R.L. Narasimham, C.J.
1. These S. J. Cs were heard analogously at the special request of the parties and are dealt with in one judgment. They all arise out of the statements or two cases under Section 66(2) of the Indian Income Tax Act made by the Income-Tax Appellate Tribunal, in pursuance of the directions given in two Bench decisions of this Court in S. J. Cs Nos. 42, 43, 44 and 45 of 1954 and 6 of 1953. The parties are the same and the sole question for decision is whether the disputed income is exempt from income tax on the ground that it is income applicable only for public religious purposes.
2. The petitioner-assessee is one of the important Pandas attached to the Temple of Lord Jagannath at Puri, Pilgrims from distant parts of India like the Punjab, Uttar Pradesh, Bihar, Rajasthan, etc., while coming to Puri used to take his services for the purpose of their pilgrimage and he used to lodge them and feed them freely during their stay at Puri..
As soon as the pilgrimage was completed they used to make payments which may be divided into two classes, firstly, a small sum known as 'Pranami' was given by way of remuneration. This was admitted to be his private income assessable to income-tax. The second class consisted of payments made by the pilgrims after the execution of a document known as 'Annodan Patra' by which the donorexpressly stipulated that the sum should be utilised by the Panda for offering bhog to Lord Jagannath with a direction that after such offering the Mahaprasad may be appropriated by the Panda and his family and also distributed to these pilgrims hailing from the home district of the donor who worship the Panda.
It was found, as a fact, by the Income-Tax Appellate Tribunal that with some of the surplus money derived from this source, the Panda purchased Zamindari and other landed property but the purchase was made in the name of Lord Jagannath and the Panda's family members were described as the murfatdars. On behalf of the assessee-petitioner, therefore, it was contended that this sum was totally exempted from income-tax by virtue, of Clauses (i) and (ii) of Sub-section (3) of Section 4 of the Indian Income-tax Act being either in the nature of income derived from property held under a religious trust or income of a religious institution derived from voluntary public contributions.
3. Before discussing the legal questions involved in these cases, I may dispose of one preliminary objection, raised by Mr. R. Mohanty on behalf of the petitioner against the finding of the Tribunal. The Tribunal considered that the 'Annadan Patra' alone was sufficient document to he taken into consideration for the purpose of ascertaining the terms of the donations made by the pilgrims.
The petitioner wanted to include, in the documents filed by him, an extract from his 'Annadan Register' containing full particulars about the names of the donors, and the amounts paid by them, both by way of 'Pranami' and by way of 'Anna Dan'. The Tribunal however rejected this prayer saying that that Register was quite irrelevant.
There is a very material difference between the terms of the 'Annadan Patra' and the entry in the 'Annadan Register' regarding the purpose for which the money was given to the Panda. According to the 'Annadan Patra' the money was to be utilised in offering bhog to Lord Jagannath & then the Mahaprasad may be appropriated by the Panda & also distributed to those jajmans of the Panda hailing from the home district of the donor, who worship him. Thus the beneficiaries are clearly specified by this document. In Annadan Register, on the other hand, the terms of the grant are recited as follows :
'The sum should be spent in offering bhog toLord Jagannath and the Mahaprasad may then bedistributed amongst the Pandas and all pilgrims(sab-yatrionnka)'.
According to the Register, therefore the beneficiaries are not only the Panda's family but all pilgrims in Puri. It does not appear that before the lower authorities the plea that all pilgrims of Puri were entitled to the Mahaprasad irrespective of whether they belonged to the home district of the donor and irrespective of their being the jajmans of this Panda and worshipping him, was put forward relying on the aforesaid entry in the Annadan Register.
On the other hand, I find from the judgments of the income-tax authorities as well as from the judgment of the Division Bench of this Court in the application under Section 66(2) of the Income-tax Act that the Annandan Patra alone was taken as embodying the terms of the grant. The entry in the Register appears to be merely an entry made by or under the direction of the Panda after the execution of the Annadan Patra by the donors.
