1. At the instance of the Commissioner of Gift-tax, this reference has been made under sub-section (1) of section 26 of the Gift-tax Act (hereinafter referred to as the Act). The assessee before us is His Highness Sir Shahji the Chhatrapati Maharajasaheb of Kolhapur. The assessment year with which we are concerned is 1958-59, the relevant previous year being one commencing from 1st April, 1957, and ending with 31st March, 1958, and the question to be considered i :
'Whether, on the facts and in the circumstances of this case, the gifts amounting to Rs. 3,30,000 are exempt from gift-tax within the meaning of section 5(1)(vi)(a) of the Gift-tax Ac ?'
2. The assessee executed a settlement of January 18, 1956 setting apart certain agricultural lands valued at Rs. 5 lakhs in trust. The income of this property was to be utilised in the manner indicated in the said deed. The deed mentions that there are several public temples in the State of Bombay and Hyderabad for the upkeep and maintenance of which the assessee had been for several years contributing. The assessee was desirous of making and declaring a religious and charitable trust in respect of the said lands and giving the trustees certain directions. Clause (3) of the trust deed shows that the income was, inter alia to be utilise :
(1) for the upkeep and maintenance of the public temples mentioned in the schedule including the expenses of the repair and the maintenance of the temple buildings;
(2) for the expenses of the repair and replacement of any ornaments and utensils and other articles required for the said temples;
(3) for the expenses in respect of the maintenance of the Nagarkhana attached to the temples;
(4) for the payment of rates and taxes and other outgoings in respect of the temples and the temple buildings;
(5) for the expenses in respect of the performance of pujas and other ceremonies; and
(6) for the expenses of the performance of temple festivals (utsavs) and the salaries of the priests and the payment of dakshinas to purohits attending religious rites and ceremonies and for other expenses relating to the said temples.
3. It is not in dispute that the gift made under this settlement is not taxable under the Act, it being one made prior to 1st April, 1957.
4. Now, the assessee later on felt that the income of the properties which he had already settled and set apart on trust under the aforesaid settlement deed would not be sufficient to satisfy and fulfil the purposes of the trust. The assessee, therefore, executed further supplementary trust deeds on 1st October, 1957, settling certain other properties worth Rs. 2 lakhs in trust for carrying out the purposes already mentioned in the said earlier settlement deed of 18th January, 1956. A month thereafter, i.e., on 1st November, 1957, the assessee further executed a third deed of settlement setting apart certain further properties worth Rs. 1,38,000 in trust as he was desirous of making permanent provision for the upkeep and maintenance of certain newly added properties which, according to the settlor, were all of religious and historical importance to the settlor as well as to the public as those properties were attached to the Amba Bhavani Chauk in the Old Palace and he was desirous of making and declaring a religious charitable trust in respect of those properties newly added. The terms and conditions enumerated in the other two trust deeds also were incorporated in this trust deed with slight modifications. One of the properties set apart on trust under this trust deed of November 1, 1957, was a portion of the old palace attached to the Amba Bhavani Chauk in a portion of which Her Highness the Junior Dowager Maharanisaheb of Kolhapur was residing.
5. In respect of this palace certain directions were given in clauses 5 and 6 of the trust deed, which need to be reproduced for the purposes of this case. This property has been mentioned as property A in the Schedule attached to the trust deed. Clause 5 and 6 of the trust deed of November 1, 1957, read as follow :
'(5) In respect of the property mentioned below as item (A) in the Schedule given below, there is the portion of the Old Palace now in possession of Her Highness the Junior Dowager Maharanisaheb of Kolhapur to be enjoyed by her as residence for her lifetime. The right title and interest in this portion is transferred to the trustees by this deed of settlement subject to a condition that the trustees are to allow to Her Highness the Junior Dowager Maharanisaheb of Kolhapur to occupy the same for her lifetime as residential quarters for Her Highness the Junior Dowager Maharanisaheb of Kolhapur; and after her death this portion in her possession will be taken in possession by the trustees.
(6) Though the possession of the portion of the property in possession of Her Highness the Junior Maharanisaheb of Kolhapur is postponed for a future period contingent on the death of Her Highness the Junior Dowager Maharanisaheb of Kolhapur, still the trustees are responsible to maintain and keep the same in good order and condition by making suitable repairs an spending for the upkeep and maintenance of the said portion of the property settled on the trust.'
