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Commissioner of Income-tax Vs. Saradeswar Siva Linga and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 61 of 1974
Judge
Reported in[1983]140ITR953(Cal)
ActsIncome Tax Act, 1961 - Section 24(1); ;Income Tax Act, 1922 - Section 9(1)
AppellantCommissioner of Income-tax
RespondentSaradeswar Siva Linga and ors.
Appellant AdvocateA.K. Sengupta and ;M.L. Bhattacharjee, Advs.
Respondent AdvocateP.K. Mullick and ;A. Kumar, Advs.
Cases ReferredRyall v. Honeywill
Excerpt:
- sabyasachi mukharji, j.1. in this reference under section 256(1) of the i.t. act, 1961, the following two questions have been referred to us :'1. whether, on the facts and in the circumstances of the case, the tribunal was right in holding that the assessee, the deity, sri sri saradeswar siva linga was entitled to deduct the expenditure incurred for its own pujas as an annual charge under section 24(1)(iv) of the income-tax act, 1961, in computing its income under the head 'income from house property'? 2. whether, on the facts and in the circumstances of the case, the tribunal was, right in holding that expenditure incurred for the puja of the deity was an annual charge within the meaning of section 24(1)(iv) of the income-tax act, 1961, and was, therefore, deductible in computing the.....
Judgment:

Sabyasachi Mukharji, J.

1. In this reference under Section 256(1) of the I.T. Act, 1961, the following two questions have been referred to us :

'1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee, the deity, Sri Sri Saradeswar Siva Linga was entitled to deduct the expenditure incurred for its own pujas as an annual charge under Section 24(1)(iv) of the Income-tax Act, 1961, in computing its income under the head 'Income from house property'?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was, right in holding that expenditure incurred for the puja of the deity was an annual charge within the meaning of Section 24(1)(iv) of the Income-tax Act, 1961, and was, therefore, deductible in computing the income under the head 'Income from house property'?'

2. The assessee is an artificial juridical person (hereinafter referred to as 'the respondent'). Late Sm. Akshay Kumari Devi, wife of late Arun Kumar Tagore had received several house properties from her husband by way of legacy in the year 1914 when the latter died. Late Sm. Akshay Kumari Devi died issueless on 14th November, 1960. She had not adopted any child and during her lifetime by a registered deed executed in the year 1934, appointed her two brothers and their three sons as shebaits of a private deity Sri Sri Saradeswar Siva Linga. It was declared in the said deed that all her properties would be vested in the said deity on her demise. In view of the questions raised in this case and the contentions urged, it would be necessary to refer to the relevant portion of the said deed. After reciting about the death of her husband, the sole settlor went on to observe as follows :

'As a result the responsibility to give effect to the desire of my husband and make suitable arrangement in respect of everything left behind by him is being vested on me only. My respected husband's utmost desire was to establish a temple of Iswar Sarada Sundari Devi at Iswar Kashidham in the name of his grandmother and instal Siva Linga but due to paucity of funds I could not give a shape to the same prior to this. Now getting involved in debt, I have purchased a house for Rs. 5,000 on 26th February, 1933 at No, 38/34, House Katora, Kashidham and have established the temple named Sarada Sundari Devi and installed Iswar Saradeswar Siva Linga on 30th Falgun 1339 B.S. as per terms of the said Will by spending about Rs. 600 and I have also a desire to invest Rs. 4,000 for the daily puja and salary of the priest as per written provisions of the Will. In spite of my utmost efforts for a long time and finding no suitable adopted son according to my choice in all respects and particularly it having been impossible to take any adopted son as per provisions of paragraph 10 of the Will, at present I have no desire at all to take any adopted son, (and) according to the provisions of the aforesaid Will executed by my husband, the entire movable and immovable properties to be left behind by me shall become the debutter property of the said Siva Linga after my death and the said Siva Linga shall become the owner of the entire property.'