It may be that some of the entries in the Annadan Register are signed by the pilgrims but in construing the legal effect of the grant we must attach greater importance to the Annadan Patrasigned by the donor himself. I would therefore completely ignore the entry in the Annadan Register and decide the case on the basis of the terms as embodied in the Annadan Patra.
4. The material portions of Sub-section (3) of Section 4 of the Indian Income-tax Act may now be quoted :
'4 (3) Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them :
(i) Subject to the provisions of 'Clause (c) of Sub-section (1) of Section 16 any income derived from property held under a trust or other legal obligations solely for religious or charitable purposes, where such purposes relate to anything done within the taxable territories, and in the case of property so hold in part only for such purposes, the income applied or finally set apart for application thereto ....... ...... ...... ...... ......
(ii) any income of a religious or charitable institution derived from voluntary contributions and applicable solely to religious or charitable purposes'.
At the end of the aforesaid sub-section the expression 'charitable purpose' was defined as follows :
'In this sub-section 'charitable purpose' includes relief of the poor, education, medical relief, and the advancement of any other object of 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.'
From this definition it is clear that income from a private religious trust will not be exempt from taxation but only that income which enures for the benefit of the public, that is to say only public religious trusts will be exempt. The lower authorities discussed at some length the question as to whether this was a trust at all or else whether it was merely a device to escape income-tax.
They held that in essence this sum was also meant for the personal benefit of the Panda, but that with a view to escape income-tax the device of making a bogus gift for the purpose of offering bhog to Lord Jagannath and subsequently appropriating it for the use of the Panda was adopted.
In coming to this conclusion the lower courts were very much influenced by the fact that pilgrims hailing from the home district of the donor who are jajmans of this Panda and who worship him would be so far indeed that, for all practical purposes, the sole beneficiary under the 'Annadan Patra' may be taken to be none else but the Panda himself.
They also took into consideration the fact that there was no clear evidence about the offering of bhog and other circumstances. It appears to me quite unnecessary to discuss the larger question as to whether the contribution made through the Annadan Patra, by the donor would amount to a trust or else whether it is a mere device to give the entire income to the Panda for his own benefit.
Even if it be assumed (without deciding) that a religious trust was created for the main purpose of offering bhog to Lord Jagannath at Puri by the execution of the Annadan Patra, the essential question on which the assessability of this income to income-tax depends is whether such a trust is a private religious trust or a public religious trust. If the assessee fails to show that it is a public religious trust his claim for exemption must fail.
5. The distinction between a public religious trust and a private religious trust is well known.The last word on the subject so far as this Court is concerned, is found in the recent judgment of the Supreme Court in --Deokinandan v. Murlidhar AIR 1957 SC 133 (at p. 136), where, after quoting Lewin on Trusts, Fifteenth Edition, pp. 15-16, Venkatarama Ayyar J., observed:
'The distinction between a private and a public trust is that whereas in the former the beneficiaries are specific individuals, in the latter they are the general public or a class thereof. While, in the former the beneficiaries are persons who are ascertained or capable of being ascertained, in the latter they constitute a large body which is incapable of ascertainment ....... Applying this principle, a religious endowment must be held to be private or public according as the beneficiaries thereunder are specific persons or the general public or sections thereof.'
6. The test therefore seems to be whether the beneficiaries can be definitely ascertained or capable of being ascertained in the future. It is not necessary that all the beneficiaries should be fully described in the document creating the trust, nor is it necessary that the beneficiaries should be fully described in the document creating the trust, nor is it necessary that the beneficiaries should be ascertainable from the facts existing at the time of the creation of the trust.
Even if the beneficiaries are ascertainable at some future time, the trust will be a private trust if the terms of the document show that they are capable of being ascertained. See also Seott on Trusts Second Edition, Vol. IV Page 2614, Article 664. Judged by these principles, I do not think there can be any doubt that the trust created by the Annadan Patra is a private religious trust.
The beneficiaries are (1) the Panda himself and (2) those pilgrims belonging to the home district of the donor who are jaimans of the Panda and who worship him. There can be no difficulty in ascertaining who these beneficiaries are. Whenever they come to Puri they are bound to lake the service of this Panda for the purpose of their pilgrimage and become his jajmans and worship him.