6. The assessee had also executed a fourth trust deed setting apart certain properties in trust for a trust named 'Chhatrapati Charitable Aid to the deserving trust'. Under this trust deed the assessee had further settled properties valued at Rs. 45,500. The gift made under this fourth trust deed was also sought to be brought to tax by the revenue. The Tribunal, however, held that the assessee was entitled to exemption in respect of the amount gifted under this trust. The reference which has been made to us does not include this amount, the department having given up the amount in respect of this trust at the time of making the reference. It is, therefore, not necessary to narrate the terms and conditions of this trust deed. Now, we are here concerned only with the gifts made under the aforesaid second and third settlement deeds of 1st October, 1957, and 1st November, 1957. It would be noticed that these gifts under the aforesaid trust deeds have been made between the period 1st April, 1957, and 31st March, 1958. At this stage it may be mentioned that the Act came on the statute book on 15th May, 1958, and section 3, which is the charging section, provide :
'Subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the 1st day of April, 1958, a tax (hereinafter referred to as gift-tax) in respect of the gifts, if any, made by a person during the previous year (other than gifts made before the 1st day of April, 1957), at the rate or rates specified in the Schedule.'
7. Under this charging section tax is levied on an assessee in respect of the gifts made by him from and after 1st day of April, 1957. The levy of the tax under the said section is 'subject to the other provisions contained in this Act' and section 5 is the section which grants exemption in respect of certain gifts. It is not in dispute that the properties settled under these two deeds constitute a gift within the meaning of the Act but not falling under section 5(1)(v). The question to be considered is whether the assessee is entitled to exemption under section 5(1)(vi)(a). That section, inter alia, provides that gift made for any charitable purpose not falling within clause (v) at any time before the 1st day of April, 1958, will be exempted from the charge to tax. The assessee claimed that the gifts made under the said two deeds were for a charitable purpose and, therefore, he was entitled to exemption in respect of these two gifts. The Gift-tax Officer took the view that the gifts in respect of which exemptions have been claimed are made for religious purposes and gifts which are exempted from tax under section 5(1)(vi)(a) are only those gifts which are made for charitable purposes. The gifts not being for charitable purposes, the assessee was not entitled to exemption. In this view of the matter he brought to tax both the gifts of Rs. 2 lakhs and Rs. 1,38,000 made under the aforesaid two settlement deeds. The Appellate Assistant Commissioner also took the view that the objects of the trust were religious and the gifts were for religious purposes. Examining the provisions in certain other enactments he came to the conclusion that the omission of the word 'religious' in section 5(1)(vi) was not accidental but was with a definite purpose of excluding gifts made for religious purposes from the exemption provided in section 5(1)(vi)(a) and, therefore, the assessee was not entitled to claim any exemption in respect of these two gifts. The Appellate Assistant Commissioner, however, granted a very small relief to the assessee in respect of the gift pertaining to the maintenance of the Nagarkhana provided in the trust deed of date October, 1, 1957. The Appellate Assistant Commissioner held that the maintenance of Nagarkhana was a charitable purpose and that part of the gift, which related to the maintenance of the Nagarkhana was, therefore, liable to be exempted. After valuing that part, the Appellate Assistant Commissioner held that the assessee was entitled to exemption to the extent of Rs. 8,000. The Appellate Assistant Commissioner brought to tax gifts amounting to Rs. 3,30,000. The assessee took a further appeal to the Tribunal and the same contentions were reiterated by the parties before it. The Tribunal has written a very elaborate order reviewing both English as well as Indian cases commencing from 1891 (Commissioners for Special Purposes of Income-tax v. Pemsel in which the question has been considered as to whether the expression 'charitable purposes' include religious purposes or not. On a review of these authorities the Tribunal came to the conclusion that the expression 'charitable purposes' in section 5(1)(vi) includes 'religious purposes'. The Tribunal further held that the mention of the word 'religious' in some enactments and non-mention of the words 'religious purposes' in the said clause made no material difference. In this view of the matter, the Tribunal allowed the appeal and held that the assessee's claim for exemption from gift-tax was proper. It may be mentioned here that before the Tribunal it had also been contended on behalf of the department that in the trust deed of 1st November, 1957, a direction had been given to the trustees to expend money for the repair, upkeep and maintenance of the building in possession of Her Highness the Junior Dowager Maharanisaheb of Kolhapur. The said object was not charitable and, therefore, a gift attributable for that object should not be granted exemption in any event. The Tribunal overruled this contention taking the view that the building in a portion of which the Dowager Maharanisaheb of Kolhapur was residing was a trust property and the direction given was only for the purpose of maintenance of the trust property. The object was, therefore, a charitable one. On an application made on behalf of the department the Tribunal has referred to us the aforesaid question.