3. There being no other person to perform the act of selecting the shebait for carrying on the seva of the said future debutter excepting herself and upon the voluntary resignation, death or removal of the other executors forever by court, the act of selecting the shebait, etc., solely devolved on her and in these circumstances she appointed her two brothers as shebaits after her death in respect of the entire estate to be left behind by her which subsequently became debutter and then charged the shebaits with the following :

'You after defraying contingent expenses, i.e., after defraying collectorate (tax), flat rates and taxes and making payment of taxes, etc., and meeting contingent expenses, i.e., by paying collectorate tax revenues, rates and taxes and making payment of taxes, etc., and after paying salary of the employees of the residential house of the Pathuriaghata and Kachari Bari of Mal and after meeting the expenses for repairs and necessary renovation of Alambazar house and meeting litigation expenses and expenses for Iswar Durga Puja and Iswar Shyama Puja and expenses for annual turn of Kuladevata Iswar Radhikaata Jew and meeting expenses for the seva of the Siva Linga installed long ago in the House Katora and meeting regular and monthly expenses of Iswar Jaganmoyee Debi installed at No. 12, Pathuriaghata and defraying such other necessary expenses or after defraying necessary expenses for the maintenance of the estate, shall, out of the profit of the said estate defray your necessary expenses and household expenses, and out of the balance amount shall perform the deva seva of the debutter of the aforesaid Iswar Saradeswar Siva Linga installed at Iswar Kashidham feed the Brahmins and guests and if funds permit, shall establish Annachatra, etc., and if capable, shall perform such other acts of public charity or any other charitable acts. But, if any sum becomes surplus even after the same, then you shall keep the same in deposit in bank for meeting necessary future expenses of the said debutter, i. e., expenses for payment of land tax, etc., and shall make provisions for payment of debts. To that no plea or objection by the relatives or heirs of my husband shall be tenable as per provisions of the aforesaid Will executed by my husband and according to provisions of this, you shall be competent to borrow money for meeting necessary expenses for maintenance of the estate, viz., for payment of taxes, etc., and for the benefit of the future debutter estate or for any law suits and the said loan shall be considered to be the loan of the estate.'

4. The other powers given to the said shebaits were incidental and are not necessary for the present purpose to set them out in detail. She reiterated that she had not executed any other shebaitnama or any deed in respect of future debutter prior to this. Then she mentioned the list of the properties and one of the properties was Sri Sri Iswar Saradeswar Siva Linga Temple situated at No. 38/34, House Katora, appurtenant to the Police Station and Sub-Registry, Benaras, within Benaras City in U.P.

5. The assessment year with which we are concerned was the assessment year 1964-65, being the first year of assessment of the respondent-assessees. During the assessment year, the respondent-assessees claimed deduction of Rs. 15,014 under Clause (iv) of Sub-section (1) of Section 24 of the Act representing the expenses alleged to be incurred by the assessee in performing pujas of the deities. The ITO in his order rejected the claim.

6. The assessee-respondent preferred an appeal before the AAC and reiterated his claim for deduction. The AAC in his order dated 11th May, 1970, observed as follows:

'The next objection is that in computing the total income the Income-tax Officer has not taken into consideration the puja expenses incurred by the appellant. The total expenditure under the head was Rs. 15,014 which was claimed by the appellant, but was not considered at all by the Income-tax Officer. Learned counsel points out that according to the Will of late Arun Kumar Tagore, the shebaits are bound to perform puja and as such the expenses for puja should have been allowed. The income in this case is, however, derived entirely from the house property and under the Act there is no provision for making any deduction on account of puja expenses from the income from house property. I am, therefore, unable to interfere in the matter that the Income-tax Officer did not take into consideration the puja expenses incurred by the shebaits.'

7. He, accordingly, rejected the respondent's claim.

8. Being aggrieved by the order of the AAC, the assessee went up in appeal before the Tribunal. In view of the grounds involved, the Tribunal, consisting of a single Member, heard and observed, inter alia, as follows :

'6. Having heard the parties and after going through the facts on record it is seen that there is no dispute on facts. I, therefore, proceed on the assumption that under the registered deed for vesting the properties in the deity the shebaits were bound to spend a portion of the income from the property on the pujas of the deity and that during the previous year this amount is Rs. 15,014.

