GANAPATI PANCHAYATAN SANSTHAN TRUST VS COMMISSIONER OF WEALTH TAX
1993 P T D 530
[194 ITR 521]
[Bombay High Court (India)]
Before T.D. Sugla and B.N. Srikrishna, .1J
GANAPATI PANCHAYATAN SANSTHAN TRUST
versus
COMMISSIONER OF WEALTH TAX
Wealth Tax Reference No. 30 of 1978, decided on 01/04/1991.
Wealth tax---
---- Trust---Assessment of trust---Trust for benefit of five deities---Shares of deities not specified---Shares of deities equal---Objects of trust including other charities of a religious nature---Object subservient to main object of upkeep of deities---Trust not assessable under S.21(4)---Indian Wealth Tax Act, 1957, S.21.
The assessee was a private trust established for the worship of Lord Shree Ganapati and four other deities. Its objects included other charities of-a religious nature as the managing trustee may, in his discretion, deem fit. The Wealth Tax Officer assessed the trust under section 21(4) of the Wealth Tax Act, 1957, and this was upheld by the Tribunal On a reference:
Held, that the trust was for the benefit of the five deities comprising Ganapati Panchayatan and the other object mentioned was not independent. In any event, that object was not a beneficiary as such. Though the shares of the five deities were not specified in the deed of trust, it had to be taken that their shares were equal. The assessment, therefore, could not legally be section 21(4).
Chintamani Ghosh Trust v. CWT (1971) 80 ITR 331 (All.); CIT v. Ashalata Devi (Smt.) (1951) 20 ITR 326 (Cal.); CIT v. Bhim C4handra Ghosh (1956) 30 ITR 46 (Cal.); CIT v. Lady Ratanbai Mathuradas (1968) 67 ITR 504 (Bom.); CIT v. Official Trustee of West Bepgal (1983) 139 ITR 1 (Cal.); CIT v. Pulin Behari Dey (1951) 20 ITR 314 (Cal.); CIT v. Sri Sri Sridhar Jew (1990) 1134 ITR 323 (Cal.); CWT v. Trustees of the Estate of V.R. Chetty & Bros. (1979) 120 ITR 329 (Mad.); CED v. Bai Suntokbai Damodar Govindji (1981) 132 ITR 223 (Bom.); Jogeswar Narain Deo v. Ram Chandra Dutt (1896) 23 IA 37; ILR 23 Cal. 670 (PC); Panchanan Das v, CIT (1951) 20 ITR 57 (Cal.) and Sri Sri Jyotishwari Kalimata v. CIT (1946) 14 ITR 703 (Pat.) ref.
S.E. Dastur with K.B. Bhujle and N.R. Jagtap for the Assessee.
G.S. Jetley with P.S. Jetley and K.C. Sidhwa for-the Commissioner.
JUDGMENT
T.D. SUGLA, J.---In this reference at the instance of the assessee, the Tribunal has referred to this Court the following question of law for opinion under section 27(1) of the Wealth Tax Act, 1957:
"Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that the applicant was assessable to wealth tax according to the provisions of section 21(4) of the Wealth Tax Act and not under section 21(l) thereof, in respect of its assessments for the assessment years 1965-66 to 1969-70?"
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It is admitted by the assessee's representative that Shri Ganapati Panchayatan Sansthan Trust is an "oral" trust created by the first Ruler of the Sangli State for the maintenance and upkeep of the temple of his family god Ganapati. Subsequently, an Act to provide for the management of Shri Ganapati Panchayatan Sansthan Trust of Sangli was enacted by the then Raja of Sangli sometime in November, 1940, to clarify the position and the status of the said Sansthan and the managing trustee vis-a-vis the State. The objects of the trust have been mentioned in section 4 of the Sangli Ganapati Panchayatan Sansthan Act (Act NO.XVIII of 1940) (hereinafter referred to as "the Act"). The objects include "the worship of the god Shri Ganapati and associated deities together called the Ganapati Panchayatan which worship includes the performance of all festivals and ceremonials traditionally performed and for the maintenance, upkeep, repairs and expansion of the temple buildings and the premises for the dissemination of religious, philosophic and spiritual knowledge and for such other charities of a religious nature as the managing trustee may, in his discretion, deem fit."