8. Having regard to the arguments advanced before us, it is not necessary to elaborately consider the judicial decisions as to the import of the expression 'charitable purpose'. It is not in dispute before us that under the Indian law expression 'charitable purpose' is a generic term of a very wide import and scope covering both public charitable as well as religious trusts. It is also not in dispute, save and except to the extent of the gift relating to the repairs of the portion of the place occupied by the Junior Dowager Maharanisaheb, that the trusts are for religious purposes. On this undisputed position, it is apparent that the said two gifts would be for a charitable purpose and would ordinarily fall within 'charitable purpose' as understood in Indian law.
9. Mr. Joshi, however contends that the expression 'charitable purpose' occurring in section 5(1)(vi) must be given a restricted meaning. That expression does not include gifts made for religious purposes. The contention is founded on certain provisions in the Income-tax Act, Wealth-tax Act and the Expenditure-tax Act. Mr. Joshi, referring to section 4(3) of the Income-tax Act, section 5(1) of the Wealth-tax Act and section 5(m) of the Expenditure-tax Act, argued that these Acts and the Gift-tax Act are allied Acts enacted with a certain objective. They are all Acts of the Central Legislature. Whenever the legislature has desired to granted exemptions to a taxpayer in respect of his contributions or expenditure to public religious and charitable institutions, funds or purposes, the legislature has in express terms said so. In the aforesaid three provisions, the legislature has used both the terms 'religious' and 'charitable' purpose. The said omission, according to Mr. Joshi is deliberate and, therefore, restricted meaning is required to be given to the expression 'charitable purpose' and when this expression is so read in a restricted sense, the gifts in question, which are admittedly for public religious purpose, get excluded or fall out of the exemption provided in section 5(1)(vi)(a) of the Act.
10. We find it difficult to accept the contention raised by Mr. Joshi. There is no ambiguity in the provisions of the said clause (vi). The expression 'charitable purpose' is a generic term in law and has assumed a definite meaning in Indian law. As already stated that expression is wide enough to include both 'charitable purpose' as well as 'religious purpose'. If the legislature desired to give this well understood term a limited meaning, it would be reasonable to assume that the legislature would have in express terms said so.
11. Presumption as to the change of intention on the part of the legislature on account of the variation in language between the earlier Acts and later Acts is of slightest weight especially when the omission of certain words in the latter Act is of words, which were more or less superfluous in the earlier Acts. In such cases the omission of words cannot necessarily be said to be indicative of a change of intention on the part of the legislature. It is equally possible that a draftsman of a later Act may omit the unnecessary words. It has been observed in Maxwell, 11th edition, page 31 :
'A change of language effected by the omission in a later statute of words which occurred in an earlier one would make no difference in the sense when the omitted words of the earlier enactment were unnecessary.'
12. Here, in certain sections of the earlier enactment, the words used were either 'religious charitable purposes' or 'public purposes of a charitable or religious nature.' In the instant Act the words 'religious purpose' have been omitted but the omission has been of unnecessary words only. As stated earlier, the expression 'charitable purpose' is wide enough to include public religious purposes also.
13. Further there is positive indication in the Gift-tax Act itself that the expression 'charitable purpose' has been used in a wider sense covering religious purposes and not in a restricted sense as is contended for by Mr. Joshi. Clauses (v) and (vi) (clauses with which we are concerned) are connected clauses. Clause (v) speaks of certain gifts to institutions or funds established for a charitable purpose not falling within clause (v). It would be noticed that exemption in respect of gifts made for charitable purpose falling under clause (v) is not restricted to any period. The exemption is available all the time. Exemption under sub-clause (a) of clause (vi), i.e., relating to gifts made to charitable purpose not falling under clause (v), is available only when the gift has been made before the 1st day of April, 1958. Both clauses speak of gifts to charitable purpose. When the clause (v) is read along with the relevant clause of section 15B of the Indian Income-tax Act, it leaves no doubt that the expression 'charitable purpose' includes religious purpose as well. Sub-section (1) of section 15B of the Indian Income-tax Act provide :
'The tax shall not be payable by an assessee in respect of any sums paid by him on or after the 1st day of April, 1953, as donations to any institution or fund to which this section applies.'
14. Sub-section (2) of section 15B enumerates the institutions or funds to which this section applies. Clause (2) of sub-section (2) of section 15B is material for the purposes of this reference. It read :
'15B. (2) This section applies to any institution or fund established in the taxable territories for a charitable purpose -....