7. The question that requires consideration in this appeal, therefore, is a very short one. Whether the aforesaid stipulation amounts to an annual charge on the property because it is only then that the annual charge can be allowed as a deduction against the property income. In this connection I would like to observe that there is no dispute regarding the principles relating to debutter properties, their legal character and incidence as propounded by the learned commentator, B. K. Mukherjea, in his commentary referred to by the counsel for the assessee. There is also no serious dispute that unless the assessec's claim falls within Section 24(1)(iv), the assessee will not be entitled to succeed. I have, therefore, to consider whether or not the assessec's case falls within that clause.

8. So far as the Allahabad High Court decision is concerned it appeal s that on the face of it the ratio is against the assessee. Their Lordships have clearly held that mere stipulation to pay annuities did not amount to an annual charge and that it would amount to an annual charge only if the charge was created over the properties. In fact, their Lordships have at page 746 clearly observed that the payment in that case on account of annuities was to be made out of the income of the property and for the payment of those annuities the property was not liable to be sold at any time. In the absence of a finding that in the case before me the shebaits were entitled to sell the property for performing puja of the deity, it is not possible for me to accept that the Allahabad High Court decision supports the assessee's contention. In fact, this is more or less the view taken by the learned commentator Kanga & Palkhivala in their treatise on income-tax. It is, however, seen that the view of the learned commentator is founded on a Madras High Court decision in the case of V. Chettiar : [1959]35ITR322(Mad) , in which case their Lordships of the Madras High Court dissented from the obiter dictum of the Calcutta High Court in CIT v. State Bank of India : [1957]31ITR545(Cal) . The assessed, belonging to the State of West Bengal, the Calcutta High Court decision is of binding authority. Respectfully following the Calcutta decision, I would hold that the word 'charge' as used in Section 24(1)(iv) of the 1961 Act, corresponding to Section 9(1)(iv) of the 1922 Act means payment and not mere security. Since the charge as already stated has not been created by the deity or the shebaits voluntarily but has been created by the settlor, I am of the view that the assessee's claim falls within clause (iv) of Sub-section (1) of Section 24. The same has, therefore, to be allowed as a deduction.'

9. He, therefore, allowed the assessee's claim. Out of this ordrr, the aforesaid two questions have been referred to this court under Section 256(1) of the I.T. Act, 1961, at the instance of the Revenue.

10. Now, it appears to us quite clear that as a result of scanning of the deed, which we have referred to hereinbefore, Sri Sri Iswar Saradeswar Siva Linga became the owner of the properties in question. Now, if that deity is the owner of the property in question, then, indisputably any expenditure incurred by the owner by himself or on itself could not form part of an annual charge under Section 24(1)(iv) of the I.T. Act, 1961. In this connection, we may appropriately refer to the relevant provisions of Section 24(1)(iv). Section 24 provides for deduction from income from house property. Sub-section (1) of Section 24 stipulated that income chargeable under the head 'Income from house property' should be computed after making certain deductions. Sub-section (1)(iv) of Section 24 provides as follows :

'(iv) where the property is subject to an annual charge (not being a charge created by the assessee voluntarily or a capital charge), the amount of such charge .'

11. The expression 'not being a charge created by the assessee voluntarily or a capital charge' had been substituted with effect from 1st April, 1969. We are not concerned in the relevant assessment year with the said addition made with effect from 1st April, 1969, as the assessment year involved is prior thereto. It appears to us to be well settled that any expenditure incurred by an owner on itself or any obligation of the owner to incur certain expenditure on itself or himself could not form part of any annual charge of the property because the assessee is the owner of the property himself or itself. If any authority is needed for this proposition, we may refer to the observations of the Supreme Court in the case of CIT v. Sri Jagannath Jew : [1977]107ITR9(SC) . The moment the deity, Sri Sri Iswar Saradeswar Siva Linga became vested with the property and became the legal owner of the property, the expenditure incurred on that deity must be considered to be the expenditure incurred by the assessee and would not be in discharge of an obligation of an annual charge. In that view of the matter, it appears to us that the Tribunal did not proceed on correct principle and the question No. 1 must be answered in the negative and in favour of the Revenue.

