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Commissioner of Income-tax Vs. Ganpatrai Sagarmall - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome Tax Reference No. 345 of 1977
Judge
Reported in[1980]125ITR334(Cal)
ActsIncome Tax Act, 1961 - Section 256(1)
AppellantCommissioner of Income-tax
RespondentGanpatrai Sagarmall
Appellant AdvocateSuhas Sen and ;B.K. Chatterjee, Advs.
Respondent AdvocateNone
Excerpt:
- .....in an earlier reference this court was of the opinion that the settlors did not transfer the trust property to the trustees and that the income of the aforesaid property was assessable in the hands of the assessee. in view of that judgment, a deed of declaration and confirmation of trust dated 26th september, 1970, was executed by the settlors and the trustees to the aforesaid trust estate.5. the ito rejected the claim in view of the aforesaid judgment of this court. the assessee having failed before the aac filed an appeal before the tribunal. the tribunal has allowed the claim and has referred the following question to this court :'whether, on the facts and in the circumstances of the case, and on a correct interpretation of the deed dated september 26, 1970, the tribunal was.....
Judgment:

Deb, J.

1. This is a reference under Section 256(1) of the I.T. Act, 1961. The assessment years are 1971-72 and 1972-73.

2. The assessee is a firm and carries on business at Calcutta. The partners of the assessee-firm are the settlors of a charitable trust known as ' Ganpatrai Sagarmall Charitable Trust '. Those partners and two other persons are the trustees of the aforesaid trust.

3. In the assessment proceedings for the aforesaid years, the assessee claimed that Rs. 16,457 and Rs. 13,880, respectively, were not assessable in its hands on the ground that the aforesaid amounts were the income of the aforesaid trust from a house property at premises No. 37/1, Jatindra Mohan Avenue, Calcutta.

4. In an earlier reference this court was of the opinion that the settlors did not transfer the trust property to the trustees and that the income of the aforesaid property was assessable in the hands of the assessee. In view of that judgment, a deed of declaration and confirmation of trust dated 26th September, 1970, was executed by the settlors and the trustees to the aforesaid trust estate.

5. The ITO rejected the claim in view of the aforesaid judgment of this court. The assessee having failed before the AAC filed an appeal before the Tribunal. The Tribunal has allowed the claim and has referred the following question to this court :

'Whether, on the facts and in the circumstances of the case, and on a correct interpretation of the deed dated September 26, 1970, the Tribunal was right in law in holding that a valid trust came into existence by the said deed dated September 26, 1970 and the property being No. 37/1, Jatindra Mohan Avenue, Calcutta, belonged to the Ganpatrai Sagarmall Charitable Trust, and in that view deleting Rs. 16,457 and Rs. 13,880 representing income of the said property from the assessments in the hands of M/s. Ganpatrai Sagarmall for the assessment years 1971-72 and 1972-73, respectively '

6. The finding of the Tribunal is that the facts stated in the recitals of the aforesaid deed are true and correct.

7. Mr. Suhas Sen, learned counsel for the revenue, has drawn our attention to the aforesaid deed which forms part of the statement of the case.

8. The deed clearly shows that the trustees have acknowledged the receipt of large sums of money from the settlors for purchasing a plot of land and for constructing thereon a dharmashala and a charitable dispensary and also to apply the income of the said property to other public, religious and charitable objects. The trustees have further acknowledged that out of the aforesaid monies received by them they have purchased a land at premises No. 37/1, Jatindra Mohan Avenue, and have built a house thereon which is being used by them as dharmashala. and that they are also maintaining a charitable dispensary and applying the income for the maintenance and education of the poor and distressed persons.

9. In the premises, the monies received by the trustees from the settlors and the partners of the assessee-firm were impressed with a trust for the aforesaid objects. The aforesaid land and also the house built thereon belonged to the trust estate and its income cannot, therefore, be assessed in the hands of the assessee.

10. In the premises, we answer the question in the affirmative and in favour of the assessee.

11. There will be no order as to costs.

12. The judgment will not, however, affect the earlier assessment as the assessee has conceded before the Tribunal that the income of this property in those earlier years was assessable in the hands of the assessee.

R.N. Pyne, J.

13. I agree.


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