowed properties for the purposes specified in the deed of dedication and for no other purpose. Any transaction which diverted the properties or funds of the endowment to purposes other than those provided for in the deed would be invalid and not binding on the endowment. It cannot be and has not been suggested that the purposes for which, under the deed, the income of the endowment were to be spent are not wholly religious purposes. It is therefore clear that the income of the endowed properties is being held wholly for religious purposes and there is a legal obligation so to hold. It is not material to consider whether such income is being held by the deity or by its manager the shebait. In either case the income is being held under a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to devote the surplus income in improving the newspaper, were entitled to exemption from taxation under Section 4(3)(i) on the ground that the income was held for charitable purposes. Sir George Rankin in considering the question observed incidentally as follows:- It is to be observed moreover that under the Income-tax Act the test of general public utility is applicable not only to trusts in the English sense but is to be applied to property held under trust or 'other legal obligation'-a phrase which would include Moslem Wakfs and Hindu Endowments. This observation lends support to the view that Hindu endowments which are not created through the medium of a trust are included in the words other legal obligation. If the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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