NAYUDU J. - These three references have been made by the Assam Board of Revenue and the following questions, which are common to all the three references, have been referred to us for our opinion :
"(1) Whether, on the facts and in the circumstances of the case, the Board was competent in the course of appeals preferred by the assessee to question the finding of the Assistant Commissioner of Taxes to the effect that the amounts donated to Jalan Charity Trust were amounts actually spent for charitable purposes within the meaning for the Assam Agricultural Income-tax Ac ?
(2) Whether, on the facts and in the circumstances of the case, the Board was justified in holding that only 60 per cent. of the amounts actually spent by the assessee for charitable purposes from the agricultural income was admissible as deduction under rule 2(2) of the Rules framed under the Assam Agricultural Income-tax Ac ?"
Before we answer these questions, it will be useful to refer briefly to the facts of the case. The assessee in each of these three references had made contributions to the Jalan Charity Trust in respect of various amounts and claimed exemption for the amounts so paid from being assessed to tax under the Assam Agricultural Income-tax Act, hereinafter referred to as the Act. The Income-tax Officer, refused to give any exemption and, against the order of the Income-tax Officer, he the assessees took the matter in appeal to the Assistant Commissioner under section 24 of the Act and the learned Assistant Commissioner found as follows :
"The appellant produced before me the articles of association of Jalans Charity Trust as made on 27th October, 1954, in support of the contention. From the said articles of association it is found that the expenditures are incurred for various charitable purposes like the extension of health and relief in the form of free distribution of medicine, establishment of institutions and societies intended to relieve poverty and distress and to help the poor students in prosecuting studies and other educational help."
After such examination and consideration, the learned Assistant Commissioner came to the conclusion that the Jalan Charity Trust had been created for charitable purposes purely, and that the amount claimed by the assessee in each case was actually spent in the hands of the appellant for charitable purposes. On having come to this finding on the facts before him, the learned Assistant Commissioner granted an exemption of 60% of the amount claimed by the assessee in each case to have been spend by them for the Jalan Charity Trust.
Not satisfied with the 60% exemption that was granted to them by the Assistant Commissioner, the assessees took the matter up in appeal to the Board of Revenue and the Board of Revenue while confirming the decision of the Assistant Commissioner held that only 60% of the income which is treated as agricultural income would be the basis for granting the exemption in regard to the contribution to the charitable trust. So holding, they left the finding of the Assistant Commissioner of Taxes undisturbed. Nevertheless, at the instance of the assessees, they made the references to us. In this connection it will be useful to refer to some of the relevant provisions of the Act. Section 24 of the Act provided for an appeal against the assessment under the Act to the Assistant Commissioner of Taxes. Section 26 is the section which deals with the appeal to the Board of Revenue against the decision of the Assistant Commissioner. Particular reference need be made to subsections (1) and (4) of section 26 which are as follows :
"26. (1) Any assessee objecting to an order passed in appeal under section 24 or passed in revision under sub-section (1) of section 27 may appeal to the Board within sixty days of the date on which such order is communicated to him...
(4) The Board may, after giving the assessee an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner."
It may be seen from the provisions of section 26 that there is no provision therein which provided for any right of appeal to the department. But we have section 27 in the Act which provided for the filing of a revision against the order. It is not disputed in the instant case that no revision had been preferred by the department as provided by this section. Nevertheless, it would appear that the learned Advocate-General on behalf of the department appeared before the Board of Revenue and was apparently allowed not only to contest the claim of the assesses to exemption given in regard to the 40 per cent. of the contribution to the charitable trust in question but was also apparently heard on the question whether the Assistant Commissioners findings were correct. We feel that that privilege should not have been extended to the department as there was no provision for doing so. When the legislature advisedly gave a right of appeal to the assessee and did not, pair passe, give a right of appeal to the department, it is obvious that the intention of the legislature was not to give the right of appeal to the department, and unless a right of appeal existed, the department would not have had the opportunity of questioning the correctness or otherwise of the decisions of the Assistant Commissioner, which are based on findings of facts. In other words, where the legislature advisedly excluded a particular remedy, because the assessee had filed an appeal, by giving an opportunity to the department to question to correctness ore otherwise of the findings of fact reached by the Assistant Commissioner, the policy of the legislature would appear to have been bypassed, as it were, and the department was wrongly given an opportunity to question the correctness of those findings. However, no serious mischief could have been done by this in view of the fact that the Board of Revenue had not disturbed the findings of the Assistant Commissioner in these cases.