12. But the question that really poses for our consideration is question No. 2. We may, however, point out that question No. 2 is not very clear. The question seems to indicate that the Tribunal was not clear as to whether the entirety of the expenditure incurred for all the obligations imposed by the deed were considered to be incurred on the puja of the deity being Sri Sri Iswar Saradeswar Siva Linga or other obligations imposed by the deed, as we shall presently notice. We have set out the relevant provisions of the deed It appears that the property vested in Sri Sri Saradeswar Siva Linga and the managements of the said property being the shebaits were charged with the obligations of 'expenses for Iswar Durga puja and Iswar Shyama puja and expenses for annual turn of Kuladevata Iswar Radhakanta Jew and meeting expenses for the seva of the Siva Linga installed long ago in the House Katora and meeting regular and monthly expenses of Iswar Jaganmoyee Debi installed at No. 12, Pathuriaghata. These expenses were for five other deities other than Sri Sri Iswar Saradeswar Siva Linga. Their situation and location would indicate that they are different from Sri Sri Iswar Saradeswar Siva Linga which was situated at 38/34, House Katora. Now, the question is, for the expenses of Iswar Durga puja and Iswar Shyama puja and expenses for annual turn of Kuladevata Iswar Radhakanta Jew and meeting expenses for the seva of the Siva Linga installed long ago in the House Katora and in meeting the regular monthly expenses of Iswar Jaganmoyee Debi what kinds of obligations were imposed upon the shebaits of the properties of Sri Sri Iswar Saradeswar Siva Linga and if any such obligations were imposed, could such obligations be considered to be the annual charge in terms of Clause (iv)of Sub-section (1) of Section 24 of the I.T. Act, 1961. In this connection, our attention was drawn to some of the judicial decisions to which we may refer. Reliance was placed on the decision of the Supreme Court in the case of New Piece Goods Bazar Co. Ltd. v. CIT : [1950]18ITR516(SC) . In that case the Supreme Court observed, in computing an income from property under Section 9 of the Indian I.T. Act, 1922, which was in similar terms with Section 24 of the present Act, an assessee was entitled to deduct under Section 9(1)(iv) the Municipal Property Tax paid under the City of of Bombay Municipal Act, 1888, and the urban immovable property tax paid under the Bombay Finance Act, 1932, inasmuch as, according to the Supreme Court, these taxes came within the expression 'annual charge not being a capital charge'. The words 'capital charge', the Supreme Court noted, in Sub-clause (1) of Section 9(1)(iv) meant the charge created for a capital sum, that is to say, a charge to secure the discharge of a liability of a capital nature and the words 'annual charge' in the 2nd sub-clause meant a charge to secure an annual liability. There, the Supreme Court referred to the observations in the case of Moss Empires Ltd. v. IRC [1937] AC 785 ; [1938] 6 ITR 188 (HL), where the House of Lords held that the fact that certain payments were contingent and variable in amount did not affect their character of being annual payments and that the word 'annual' should be taken to have the quality of being recurrent or being capable of recurrence. The Supreme Court referred to several other decisions including the decision of the Madras High Court in the case of Mamad Keyi v. CIT : [1943]11ITR484(Mad) and held that in view of the obligations imposed the tax with which the Supreme Court was concerned was an annual charge and liible to deduction. As we have