MASUD, J. - In this reference under section 66(1) of the Income-tax Act, 1922, the short point to be decided is whether the income derived by trustees under a deed of endowment in respect of certain immovable properties for the purpose of certain religious functions including services and Poojas of particular deities fall under the mischief of the first proviso to section 41(1) of the Act. The facts of the case are as follows :
Sri Rajendra Nath Dutt executed a will dated 6th August, 1892, under which he created, inter alia, a trust in respect of several houses and godowns including the tenanted houses at No. 10, Convent Road, and No. 62, Dharamtolla Street, Calcutta. This settlement of trust was made to ensure due performance of certain religious festivals and ceremonies and poojas of certain deities. At the material period the applicants were the trustees to the estate of the late Sri Rajendra Nath Dutt for each of the assessment years 1952-53 and 1953-54. The applicants were assessed to a total income of Rs. 7,973 being the rental income from the house property at No. 10, Convent Road, Calcutta, and No. 62, Dharamtolla Street, Calcutta, and ground rent, etc. The Income-tax Officer taxed this income at the maximum rate under section 41(1) of the Income-tax Act on the ground that the income is to be utilised by the trustees for performing certain poojas and was 'not specifically receivable on behalf of any one person.'
On appeal, the Appellate Assistant Commissioner held that the income was not liable to tax at the maximum rates under the proviso to section 41(1) as the income was not receivable by the trustees on behalf of any one person, natural or artificial. The department, thereafter, appealed against the said order of the Appellate Assistant Commissioner before the Appellate Tribunal which allowed the appeal. On these facts the following question of law arising out of the Tribunals order has been referred to us :
'Whether, on the facts and in the circumstances of this case, the income from the property in the hands of the assessee-trustees was assessable at the maximum rate by virtue of the first proviso to section 41(1) of the Income-tax Ac ?'
Dr. D. Pal, learned counsel for the assessee, has submitted at the outset that as the answer to the question involves construction of the will of the said Sri Rajendra Nath Dutt, he should be allowed to refer to a copy of the said will although it has not been included in the paper-book. Mr. S. Mukherjee, learned counsel for the department, has, in his usual fairness, has been made an annexure to the statement of the case.
The main contention of Dr. Pal is that the assessed income of Rs. 7,973, being the rental income from the house property at No. 10, Convent Road, Calcutta, and 62, Dharamtolla Street, Calcutta, and ground rent, etc., should not be taxed in the hands of the trustees at the maximum rate under the first proviso to section 41(1) on the ground that the said proviso has no application in the instant case, inasmuch as the shares of the persons for whom the said income was received by the trustees are definite specified amounts. According to him, the tax shall be leviable at the maximum rate when the shares of the beneficiaries in the income of the trust property are indeterminate or unknown. In the instant case, according to him, the shares of the persons for whom the income has been collected or received by the trustees are definite, specific figures. Mr. S. Mukherjee, on the contrary, has submitted that the word 'shares' in the first proviso to section 41(1) means a fixed specific proportion of the income of the trust property and not a specified amount as contended by Dr. Pal. According to him, under the will no fixed proportion or definite fractional part in the income of the trust property has been given, and as such, the individual shares of the beneficiaries are indeterminate and, therefore, assessable at the maximum rate under the said proviso.
The point involves a matter of first impression and no reported judgment has been cited before us for resolving the doubt raised. The relevant provisions of the deed of endowment which have been referred to us by the parties may be stated as follows :
'I hereby direct my trustees to provide for and defray out of the said rents and profits the performance of the following services, poojas, festivals and other religious ceremonies, that is to say, for the services of the family idol the said Sri Sri Madhusudan Jeu (monthly), Rs. 6. For the services of the said Banlingo Mahadeva (monthly), Rs. 4. For performance of the Durga Pooja (annually), Rs. 600. For Jagadhatri Pooja (annually), Rs. 200. For Akodist Sradh of my parents (annually), Rs. 50.
And I hereby also direct my trustees to set apart surplus (if any) of the rents and profits of the aforesaid houses, godowns and lands as a reserve fund to provide against any deficiency in the said rents and profits for the purpose aforesaid owing to any of the houses and premises remaining unlet or unproductive for any time, and to apply the said reserve fund or so much thereof as may be required for any of the purposes aforesaid provided always that when from time to time the said reserve fund shall be in the opinion of the trustees in excess of the amount required as such reserve fund the trustees shall spend the excess surplus of the said fund for the performance of the worship of the Shiva on the night called Shivaratri and feed the Brahmins in the next day following and pay them in cash as much as the said surplus will suffice to pay.'