The learned Advocate-General has argued before us that the references in these cases are not in proper form as all the facts have not been fully set out and, therefore, these references should be returned for making out proper statements of cases and submission of all the facts to us. We have examined this objection but we feel that sufficient material has been placed before us both in the references as well as in the opinion given by the Board on the questions referred to us taken together with the judgment in which they had given reasons in support of the stand taken by them, and we do not consider that these cases should be further delayed for the sake of getting clearer statements of cases or details of references. We fell that we have got enough material before us to enable us to dispose of the references.
Another point which has been relied on by the learned Advocate-General is that whether a trust is a charitable trust or not is a pure question of law and, therefore, the Board of Revenue could have gone into that on appeal by the assessee and if they took a different view on the question of law they could have interfered with the decision of the Assistant Commissioner. In support of this, the learned Advocate-General invited our attention to section 24 of the Act which enabled the Assistant Commissioner, on appeal by the assessee to him, to enhance the assessment notwithstanding that there was no appeal by the department in regard to the assessment. But sufficient safeguards have been provided in that section by way of giving notice and opportunity of being heard, etc., and we do not think that would help us to decide the question.
We do not also agree with the learned Advocate-General that whether a particular trust is a charitable trust or not is a pure question of law. On the other hand, we are satisfied that a certain set of facts have to be found and when they are found, whether on those findings the trust in question satisfied the definition or requirement of law, may be a question of law but, taken together, the utmost that can be said is that the determination of the question is not purely a question of law but a mixed question of fact and law. Such being the case, we do not feel that it would be proper or open to the Board of Revenue to enter into the facts and try to come to a different finding on the facts to enable them to apply the law.
The decisions, on which reliance has been placed by the learned Advocate-General, namely, In re Trustees of the Tribune and Gangi Reddi v. Tammi Reddy do not support any proposition different from what we have laid down above.
Another argument which was not argued with much emphasis by the learned Advocate-General is that voluntary contribution to charity without legal obligation is not exempted under the Act. We cannot accept this argument as there is no provision in the Act which requires that, before an exemption could be claimed for making contribute to a charitable trust, there should be some form of compulsion or coercion or legal obligation. That would, in our opinion, be reading something in the section which is not there and for that reason, if not for others, we are unable to accept that argument.
The real and the only question that fell to be determined by the Board of Revenue on the appeal by the assessee was whether it was open to the assessees to claim exemption in regard to their contribution to the charitable trust only on a proportionate basis on which the liability to agricultural income-tax and income-tax is determined. It is common knowledge that where agricultural income is derived side by side with the industrial activity, like the production and manufacture of tea, 60 per cent. of the income, by virtue of the relevant rule under the Act, is treated as agricultural income and the rest as the income assessable under the Income-tax Act. But whether this proportion should also be applied in the similar way to the exemption claimed is the question that we have to consider. In this context it would be necessary to refer to the first proviso to section 8 of the Act, which deals with deductions, which runs as follows :
"Provided always that no deduction shall be made under this clause, if it has already been made under section 7 of this Act or in the assessment under the Indian Income-tax Act."
In other words, the restrictions on the making of the deduction in regard to such contribution to charitable trusts, which is one of the exemptions allowed under the Act, are that the deductions should have been already made under the Income-tax Act. Section 7, of course, has no application to the instant case. It is a common case of both the parties that no exemption had been given in regard to this contribution under the Income-tax Act. That being the case, this only bar to the claim of exemption not being present, we fail to see how the assessee could not claim the entire amount contributed towards the charitable trust as exemption from agricultural income-tax under the Act. Our answers to the questions referred to us therefore, are as follows :
Question No. 1... in the negative.
Question No. 2... in the negative.
The references are accordingly answered with costs and advocates fee, one set, which we assess at Rs. 200.
Questions answered in the negative.