That Act was amended in the year 1947. When the Bombay Public Trusts Act, 1950, was enacted, an effort was made by an application made by some persons to declare the trust as a public charitable trust. The Assistant Charity Commissioner conducted a suo motu enquiry under section 19 of the Bombay Public Trusts Act, 1950, and came to the conclusion that the institution called "Stn Ganapati Panchayatan Sansthan" is partly a public trust and partly a private trust, and its objects were to maintain the family deity of the Ruler and to disseminate religious, philosophic and spiritual knowledge. An appeal was brought before the Charity Commissioner, Bombay, against this decision of the Assistant Charity Commissioner. During the course of this appeal, the managing trustee agreed that he was willing to set apart some land, the income whereof would be Rs.1,200 per year, to be spent on one of the objects of the trust, namely; dissemination of religious, philosophic and spiritual knowledge and to create a separate trust known as "Dissemination of religious, philosophic and spiritual knowledge fund Trust", which was to be registered as a public trust. The Charity Commissioner permitted the managing trustee to create a separate public trust of the above description and recognised the original trust, namely, "Shree Ganapati Panchayatan Sansthan" as a private religious trust. As a result of this recognition, there came into existence two trusts, one in the name of "Shri Ganapati Panchayatan Sansthan" and the other in the name of "Dissemination of religious, philosophic and spiritual knowledge fund Trust", the first being a private religious trust and the second being a public trust.
We are concerned herein with the private trust in the name of "Shree Ganapati Panchayatan Sansthan". The objects of this trust as per section 4 of the Act, as amended from time to time, and as applicable to the assessment years 1965-66 to 1969-70 can be stated as follows:
"For the worship of the god Shree Ganapati and associate deities together called the Ganapati Panchayatan which worship includes the performance of all festivals and ceremonials traditionally performed, and for the maintenance, upkeep, repairs and expansion of the temple buildings and for such other charities of a religious nature as the managing trustee may, in his discretion, deem fit."
As per section 5 of the Act, the Ruler of the Sangli State for the time being in his personal and private capacity as the descendant of the founder of the trust is the sole managing trustee of the trust. As per section 6 of the Act, the property of the Sansthan vests in the managing trustee for the purposes of the trust.
In the wealth tax assessments of the trust for the assessment years 1965-66 to 1968-69, the assessee claimed exemption in respect of its entire wealth in Part IV of the return with the following remarks:
"It is submitted that the assets belonging to the deities are held for religious purposes and are not taxable under any of the provisions of the Wealth Tax Act. They are also otherwise exempt. However, the particulars of the assets are detailed in the balance-sheet, a copy of which is enclosed and also vide letter."
The Wealth Tax Officer completed the assessments under section 21(4) holding that the assessee trust was a private discretionary trust and the shares of the deities, i.e., the beneficiaries of the trust, were indeterminate and unknown. The Appellate Assistant Commissioner upheld the order of the Wealth Tax Officer. The Tribunal agreed with the departmental authorities in that the shares of the beneficiaries, i.e., the five deities, were indeterminate and unknown and that the wealth of the trust was assessable in the hands of the trustee under section 21(4) of the Wealth Tax Act, 1957. The Accountant Member, in his concurring but separate judgment, also stated that amongst the objects of the trust, one object was "and for such other charities of a religious nature as the managing trustee may in his discretion, deem fit". This object was independent of the earlier objects. The trustee has full discretion to spend any amount on this object and the act of spending any amount on this object was likely to result in variation of the shares of the five deities even assuming that their shares were equal. This he gave as an additional reason for holding that the shares of the beneficiaries, in this case, deities, were unknown and indeterminate and, therefore, the assessment was justified under section 21(4) of the Wealth Tax Act.