It appears from the said provision in the deed of endowment that the beneficiaries for whom the income of the endowed properties is received are entitled to definite, determinate figures, although the fixed proportion under which the income is receivable by the trustees has not been mentioned. The settlor has anticipated two possible contingencies. One such contingency may arise if the total income of the endowed property is in excess of the fixed amounts payable to the beneficiaries and the other contingency may happen where the total income would not be sufficient to meet such payments. To meet such situation the settlor has made a provision to create a reserve fund out of the surplus accumulated rents and profits of the endowed properties. But the provision as to the utilization of the reserve fund creates a difficult situation. There is a direction in the deed of endowment that the trustees shall spend the surplus amount in excess of the amount required for payment of the specific amounts set out below, for the performance of the worship of the Shiva on the night called Shivaratri and feed the Brahmins in the next day following and pay them in cash as much as the said surplus will suffice to pay. Apart from the fact that the money to be spent for the worship of the Shiva and feeding the Brahmins is indeterminate and unknown, the trustees in their discretion may exhaust the entire reserve fund in a particular year for the worship of the Shiva and for feeding and paying the Brahmins and nothing might be left in the reserve fund for making payment of the fixed amounts payable to the deities in the event of any deficiency in the rents and profits of the endowed property in future owing to any of the houses and premises remaining unlet or unproductive for any time. In the latter case, the payment of the specified amounts may have to be reduced proportionately. Therefore, a situation may arise under the deed when the fixed amount payable to the beneficiaries may cease to be fixed. In any event the amount accumulated in the reserve fund and the portion allotted by the trustees under their discretion for the worship of Shiva and for feeding the Brahmins, etc., are indeterminate and unknown.
It may now be discussed how far the first proviso to section 41(1) of the Income-tax Act would be applicable to the facts of this case. The proviso to section 41(1) reads as follows :
'Provided that where any such income, profits or gains or any part thereof are not specifically receivable on behalf of any one person, or where the individual shares of the persons on whose behalf they are receivable are indeterminate or unknown, the tax shall be levied and recoverable at the maximum rate, but, where such persons have no other personal income chargeable under this Act and none of them is an artificial juridical person, as if such income, profits or gains or such part thereof were the total income of an association of persons.....'
It appears under the said proviso that the tax is leviable on and recoverable from the trustees at the maximum rate in cases in which (a) the income or any part thereof is not specifically receivable on behalf of anyone person, or (b) the individual shares of the beneficiaries are indeterminate or unknown. In the instant case, it has been urged by the revenue that the parties that the applicability of the first proviso to section 41(1) would depend upon the meaning of the word 'shares'. The word 'shares' may mean a fixed definite fraction or proportion in relation to the income of a property or it may mean a definite part or portion of the income. The dictionary meaning of the word as set out in Murrays New English Dictionary, vol. VIII, is as follows :
'A part or portion (of something) which so allotted or belongs to an individual, when distribution is made among a number.'
Etymological the word 'share' comes from the word 'shear' which means a piece hewn out to cut or torn away. Following the etymological meaning and accepting the aforesaid dictionary meaning, in our opinion, in the context in which the word has been used in the first proviso to section 41(1), the word 'shares' means and includes a specific, definite part or portion of the income of the property. But it seems to us that the answer to the question of law raised would really depend on the other aspect of the matter, namely, whether the specified amounts allotted to the beneficiaries are indeterminate or unknown. From the analysis of the relevant provisions of the deed of endowment as stated above, it appears that the fixed sum payable to the beneficiaries may be variable in different years indifferent situations. Therefore, it cannot be said that the respective shares of the beneficiaries are determinate and known. Dr. Pal has referred to Commissioner of Income-tax v. Bhim Chandra Ghosh and the Official Trustee of West Bengal v. Commissioner of Income-tax. Both there cases do not give material assistance inasmuch as they do not deal with the second part of the first proviso to section 41(1) and, as such, we do not intend to discuss them at length.
For the reasons stated above, the answer to the question of law referred to us will be in the affirmative and against the assessee. Each party shall bear and pay the costs of this reference.
Question answered in the affirmative.