noted, the Supreme Court noted with approval the fact that in order to be an annual charge the obligation for such payment may be contingent or may be variable and that would not deter the charge being 'annual charge'. More or less a question similar to the one with which we are concerned came up for consideration before this court in the case of CIT v. State Bank of India : [1957]31ITR545(Cal) . There, in a suit, instituted against the assessee by his wife, a consent decree was passed by which an order for judicial separation was made and the assessee was directed topay Rs. 800 per month to his wife as alimony. Three years later, the assessee executed a deed of charge, whereby he made payments of this alimony 'amounting to Rs. 800 per month or Rs. 9,600 per year' a charge on two properties owned by him and the question was whether the sum of Rs. 9,600 payable annually under the deed of charge was an admissible deduction under Section 9(1)(iv) of the Indian I.T. Act, 1922, in computing the assesses income from property. The expression in Section 9(1)(iv) of the Indian I.T. Act, 1922, is in part materia with the expression used in Section 24(1)(iv) of the 1961 Act, before its amendment with effect from 1st April, 1969. It was held by the Division Bench of this court that thefact that the alimony was made payable by the consent decree at the rate of Rs. 800 per month and not at the rate of Rs. 9,600 per year did not prevent the payment from being an 'annual payment' or 'annual charge' as contemplated under Section 9(1)(iv). It was further held that in view of the express language used in Section 9(1)(iv), the sum of Rs. 9,600 was an admissible deduction under Section 9(1)(iv) even though the charge was created by the assessee voluntarily and was not an overriding charge diverting the amount from the assessee before it could become his income. The Division Bench of this court noted that the 'annual payment' as used in the taxing statutes should be taken to mean payments in whatever kind of instalments paid, made every year in discharge of a liability incident to that year, if it has to be made during more than one year, whether consecutively or otherwise. A payment was annual if it had the quality of recurrence in different years, although it might not be in every one of a succession of years. It was held, it was not necessary that its quantum should be fixed by reference to a whole year. This court noted that the expression 'charge' used in Section 9(1)(iv) meant payment and not more security. What this section provided for was a deduction of certain sums out of the assessee's income after the income had become his. The broad ground that where there was only an application of the income, there could be no claim to exemption from tax or deduction in the computation of the income was, therefore, not available as an argument against a literal construction of Section 9(1)(iv) which seems to be same for Section 24(1)(iv) of the 1961 Act. In a taxing statute, there was no room, this court noted, for any intendment or presumption or balancing of equities. One had merely to look at the terms employed, look fairly at the language used and ascertain what the statute said. If it spoke clearly to certain effect, then it was wholly immaterial that what it said did not appear to accord with the principles upon which other parts of the Act appear to have proceeded or that the assessee got what seemed to be an undeserved advantage. It may be instructive, in view of some of the contentions raised before us, to refer to some observations of Chief Justice Chakravartti, in this case, which are as follows (p. 553) :