Shri Dastur, learned counsel for the assessee, has taken us through the Patna High Court decision in the case of Sri Sri Jyotishwari Kalimata v. CIT (1946) 14 ITR 703, the Calcutta High Court decisions in the cases of CIT v. Pulin Behari Dey (1951) 20 ITR 314, CIT v. Smt. Ashalata Devi (1951) 20 ITR 326 and CIT v. Bhim Chandra Ghosh (1956) 30 ITR 46, and our High Court decision in the case of CED v. Bai Suntokbai Damodar Govindji (1981) 132 ITR 223, for the proposition that where a gift or bequest was to certain persons natural or juridical and their shares were not mentioned, their shares would have to be taken as equal under the ordinary law of the land. According to him, these cases also are an authority for the proposition that in case some discretion was vested in the trustee to spend a part of the income on other charitable objects, that fact by itself will not mean that the shares of the beneficiaries which are otherwise determinate and known will become indeterminate and/or unknown on account thereof. He submitted that the Tribunal failed to appreciate these decisions which were squarely applicable in the facts of the case. As regards the Calcutta High Court decision in the case of Panchanan Das v. CIT (1951) 20 ITR 57, the Allahabad High Court decision in the case of Chintamani Ghosh Trust v. CWT (1971) 80 ITR 331, and our High Court decision in the case of CIT v. Lady Ratanbai Mathuradas (1968) 67 ITR 504, he stated that the cases were distinguishable and, on facts, not applicable. He then invited our attention to the recent decisions of the Calcutta High Court in the cases of CIT v. Official Trustee of West Bengal (1983) 139 ITR 1 and CIT v. Sri Sri Sridhar Jew (1990) 184 ITR 323, where the Calcutta High Court, following its earlier decisions and the Patna High Court decision in Sri Sri Jyotishwari Kalimata v. CIT (1946) 14 ITR 703, was stated to have taken the same view. As to the question whether the fact that, in this case, the properties were vested in the trustees and not in the beneficiaries will make any difference, Shri Dastur stated that that fact by itself would not make any difference. In this context, he referred to the observation of the Judicial Member of the Tribunal at page 63 of the paper book to the effect:
"It is not necessary to pursue this topic further. Section 21 of the Wealth Tax Act does not make any distinction as to whether the properties are vested in the trustee or in the beneficiaries thereof."
He also stated that both in the Patna High Court decision in Sri Sri Jyotishwari Kalimata v. CIT (1946) 14 ITR 703 and the Calcutta High Court decision in CIT v. Pulin Behari Dey (1951) 20 ITR 314, the properties were vested in the trustees and not in the beneficiaries and yet it was held that the shares of the beneficiaries, even though not specifically mentioned in the deed of trust, were taken to be equal.
As to another question whether the fact that the deities herein are not made specifically owners of the corpus will make any difference, Shri Dastur referred to the observations of the Allahabad High Court in Chintamani Ghosh Trust v. CWT (1971) 80 ITR 331, at page 342, where it was observed that:
"Section 21(1) of the Act does not lay down that in order that the trustees might be assessable `in the like manner and to the same extent' as the beneficiaries, the latter must have a definite share in the corpus of the trust property. The trustees being the legal heirs, the trust property vests in them, and the beneficiaries cannot have any share therein."
Thus, the sum and substance of Shri Dastur's argument is that the shares of the deities will have to be taken as equal. The so-called residuary clause is not an independent clause. It contemplates charities of a religious nature only. If the charities were of a nature other than religious, the Charity Commissioner would have perhaps taken out that part also like the other part from the purview of the private trust and made that also a part of the public charitable trust.