(ii) which is not expressed to be for the benefit of any particular religious community.'
15. It is clear that the donation for religious purpose is not excluded from the expression 'charitable purpose'.
16. Turning to the provisions of the earlier Act, to which Mr. Joshi had referred us, the first provision that has to be considered is clause (i) of sub-section (3) of section 4 of the Indian Income-tax Act. The sub-section relates to the exclusion of certain income, profits and gains from being included in the total income of the assessee. The material part read :
'(3) Any income, profits or gains falling within the following clauses shall not be included in the total income of the person receiving the :
(i)...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....'
17. It is indeed true that in this clause the expression used is 'religious or charitable purposes', but the definition clause for the purpose of this section occurring at the end of the section refers only to 'charitable purposes'. It is in the following term :
'In this sub-section 'charitable purpose' includes relief of the poor, education medical relief and the advancement of any other object of general public utility but nothing contained in clause (i) or clause (ii) shall operate to exempt from the provisions of this Act that part of the income from property held under a trust or other legal obligation for private religious purposes which does not enure for the benefit of the public.'
18. The definition is an inclusive definition and is not an exhaustive definition, and the concluding part of the definition itself shows that religious purposes enduring for the benefit of the public is included in the expression 'charitable purposes'. It would be seen on reading the definition clause and clause (i) of sub-section (3) of section 4 that the expression 'charitable purposes' and the expression 'religious and charitable purposes' are inter-changeable and used for conveying the same meaning. This is the earliest taxation Act enacted in the year 1922. The Wealth-tax Act and the Expenditure-tax Act have been enacted in the year 1957. The Gift-tax Act with which we are concerned here, however, was enacted later in the year 1958. It would be reasonable to assume that the legislature in omitting the words 'religious purposes' must have only intended to omit the unnecessary words which occurred in the earlier Acts and as already pointed out there is an indication in the Gift-tax Act itself, and when clause (v) is read there is no doubt that the expression 'charitable purpose' has been used in the Act in a wider sense and not in a restricted sense.
19. Further, if it really be the true position as a argued by Mr. Joshi that all these Acts, viz., Income-tax Act, Wealth-tax Act, Expenditure-tax Act, and Gift-tax Act are allied Acts enacted with a certain objective, we fail to see why the legislature would intend to give a restricted meaning to the expression 'charitable purpose'. Now, when the property is held under a trust or under a legal obligation for religious and charitable purposes its income does not enter 'total income'. When a donation is given to an institution or fund established for public religious and charitable purpose, the income is exempt from tax. When a property is held under trust or legal obligation relating to charitable or religious nature it is not liable to be included in the wealth of a person for the purpose of levy of wealth-tax. Similarly, if an expenditure is incurred for any public purpose of religious or charitable nature, it is excluded from the expenditure which attracts tax. We see no reason why a person should not be entitled to exemption from tax in respect of gifts made for public religious and charitable purposes. In our judgment, therefore, the contention advanced on behalf of the revenue should fail. In our judgment, therefore, the Tribunal was not in error in taking the view it has taken as to the interpretation of the expression 'charitable purpose'.
20. The other contention raised on behalf of the revenue is that at any rate that part of the gift, which relates to the repairs of that part of the property, in which the Junior Dowager Maharanisaheb of Kolhapur is given a right of residence for her lifetime is not a gift for a religious purpose. The contention, in our opinion, has little force. We have already referred to this clause in the gift deed of November 1, 1957. The material clauses already reproduced are clauses (5) and (6) therein and they relate to a portion of the property mentioned in clause A of the Schedule. It would be seen that the entire property mentioned in clause A has been settled on trust and the portion in which the Maharanisaheb of Kolhapur is staying is also a trust property. Maharanisaheb has been given only a right of residence in that portion of the trust property for her lifetime. The trustees have been given a direction to take possession of that portion of the property on the death of the Maharanisaheb for the purposes of the trust. It being a trust property, it was incumbent on the trustees to maintain this property in good repair in the interest of the trust. Lest the trustees may think that there was no obligation on them to keep in good order that part of the property in which the Junior Dowager Maharanisaheb of Kolhapur was staying, the direction appears to have been given in clause (6) of the trust deed. In the circumstances it is not possible to accept this contention raised on behalf of the revenue. In our opinion, therefore, the Tribunal also was right in not accepting this contention of the revenue.
21. In the result our answer to the question referred to us is in the affirmative. The Commissioner shall pay the costs of the assessee.
22. Question answered in the affirmative.