'The second of Mr. Meyer's points was that the charge on the basis of which the assessee claimed the deduction in the present case was not an 'annual charge' as contemplated by Section 9(1)(iv). It was contended that under the consent decree, the alimony was payable at the rate of Rs. 800 per month and the assessee could not, by merely multiplying that monthly sum by twelve, claim the multiple to be an annual payment or charge. Cases where the levy or payment was in fact an annual levy but only the payment of it by instalments was allowed were saidto be different, because in those cases the charge itself was basically and in its own nature an 'annual charge'. Where, however, a payment was to be made month by month under a contract or a consent decree, the charge, if any, was really a monthly and not an annual charge and, consequently, the provisions of Section 9(1)(iv) would not be attracted. I do not think that this contention is sound and indeed at the end of his argument Mr. Meyer himself conceded that the weight of authority was against him.

Before referring to other authorities of which there is a considerable number, I might with advantage mention the decision of the Supreme Court in the case of New Piece goods Bazar Co. Ltd. v. Commissioner of Income-tax : [1950]18ITR516(SC) . Incidentally that decision was given in an appeal from one of the four decisions named by the Tribunal in its appellate order. The case related to the charge created in respect of municipal property tax by Section 212 of the City of Bombay Municipal Act, 1888, and the question being whether or not the charge was an 'annual charge not being a capital charge' within the meaning of Section 9(1)(iv) of the Income-tax Act, their Lordships had occasion to decide what a 'capital charge' meant and also, to a certain extent, what was meant by an 'annual charge'. 'Capital charge' they held, meant a charge created to secure the discharge of a liability of a capital nature; and an 'annual charge', they said, meant a charge to secure an annual liability. We are not concerned, in view of what I have already said; with the true meaning of the expression 'capital charge' in the present case. With regard to the expression 'annual charge' all that the Supreme Court actually decided appears to have been that a charge, in order to be an 'annual charge', had to be a charge, in respect of a payment to be made annually or to secure the discharge of an annual liability and that provided a charge was of that nature, it was, although of a variable or contingent character, none the less an 'annual charge'. The direct decision in the case does not appear to go beyond excluding the view that if a charge was of a variable character, that is to say, liable to be increased or reduced or of the nature of a contingent charge, it would not be an annual charge, as contemplated by Section 9(1)(iv). What, however, 'a payment to be made annually' or 'an annual liability' really meant, namely, the positive concept underlying the terms, was not, so far as I can see, explained by the Supreme Court except perhaps indirectly and incidentally in two short paragraphs to which I shall refer later.

The term 'annual charge' is a term expressed in the English language. The successive English Income Tax Acts contained the expression 'yearly interest' and 'annual payment' and brought such interest or payment to tax. Judges of the English courts had consequently to construe the expression 'annual payment' and I think that what they held to be meant by the word 'annual', as used in such context, can safely be regarded as authoritative. I may point out, however that while Section 9(1)(iv) of the Indian Act makes the amount of an 'annual charge' exempt from taxation by permitting a deduction thereof in the computation of the assessee's income, the English Acts use the expressions ' yearly interest' and 'annual payment' in the opposite context, because they use them in charging sections so as to make the amounts concerned not exempt but chargeable to tax. That distinction, however, makes no difference.

Some of the possible different meanings of the expression 'annual' were stated by Rowlatt J., in the eases of Ryall v. Hoare: Ryall v. Honeywill [1923] 2 KB 447, 454 (KB). 'The word 'annual' may mean', said the learned judge, 'annually recurring', as applied to the seasons of the year or 'recurring over a long period of years'; or it may mean 'lasting only for one year', as we speak of certain flowers as annuals which must be sown afresh every year ; or, as in the case of interest on a sura of money, it may mean 'calculated with reference to a year'.' The cases show that the word 'annual', as applied to payments, has been construed to mean not merely payments which are to be made permanently or during a succession of years and are computed by reference to the liability for the whole year, but also payments which may have to be made week by week or month by month, provided the period of the payment extends beyond a year and provided that the liability for the payment is a recurring feature of every year as it comes and passes.'

13. His Lordship then referred to some other English decisions and referring to the decision in the case of Cunard's Trustees v. IRC [1946] 1 All ER 159 (CA), Chief justice Chakravartti observed as follows (p. 557 of 31 ITR):

'The payments might not require to be made every year, because the Will directed them to be made only if the income available did not suffice to keep the sister in her customary comfort. Nevertheless, the court held that inasmuch as the payments contemplated were of such a nature that they could be made and might have to be made recurrently, although it might not be consecutively in different years, they were annual payments.'

14. Chief Justice Chakravartti then referred to the actual terms of Rule 1(a) of Case III of Sch. D and thereafter expressed the following view (p. 559) :

'I would only add here that the word 'charge' as used in Section 9(1)(iv), must mean payment and not security. The relevant words of the section are : 'where the property is subjected to an annual charge.....the amount of such charge'. Clearly, the phrase 'the amount of suth a charge' indicates that the word 'charge' used in the earlier phrase also means payment. It would be singularly inappropriate to use the word 'charge' if security was intended, for 'annual security' would be wholly meaningless. That the meaning is 'payment' would also seem to be clear from the explanation appearing after clause (vii) of subsection where it is said that the expression 'annual charge' in clause (iv) does not include any tax in respect of property or income from property, if such tax is of a certain kind. '