Shri Jetley, learned counsel for the Department, on the other hand, strongly relied on the order of the Tribunal. He reiterated that the decisions relied upon by Shri Dastur in - support of his contention were rightly distinguished by the Tribunal and that, following the Calcutta High Court decision in Panchanan Das v. CIT (1951) 20 ITR 57, the Allahabad High Court decision in Chintamani Ghosh Trust v. CWT (1971) 80 ITR 331 and our High Court decision in CIT v. Lady Ratanbai Mathuradas (1968) 67 ITR 504, the Tribunal had correctly held that the shares of the beneficiaries herein were indeterminate and unknown, and, therefore, the assessments were rightly made under section 21(4) of the Wealth Tax Act, 1957.
In order to appreciate the rival contentions, it is desirable to refer to the decisions relied upon by learned counsel on both sides somewhat in detail. The Patna High Court in Sri Sri Jyotishwari Kalimata v. CIT (1946) 14 ITR 703, has admittedly held that where the shares of the deities were not specified in the deed of trust, they took the shares equally. In that case, by two deeds of trust, Maharajadhiraja of Panchkote had created a trust in favour of his family deities shown in three groups. In two groups, there were three deities each whereas in the third group there were, four deities. Certain properties were, of course, made over to the trust for the benefit of these three groups of deities. The first question for consideration was whether on the fact that the individual share of the three deities in two cases and of the four deities in another case were not specified in the deeds of trust, it could he said that their shares were indeterminate and unknown. Following the Privy Council judgment in the case of Jogeswar Narain Deo v. Ram Chandra Dutt (1896) LR 23 IA. 37, the Patna High Court held that it was not so. The shares of the individual deities will have to be taken as determinate and known as, under the general law, when the shares were not specified, the beneficiaries take their shares equally. Under the trust, the trustee, it may be stated, was given full discretion as to the manner and extent in which he should spend the whole or part of the income of a particular year. It was only the balance of the income remaining after meeting the expenses that was to be held by the trustee in trust for the use or the benefit of the deities, and yet it was held that this clause did not snake any difference and the shares of the individual deities continued to be known and determinate and that the assessment made under the proviso to section 41(1) of the Indian Income-tax Act, 1922, was not justified.
The facts in the Calcutta High Court decision in CIT v. Pulin Behari Dey (1951) 20 ITR 314, were that a Hindu executed a deed of trust and transferred certain properties to the trustees for the maintenance and the worship of two deities and for the performance of certain Poojas. Subsequently, his wife also made a will by which she dedicated all her immovable property to and for the worship of the two deities and for certain other charitable purposes which were set out in the will. After applying the income for those objects, the executors were to spend the remainder of the income for the worship of the two deities. The question arose whether the shares of the two deities were determinate and known though they were not specified in the deed of trust and whether the fact that, under the will of the settlor's wife, the income was to be spent for certain other charitable purposes will make any difference to the situation. Following the aforesaid Patna High Court decision in Sri Sri Jyotishwari Kalimata v. CIT (1946) 14 ITR 703, the Calcutta High Court also held that the shares of the individual deities have to be taken as known and determinate and the fact that a part of the income was to be spent on other charitable purposes was not going to make any difference.