If the income of the trust property is thus meant to be distributed as Mahaprasad to these persons after being offered as bhog to Lord Jagannath there is no escape from the conclusion that it is a private religious trust. These beneficiaries cannot be held to be a class or section of the public so as to make it a public trust.
7. Mr. Mohanty however relied on some English decisions in support of his argument that a trust for the benefit of a well-defined and ascertainable class of persons may in some circumstances amount to a charitable trust under the English law. Thus, in Gibson v. South American Stores, (1950) 1 Ch. 177 a trust for the benefit of the necessitous employees, and ex-employees and their dependents of a company was held to be a charitable trust.
Again in Scarisbrick In re; Cockshott v. Public Trustee, 1951-1 Ch. 622 a bequest in favour of the relations of the son and daughters of the testatrix, as may be in needy circumstances, was held to be a charitable trust under the English law. These two decisions however will not help Mr. Mohanty very much.
In the former decision, Evershed M. R. observed, following earlier decisions, In re: Drummond, (1914) 2 Ch. 90 and In re: Compton Powell v. Compton, (1945) Ch 123 that the requirement of public interest in charitable trusts may not apply to the same extent in the case of charities for the relief of poverty, as it is in other cases. In the latter decision also the same principle was followed andJenkins L. J. laid down (at pp. 648-649 of the report) the following propositions based on previousdecisions;
'(i) It is a general rule that a trust or gift, in order to be charitable in the legal sense must be for the benefit of the public or some section of the-public.
(ii) An aggregate of individuals ascertained by reference to some personal tie (e. g. of blood or contract) such as the relations of a particular individual the members of a particular family, the employees of a particular firm, the members of a particular association, does not amount to the public or a section thereof for the purpose of the general rule.
(iii) It follows that according to the general rule above stated, a trust or gift under which the beneficiaries or potential beneficiaries are confined to some aggregate of individuals ascertained as above, is not legally charitable even though its purposes are such that it would have been legally charitable if the range of potential beneficiaries had extended to the public at large or a section thereof.
(iv) There is however an exception to the general rule, in that trusts or gifts for the relief of poverty have been held to be charitable even though they arc limited in their application to some aggregate of individuals ascertained as above and are therefore not trusts or gilts for the benefit of the public or a section thereof.
(v) This exception cannot be accounted for by reference to any principle, but is established by a series of authorities of long standing and must at the present date be accepted as valid, at all events as ' far as this Court is concerned.'
The instant case will clearly come under proposition (ii) mentioned above. The aggregate of individuals to be benefited by the Annadan Patra can be easily ascertained by reference to some personal tie with the donor, that is to say, they must belong to the same district and they must be Jajmans of this Panda and must worship him.
The 'Annadan Patra' does not say that even amongst this class of persons only those who are poor and needy are entitled to the Mahaprasad. Hence, proposition (iv) mentioned above, of the English Law, will not be attracted even if for the sake of argument --without deciding this question --it is assumed that the English Principles of charitable trust are applicable to religious trusts in India.
8. Mr. Mohanty also relied on a later English decision reported in Baddeley v. Inland Revenue Commissioner, 1953-2 All ER 233 where it was held that property dedicated for the promotion of religious, social and physical well being of persons resident in the country boroughs of West Nam and Leyton who are or are likely to become members of the Methodists' Church and are of insufficient means otherwise, to enjoy the advantages provided by the trust, is a public charitable trust under the English Law.
In this decision it was held that if the members of a religious sect or denomination reside in a particular area they constitute a section of the public for the purpose of educational or religious charity and it was further pointed out that the inclusion or prospective or potential members of a particular denomination cannot make the class any the less a section of the public.
In the instant case however it cannot be said that these persons hailing from the home district of the donor, who are jajmans of the Panda and who worship him, form a class or religious sect or denomination so as to become a section of the public. They are merely a collection of individuals who can fee easily ascertained.
