G.P. Singh, C.J.
1. This is a reference under Section 256(1) of the I.T. Act, 1961, referring for our answer the following questions of law :
'1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the endowment alleged by Seth Gopaldas is valid according to law ?
2. Whether the Tribunal was right in holding that only the extra income of the Mandir, which has been utilised by Seth Gopaldas, could be treated as Seth Gopaldas' own income and consequently meaning that the entire income of the Mandir (Temple) could not be treated as his income ?
3. Whether, on the material on record, there is justification in lawto hold that the applicant should be assessed on interest income whichshould be computed at 12% on the capital deposited with Seth Gopaldasinstead of 8% ?'
The relevant assessment years are 1973-74 and 1974-75. The temple of Shri Ramchahdraji Maharaj filed returns for these assessment years. The ITO found that there was a deed of dedication executed by Seth Gopaldas of certain agricultural property in favour of the temple on 20th August, 1954. It was further found that in the account of Gopaldas there was a khata for the temple and 8% interest was credited in favour of the temple. The ITO found that the assets of the temple were assets of Seth Gopaldas and the income should be assessed in the hands of Seth Gopaldas. He, however, made protective assessments on the temple. There were two appeals filed before the AAC, who quashed the protective assessments made by the ITO, and held that Seth Gopaldas be taxed on the entire income. Then the assessee filed two appeals before the Income-tax Appellate Tribunal. The Tribunal allowed the appeals by its order dated 31st July, 1978. The Tribunal maintained the protective assessments but directed that the interest income should be taxed at the rate of 12% and not 8% as shown in the books. It may here be mentioned that the ITO had taxed the interest income at 15% which was not accepted by the Tribunal on theground that it was too high. The Tribunal also directed that the income earned by Seth Gopaldas from the properties of the temple should be taxed in his hands.
2. As regards the first question, we have already mentioned that there is a registered endowment deed executed by Seth Gopaldas on 20th August, 1954. It has never been the case of the Department that the said deed is not genuine or sham. All that the learned standing counsel argued before us is that the Tribunal has not considered whether the deed was revocable or not. In this connection, the learned counsel has referred us to Section 61 of the I.T. Act, 1961, which says that all income arising to any person by virtue of a revocable transfer of assets shall be deemed to be income of the transferor. Section 61 applies when the transfer is revocable. A perusal of the deed of endowment will show that it is absolute. There is complete dedication of the agricultural lands and of the income from those lands in favour of the deity. The dedication is not revocable at all. The properties are to be mutated in the name of the deity. It is true that Seth Gopaldas continued to manage the properties but that was in the capacity of sarvarakar as mentioned in the document. The fixed deposit receipts which are referred to in the order of the Tribunal were also in the name of Seth Gopaldas as sarvarakar of the temple. Thus, there are no circumstances to suggest that the endowment was not valid and the Tribunal, in our opinion, was right in holding it to be valid.
3. As regards the second question, there is nothing to show that any income of the temple was utilised by Seth Gopaldas. All that is shown is that Seth Gopaldas paid to the temple interest at 8% and, in the opinion of the Tribunal, Gopaldas should have paid interest at 12%. Now, as Gopaldas paid interest at 8% on the money borrowed from the temple, his taxable income in his assessment would be more as compared to what it would have been had he paid interest at 12%. Thus, there is no question of taxing any extra income in the hands of Seth Gopaldas.
4. Coming now to the third question, the Tribunal's view that the interest income in the hands of the assessee should be taxed at 12% instead of 8%, does not appear to be justified. We have already mentioned that when Seth Gopaldas paid interest only at the rate of 8% his taxable income would proportionately increase and the Department would get that benefit in his assessment. It is nobody's case that interest to the temple was really paid in excess of 8% and, therefore, the question of taxing the interest income at more than 8% does not arise.
5. For the reasons given above, we answer the questions as follows:
1. The Tribunal was correct in holding that the endowment was valid.
2. The Tribunal was not right in holding that the extra income of the temple be taxed in the hands of Seth Gopaldas.
3. The Tribunal was not right in holding that the interest income of the temple should be taxed at 12% and not at 8%.
6. There will be no order as to costs of this reference.