In CIT v. Ashalata Devi (1951) 20 ITR 326, the Calcutta High Court reiterated the view taken by it in. CIT v. Pulin Behari Dey (1951) 20 ITR 314. It held that when there is a gift or bequest to two deities without any specification of shares, the deities are equally entitled to both the corpus and the income of the properties and should be treated as such. It may not be out of place to mention here that Shri Jetley has pointed out that, as regards the discretion given to the Shebaits to spend the amounts for charities as a result of which the income which would be available for the deities was variable and indeterminate, the Calcutta High Court had held that it was not open to the Commissioner to urge that point before it. This submission is, in our view, misconceived. It is true that the Calcutta High Court said so in that case. However, the Court did not stop by merely making those observations. It decided the question on the merits as is evident from further observations, namely, it was further held that inasmuch as the assessment had been made on the whole of the income of the deities, it was immaterial that the deities, through the Shebaits, had to make payments to other persons and the amount which might be available to the deities was variable or indeterminate. It was equally immaterial that the Shebaits, as managers of the deities, received the income but had to make payments to or to provide for a large and somewhat indefinite group of persons and charities. Thus, it is not possible to accept Shri Jetley's argument that the Calcutta High Court in CIT v. Ashalata Devi (1951) 20 ITR 326, in any way, took a view different from what it had taken in CIT v. Pulin Behari Dey (1951) 20 ITR 314. CIT v. Bhim Chandra Ghosh (1956) 30 ITR 46, is also a Calcutta decision. The High Court in that case, applied its decision in CIT v. Pulin Behari Dey (1951) 20 ITR 314 and distinguished its decision in Panchanan Das v. CIT (1951) 20 ITR 57. Since the Tribunal as well as Shri Jetley had strongly relied on the Calcutta High Court decision in Panchanan Das v. CIT (1951) 20 ITR 57, it is desirable to refer to the facts in Panchanan Das v. CIT (1951) 20 ITR 57 and the manner in which that case was distinguished by the Calcutta High Court in its later decision in CIT v. Bhim Chandra Ghosh (1956) 30 ITR 46. In Panchanan Das v. CIT (1951) 20 ITR 57, the deed provided that, if the income was Rs.2,000, a sum of Rs.1,200, Rs.600 and Rs.200 were to be spent for the deities on the Durga Puja, Dolo Lila Param Pravu Festival and Lakshmi Puja, respectively in whose favour the trust was created. Though these amounts were to increase or decrease proportionately depending upon the quantum of income of each year, the trustee was given discretion to vary the amount to be spent on each of the three festivals for the deities in the manner he considered appropriate. It was because of this discretion that the Calcutta High Court held in Panchanan Das v. CIT (1951) 20 ITR 57 that the shares of the beneficiaries, i.e., deities, were not known or determinate. Referring to these facts at page 52 of 30 ITR, the Calcutta High Court distinguished the decision in Panchanan Das v. CIT (1951) 20 ITR 57, observing that there was a provision in the Arpannama that the Shebait, for the time being, shall be able to make modifications and alterations of the amounts specified in the document for expenditure on different items according to his discretion and according to the times. Thus, Panchanan Das v. CIT (1951) 20 1TR 57 is certainly distinguishable from the facts in the present case.
The Madras High Court had also an occasion to consider a similar issue in the case of CWT v. Trustees of the Estate of V.R. Chetty and Brothers (1979) 120 ITR 329. That was a wealth-tax case. In that case, a trust was created for the benefit and use of the settlor's two minor sons then existing and other sons that might be born to him thereafter till the eldest son completed 21 years of age. Three more sons were born to the settlor in the meantime. After the eldest son attained majority, on an application by the five sons, the High Court discharged the official trustee who was appointed under the trust deed and appointed the three major sons as trustees and also appointed the eldest son as the guardian of the two minors. The Madras High Court took the same view, namely, that as the settlor had five sons, all of them became entitled to the estate, the rule of construction being where the share of each beneficiary is not specified, each one of them takes equally in the absence of any indication to the contrary.
