TMI Blog1960 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... -1960 - Judge(s) : HIDAYATULLAH., J. C. SHAH., S. K. DAS JUDGMENT The judgment of the court was delivered by S. K. DAS, J.--This is an appeal on a certificate of fitness granted under the provisions of sub-section (2) of section 66A of the Indian Income-tax Act, 1922, by the High Court of Judicature for the State of Punjab then sitting at Simla. The certificate is dated December 28, 1953, and was granted on an application made by the Commissioner of Income-tax, Punjab, appellant herein. The relevant facts are shortly stated below. For the assessment year 1946-47, one Pandit Thakurdas Bhargava, an advocate of Hissar and respondent before us, was assessed to income-tax on a total assessable income of Rs. 58,475 in the acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the facts found was expressed in the following words : "The income in this case did not at any stage arise to the assessee. Keeping in mind the express stipulation made by the assessee when he accepted the brief there was a voluntary trust created, which had to be and was subsequently reduced into writing after the money was subscribed. The payments received from the accused and other persons were received on behalf of the trust and not by the assessee in his capacity as an individual. In this view, we delete the sum of Rs. 32,500 from the assessment." The appellant then moved the Tribunal for stating a case to the High Court on the question of law which arose out of the order of the Tribunal. The Tribunal was of the opinion that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1945, the amount of Rs. 32,500 received by the assessee was professional income in his hand. It is, therefore, appropriate to refer first to the recitals in the trust deed. The respondent stated in the trust deed that he had "decreased" his legal practice for the last few years and had reserved his professional income accruing after June, 1944, for payment of taxes and charity. He then said : "Accordingly, I have been acting on that. In the Farrukhnagar, District Gurgaon case, Crown v. Chuttan Lal etc. the relatives of the accused expressed a strong desire to get the case conducted by me during its trial. At last, on their persistence and promise that they would provide me with Rs. 40,000 for charitable purposes and I would create a publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gust 6, 1945, was to reduce the terms of the trust to writing. The High Court, therefore, applied the principle laid down by the Privy Council in Raja Bejoy Singh Dudharia v. Commissioner of Income-tax, and observed that by the overriding obligation imposed on the assessee by the persons who paid the money, the sum of Rs. 32,500 never became the income of the assessee ; and the amount became trust property as soon as it was paid, there being no question of the application of part of his income by the assessee. On behalf of the appellant it has been contended that the inference which the Tribunal and the High Court drew is not the proper legal inference which flows from the facts found, and according to the learned Attorney-General who ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessary. A trust may even be created by the use of words which are primarily words of condition, but such words will constitute a trust only "where the requisites of a trust are present, namely, where there are purposes independent of the donee to which the subject matter of the gift is required to be applied and an obligation on the donee to satisfy those purposes." The findings of the Tribunal show clearly enough, that the persons who paid the sum of Rs. 32,500 did not use any words of an imperative nature creating a trust or an obligation. They were anxious to have the services of the assessee in the Farrukhnagar case ; the assessee was at first unwilling to give his services and later he agreed proposing that he would himself create a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forceable obligation. In the circumstances the Appellate Assistant Commissioner rightly pointed out that "if the accused persons had themselves resolved to create a charitable trust in memory of the professional aid rendered to them by the appellant and had made the assessee trustee for the money so paid to him for that purpose, it could, perhaps, be argued that the money paid was earmarked for charity ab initio but of this there was no indication anywhere." In our opinion, the view taken by the Appellate Assistant Commissioner was the correct. view. The money when it was received by the assessee was his professional income, though the assessee had expressed a desire earlier to create a charitable trust out of the money when received by him ..... X X X X Extracts X X X X X X X X Extracts X X X X
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