9. I would therefore hold that the trust created by the 'Annadan Patra' is a purely private religious trust and the petitioner's income derived from this source is not exempt from income-tax under either Clause (i) or Clause (ii) of Sub-section (3) of Section 4 of the Income-tax Act. The answer to the question posed by the Tribunal is in the affirmative.
The petitions are dismissed with costs. Hearing fee Rs. 200/- (Rupees two hundred only).
S. Barman, J.
10. I have read the judgment of my Lord the Chief Justice and while fully agreeing with his conclusion that the answer to the question posed by the Tribunal must be in the affirmative, I should like to add and give my reasons in support of my Lord's views as expressed in his judgment.
11. As to the broad facts so far as relevant for the present purpose, my Lord has mentioned them. I should, however, like to add a few words. This matter arises out of dismissal of several Income-tax Appeals filed by one Shri Dwarakanath Guru, Puri (hereinafter referred to as the assessee against the Income-tax Officer concerned, before the appropriate Income-tax Appellate Tribunals in respect of the assessee's income in the different assessment years, full particulars whereof appear in the relevant records and proceedings herein.
The assessee is a Panda in Puri. He engages people to attract and canvass pilgrims, appoints others to take these pilgrims around and yet others to show them the temple and Darshan. While the pilgrims stay at Puri, they are fed free of charge. It is said that during the course of the pilgrimage, the pilgrims make payment to the assessee's estate under an unregistered document called Annadan Patra, also known as Attika Patra, executed by the pilgrims (hereinafter referred to as the said Annadan Patra). The pilgrims also pay cash sometimes and at other times make promises to pay later, the latter being more frequent.
12. The assessee's case is that these monies are intended for the offering of Bhog to Lord Jagannath, the exclusive right to carry it out being vested an the assessee, the Prasad itself being distributed, after the offering to the Lord, between the assessee and the people of the district from which the pilgrims come. Naturally, expenses have to be incurred out of the funds so collected.
In addition to these, a small remuneration is paid as presents to the Panda personally. This last item alone (called Pranami), the assessee contends, is assessable as income, the rest of it being exempt either under Section 4(3)(i) or Section 4(3)(ii) of the Income-tax Act (hereinafter referred to as the said Act). The Income-tax Department, however did not accept these contentions.
13. This leads me to the consideration of the question whether the assessee is entitled to the exemption under Section 4(3)(i) or 4(3)(ii) of the said Act. As to the burden of proof, I am of the opinion that it is for the assessee to prove that he is entitled to such exemption; in other words, it is for him to establish that he can claim the benefit of the exemptions allowed by the Act.
In this connection, I should like to draw attention to a decision of the Full Bench of the Allahabad High Court, Commissioner of Income-tax v. Indra Sen Raizada Meerut, AIR 1940 All 154 where it was held that taxation under the Act is the rule and exemption the exception and that all income from whatever source derived, must therefore be chargeable to income-tax and the burden of proving that a particular class of income is not so chargeable must necessarily lie on the person, claiming exemption from the liability to pay income-tax. Therefore, in the present case, it was for the assessee to prove that he was entitled to the benefit of the exemptions under the Act.
14. Therefore, the main question for consideration is whether the income of the Panda was income derived from voluntary contributions and applicable solely to religious or charitable purposes'. For this purpose, we have to consider the Annadan Patra by which the pilgrims used to make their contributions towards the Bhog of Lord Jagannath.
In other words the point is whether the Annadan Patra is capable of such interpretation as to make it a public trust for religious or charitable purposes. Whether the trust is public or private will have to be decided in each case with reference to the terms of the document if any; and if there is no document or its language is ambiguous, the decision would depend upon the inferences which could be legitimately drawn from the evidence adduced in the case, the material evidence being of actual user and public repute.
In the present case, however, when there was a document, namely, Annadan Patra by which the pilgrims used to make the contributions, we can rightly confine ourselves to that document alone for determination of the question before us, without going into the actual user or public repute. For ready reference an unofficial English translation of the said Annadan Patra in Devanagri script as available to us on record, is quoted as follows:
Annadan Patra written by .... of District .... Pragana .... P. O...... Village ..... grandson of .... son of.... by caste....