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The Allahabad High Court decision in Chintamani Ghosh Trust v. CWT (1971) 80 ITR 331 was strongly relied upon by Shri Jetley for the Department. In that case, 15 per cent. of the net income of the trust was required to be invested and added to the trust properties. The other 15 percent of the net income was to be devoted to the worship of the family deity and wages of the servants employed and for the maintenance of a charitable homeopathic dispensary and a fund for .the maintenance of widows, orphans and students, etc. and 10 per cent. of the income was to be devoted to the granting of allowances to relatives and dependants of the settlor. Remaining 60 percent was to be given to Sebayets, As regards the 15 per cent. of the income which was devoted to the family deity, for the maintenance of a charitable? homeopathic dispensary and a fund for the maintenance of widows, sons, students and orphans, etc., the High Court held and rightly that the shares of the beneficiaries for that 15 per cent. of income were indeterminate and unknown. The reason is obvious. A charitable homeopathic dispensary and a fund for the maintenance of widows and orphans, etc. two of the three beneficiaries, were neither natural nor juridical persons. Referring to the facts in the present case; namely, that besides five deities in section 4 of the Act, there was one more beneficiary, namely, "and for such other charities of a religious nature as the managing trustee may, in his discretion, deem fit", Shri Jetley had argued that, on the basis of the aforesaid Allahabad High Court decision, it must be held that the shares of the. beneficiaries in the present case were also indeterminate and unknown. We are afraid that this argument advanced on behalf of the Revenue is also without much substance. The decisions referred to by us earlier are all decisions in which the beneficiaries were natural or juridical persons and not persons and causes. In the Allahabad case, besides the deity, the other two beneficiaries were causes such as for maintenance of a homoeopathic dispensary and the other fund for the maintenance of widows, orphans, etc. Had we agreed with Shri Jetley that, in the present case, as the trust was not in favour of five deities only but in favour of five deities and one more cause as contended, we might have accepted his submission: "On going through the preamble and sections 4 and 6 of the Act, however, we find that the conclusion that the trust was for the benefit of five deities is irresistible. For this purpose, it may be relevant to note that the preamble says that it is "an Act to provide for the management of the Shree Ganapati Panchayatan Sansthan at Sangli". It also says that it is a private crust for the maintenance and upkeep of the deity called "Shri Ganapati Panchayatan Sansthan". No doubt, section 4 refers to the five deities as also the object "and for such other charities of a religious nature as the managing trustee may, in his discretion, deem fit", etc. However, section 6 makes it abundantly clear that the property which was made over to the managing trustee and which might be acquired for the trust or may be dedicated to the deity shall vest in the managing trustee. The expression in section 6 "omit may be dedicated to the deity", is very important. The intention is very clear in that the dedication of the trust properties is in favour of the deities alone. The so-called other object is not an independent object. It is subservient to the main object, i.e., the worship and upkeep of the deities.
That apart, though the Allahabad High Court has held that the shares of the beneficiaries in the 15 percent of the income which was devoted to the family deity and for the maintenance of a homoeopathic dispensary and for a fund for the maintenance of widows, orphans and students; etc., were indeterminate, and unknown, there appears to be no discussion or debate about it in the decision. It was not even argued or considered whether, in a case like this, the beneficiaries could be treated to have their shares in the income equally. The Allahabad case, thus, does not advance the Department's case further.
Coming then to our High Court decision in CIT v. Lady Ratanbai Mathuradas (1968) 67 ITR 504, it is seen that our High Court held that the shares of the beneficiaries were indeterminate and unknown since the trustees had, during the period in question, absolute discretion to accumulate the income or use it for the benefit of any one or more of the children of P to the exclusion of others. It was further held that the trustees should be assessed at the maximum rate under the proviso to section 41 of the Income-tax Act. Since however, the facts in the present case are materially different from the facts before our High Court in CIT v. Lady Ratanbai Mathuradas (1968) 67 ITR 504, we do not agree with Shri Jetley that this decision supports the Department's case.
Having regard to the above discussion, we are inclined to agree with Shri Dastur that the trust is for the benefit of the five deities comprising Ganapati Panchayatan and the other object mentioned in section 4 of the Act is not an independent object. In any event, that object is not a beneficiary as such. Though the shares of the five deities are not specified in the deed of the trust, on the basis of general law referred to and relied upon in the decisions cited before us, it has to be taken that their shares are equal. In that view of the matter, we further hold that the shares of the deities are determinate and known and, therefore, the assessment could not legally be made under section 21(4) of the Wealth Tax Act.
Accordingly, we answer the question referred to us in the affirmative and in favour of the assessee.
No order as to costs.???
M.B.A./2008/T ?????????????????????????????????????????????????????????????????????????????????? Question answered.