15. Therefore, in view of the language used in Section 9(1)(iv), this court came to the conclusion as we have noted before. The view expressed by this court has not been dissented from or disapproved by the Supreme Court. In our opinion, the ratio of the said decision is applicable, in view of the clause we have set out hereinbefore, to the expenses of the four deities. Our attention was drawn to the observations of the Delhi High Court in the case of CIT v. Dr. Rameshwar Lal Pahwa : [1980]123ITR681(Delhi) , where under different heads certain expenditures were allowed deductions. Reliance was also placed on the observations of the Calcutta High Court in the case of State Bank of India : [1957]31ITR545(Cal) . Learned advocate for the Revenue further drew our attention to the observations of the Bombay High Court in the case of Trustees of Chaturbhuj Raghavji Trust v. CIT : [1963]50ITR693(Bom) , where Mr. Justice Desai observed as follows (p. 697):

'The next contention of the assessee was that in respect of the said amount of Rs. 25,000, tax had to be levied under the main provision of Section 41(1) in the like manner and to the same amount as it would be leviable upon and recoverable from Champavahoo on whose behalf that part of the income was receivable by the trustees. According to the asses-see, therefore, the Income-tax Officer was not entitled to levy tax on the said amount of Rs. 25,000 at the maximum rate under the first proviso to Section 41(1).'

16. It appears that the obligation with which the Bombay High Court was concerned was different. But, in so far as the Bombay High Court has expressed the view that unless the actual amount was fixed, there could not be any charge, with respect, we are unable to agree.

17. Reliance was placed on the observations of the Supreme Court in the caseof CIT v. Sri Jagannath Jew : [1977]107ITR9(SC) , which we have already noted. There, after construing the Will, the Supreme Court observed that on an interpretation of the Will, it was clear that the testator gave away his estate to the deity and created an absolute debutter thereof with responsibility to discharge certain secular but secondary bequests including benefit to family members, their residence and transportation. The deity was the legal owner of the whole estate and liable to be assessed as such. The directions in the Will, the Supreme Court noted, did not divert the income at source but merely directed the shebaits to apply the income received from the debutter properties for the specified purposes and, therefore, the income of the deity was not restricted to the amounts spent by the shebaits for the daily puja and religious ceremonies connected with the deity and the amount spent for the remuneration of the shebaits, payment of allowances to the widows of shebaits, expenditure in maintaining horses, carriages and cars and repairs, could be included in the income of the assessee. The surplus income of the estate after defraying expenses were not held in trust for charitable purposes and were not exempt from taxation under Section 4(3)(i) of the Indian I.T. Act, 1922, and the amounts spent for performing sraddha and other ceremonies for the spiritual benefit of the testator were not diverted by an overriding title. The Supreme Court was not concerned with the question, as it appears to be the case, on the construction of the deed, in the instant case. Our attention was also drawn to certain observations made by this court in the case of Official Trustee of West Bengal v. CIT : [1979]116ITR219(Cal) , where we reiterated that the nature of the obligation determined whether there was diversification of income. In the instant case we are not concerned with the question whether there has been any diversification of income before it became an income of the assessee and we are concerned having regard to the nature of the obligation whether the obligation created an annual charge on the income after the income had become the assessee's income. On the construction of the deed, as it is, the expenditure incurred on the four deities, which we have set out hereinbefore, in our opinion, constitute an annual charge in view of the principle laid down by this court in the case of State Bank of India : [1957]31ITR545(Cal) , referred to hereinbefore. Inasmuch as, however, the actual amount, which was spent by the assessee for the four deities, mentioned hereinbefore, not having been found by the Tribunal, we say that the Tribunal would direct a determination of the actual expenses incurred on the four deities and only allow such amount. Therefore, question No. 2 would be answered by saying that the Tribunal was right in holding that expenditure incurred for puja of the four deities, referred to hereinbefore in our judgment, was an annual charge within the meaning of Section 24(1)(iv) of the I.T. Act, 1961, and was, therefore, deductible in computing the income, but the amount would be the actual expenses to be found out incurred on the four deities out of the sum of Rs. 15,014.

18. Each party to pay and bear its own costs.

Suhas Chandra Sen, J.

19. I agree.


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