I have come to the sacred place of Sri Jagannathjee had Darsan, and accepted and paid my homage to ....... of Goudbad Sahu, Town Puri and have given Rs.......... Annadan for offering Bhog to Sri Jagannath. Pandaji will offer Bhog to Takurjee with this money Annadan and this Mahaprasad will be available to Pandaji himself, and also to such pilgrims of my district. I as well worship Pandaji. This Atika Annadan is confirmed by me.
Annadan Alika Rs.
Signature of Jajman'
From this Annadan Patra, it is quite clear that the pilgrims were giving Annadan for offering Bhog to Sri Jagannath. Then it provides that Pandaji (the assessee) will offer Bhog to Thakurjee with this money Annadan and that this Mahaprasad will be available to the Pandaji (Assessee) himself and also to such pilgrims of their respective districts (being 'my district' in each case) who all worship the Pandaji (assessee).
It is clear from the document that the primary beneficiary was the Pandaji himself. The Annadan Patra appears to be only a device by which the contributions were being indirectly given by way of offering to Lord Jagannath, for the ultimate benefit of the Pandaji himself.
It was, however, argued on behalf of the petitioners in the present application, that the ultimate beneficiaries were the pilgrims of the respective districts of the donors and that the voluntary contributions were not for the benefit of the Pandaji alone but applicable solely to religious or charitable purposes.
I am afraid that I cannot accept this contention. In this connection I should like to refer to a Calcutta decision Prosad Das Pal v. Jagannath Pal 37 Cal WN 181 at p. 183: (AIR 1933 Cal 519 at p. 521) C.C. Ghose, A. C. J. and Mitter J. where the question was whether a deed of endowment, providing for Devasheva and inter alia, for feeding of the poor and of the students, if the income increases, did or did not make the endowment a private trust or a public trust.
In that case, one of the main contentions before the High Court was whether the finding of the lower Court that the endowment was partly a private trust and partly a public one was wrong whereas he should have held that it was a private and not a public charitable endowment. In the judgment delivered by His Lordship Mr. Justice Dwarka Nath Mitter, it was observed as follows:
'It is argued that the provision that the whole of the income of the debutter property shall be wholly spent for the purposes of the debsheba and feeding of the poor does not make the endowment a public charitable one. It is argued that this provision about feeding of the poor is part and parcel of the debsheba and cannot be regarded as independent charity in which any class of the public was to have a direct and independent interest. The argument is that the feeding of the poor is really incidental to the Puja. Mr. Pugh who appears for the Respondent argues that the trust is principally public, seeing that the feeding of the poor and the feeding of students of educational institutions have been provided for in the deed of endowment. We are unable to accept this contention of the Respondent for it deems to us that the feeding of the poor and the feeding of students if the income of the debutter property increases are really incidental to the main purpose of the endowment, namely, the Puja of the deity. The view we take is supported by the decision of Sathappayyar v. Periasami ILR 14 Mad 1. We are therefore, of opinion that the learned Judge was not right in the view that this trust was partly of a private and partly of a public nature and not one wholly of a private nature.'
In this view of the matter, the Calcutta High Court decided that the said deed of endowment did not make the endowment anything but a private trust. In my view, the element of public benefit is essential to render a purpose charitable in law and this applies equally to religious as to other charities Gilmour v. Coats, 1949 AC 426 (H. L.)
15. In the ultimate analysis, on interpretation of the Annadan Patra, it appears to me that the main object of the pilgrims contributions was intended to benefit only the Pandaji (the assessee) himself and the pilgrims coming from a particular area, namely, the district from which the particular pilgrim making the contribution came from.
There was no element of public benefit in the document, the main purpose having been for the benefit of the Pandaji (the assessee) and the pilgrims of the district of the donor, the other objects were only ancillary to the main purpose and, therefore, it did not make the said Annadan Patra anything but a private trust with the consequence that the assessee was not entitled to the benefit of the exemptions under the Income Tax Act.
16. In this view of the matter, I agree with the order proposed to be made in the main judgment of my Lord the Chief Justice.