ION Civil Appeal No 140 of 1977
From the Judgment and Decree dated 311
1973 of the Madras High Court in LPA No 6 of 1965
ATM Sampat and PN Ramalingam for the Appellants
Ms Lily Thomas for the Respondents
The facts leading to the institution of the suit are as follows On 3 239 March 1942 one Karuppanna Pillai hereinafter referred to as testator executed his last Will and testament Ext
Thereunder he disposed of all his properties described in five schedules A B C D and E He directed that the properties under A B and
C schedules shall be respectively taken and be in the possession of the defendant the first plaintiff and the second plaintiff
In respect of E schedule properties he has made a bequest creating an endowment that after his life time it should be managed for the purpose and in the manner mentioned therein
The dispute in the suit was as to the validity of the endowment
One Palaniammal and Chellammal are the sisters of the plaintiffs and the defend ant
The testator created a life estate in favour of those sisters in respect of D schedule properties with a direction that after their lifetime the properties shall be dealt with in the same manner as the E schedule properties
We are not concerned in the present litigation with any of the proper ties in schedules A to D
We are concerned only with the validity of the disposition of E schedule properties
The Will is in Tamil but we are helpfully provided with the English translation of the relevant portion
It is also found incorporated in the judgment of the District Judge
It runs as follows After my lifetime the aforesaid three persons Ponnuswami Pillai Malayalam Pillai and Thangavelu Pillai shall take and manage the E schedule properties from out of the income from the said properties pay the kist for the aforesaid E schedule properties and out of the balance of income for the salvation of my soul after my lifetime shall enter mY body after my life is extinct in the land SF No 68B Punjai Thottakurichi Village pertaining to the aforesaid E schedule build structure therefore and put up light every day shall plant flower plants in the said land and grow them shall construct a Matam for annual ceremonies install pictures therein put up light in the Matam every day conduct Guru Pooja distribute saffron coloured clothes and on that day shall feed the poor
Since the aforesaid Pon nuswami Pillai is the eldest of the sons he shall be the Manager to conduct the above matters
The surplus income shall be taken in the shares of 24 by Ponnuswami Pillai 14 by Malayalam Pillai and 14 by Thangavelu Pillai
After the said Ponnuswami Pillai s life out of his make heirs the eldest son shall conduct in the same manner as above and the surplus income shall be taken by the said eldest son
 240 There then follows a residuary clause which is as under The movable and immovable properties belonging to me and not mentioned herein shall be taken and enjoyed by the aforesaid three persons after my lifetime The plaintiff s case has been that the testator could not have created on endowment of properties for construction of his own tomb or Samadhi and for performing Pooja and ceremonies thereat
Since the testator has bequeathed E schedule properties for Samadhi Kainkaryam the trust would be invalid and the said properties should be shared by the plaintiffs and defendant under the residuary clause in the Will as if they remain undisposed of by the testator
The suit is also for account from the defendant regarding the income of the E schedule properties
The defendant has resisted the suit and sought to justi fy the creation of the trust and its purposes
It was con tended inter alia that the Matam and the Samadhi were constructed for different purposes
They are separated by a respectable distance
At the Samadhi there is no perform ance of pooja
It is only at the Matam the ceremonies and Guru Pooja are performed with feeding the poor and distribu tion of saffron clothes
These acts are distinctly and substantially religious and charitable purposes
It was also contended that the plaintiffs in any event are not entitled to claim partition and separate possession of the Schedule properties
At the trial learned Subordinate Judge accepted the plaintiff s case declaring that the dedication of the E Schedule property for purposes enumerated under the Will was invalid and accordingly he decreed the suit as prayed for
In appeal the District Judge took a different view
He held that the purposes for which the E Schedule properties have been dedicated were charitable or religious in nature
He dismissed the suit but gave certain directions to the de fendant for rendition of accounts of the surplus income from the properties which the defendant as a manager is obliged to do
In second appeal to the High Court the learned single Judge expressed the view that the Trust in respect of the properties for construction of the Samadhi with raising flower garden and lighting up would not be valid as it is not recognised under the Hindu Law
That part of E Schedule properties referable to the Samadhi and its maintenance should remain as the property undisposed of by the Will
241 Neither the plaintiffs nor the defendants will be entitled to it under the terms of the Will
He however held that the endowment and directions as to application of the property for construction of the Matam and performance of ceremonies and pooja would be valid since they are religious and char itable in nature
He dismissed the suit for partition while at the same time affirmed the decree for accounting the surplus income from the properties referable to the Matam and charities
In the Letters Patent Appeal the Division Bench has disagreed with the views expressed by learned Single Judge
It has been observed that the Matam is close to the Samadhi and the former has been built for the purpose of providing a convenient place for the purpose of offering worship and performing ceremonies connected with the Samadhi and Matam are covered by one scheme and therefore the entire trust must fail
In support of the conclusion the Division Bench largely relied upon the decision of the Privy Council in N Subramania Pillai vs A Draviyasundaratn Pillai AIR 1950 PC 37
In the Privy Council case referred above the testator by name Kanakasabhapathy  in his Will constituted a Trust of his properties with certain directions as to its applica tion
He directed that his body should be buried in a Sa madhi and at the same place where the Samadhi is made a Matam should be built with a stone inscription in the front portion of the Matam as Kanakesabhapathi Samadhi Matam 
He also directed that regular worship should be conducted with Guru Pooja and poor feeding
Construing the terms of the Will the Privy Council observed that the directions given by the testator were embodied in a single scheme and they were primarily intended to keep his memory alive and to enhance his own posthumous reputation
Feeding the poor was to be conducted during the daily pooja to be performed in connection with the burial place and it did not provide for any charity apart from the ceremonies to be conducted at his own burial place and therefore the trust must fail
In Hindu system there is no life of demarcation between religion and charity
On the other hand Charity is regarded as a part of religion
Hindu Law of Religious  Charitable Trusts by BK Mukherjea 5th Ed
p 11
But what are purely religious purposes and what religious purposes will be charitable must be entirely decided according to Hindu Law and Hindu notions
 Mayne s Hindu Law 10th Ed
p 9 12
242 The perpetual dedication of property for construction of a Samadhi or a tomb over the mortal remains of an ordinary person and the making of provisions for its maintenance and for performing ceremonies in connection thereto however has not been recognised as charitable or religious purpose among the Hindus
But the Samadhi of a Saint stands on a different footing
This was the consistent view taken by the Madras High Court in several cases namely Kunhamutty vs T Ahmad Musaliar  Ors ILR 1953 Mad 29 A Draivaisundram Pillai vs N Subramania Pillai ILR 1954 Mad 854 Veluswami Goundan vs Dandapani 1946 Mad
This Court in Saraswati Ammal vs Rajagopl Ammal  has approved those decisions of the Madras High Court
Jagannatha Das J who spoke for the Court said at 289 We see no reason to think that the Madras decisions are erroneous in holding that perpetual dedication of property for worship at a tomb is not valid amongst Hindus
 The view taken in Saraswati Ammal case has been reiter ated in Nagu Reddiar  Ors
vs Banu Reddiar  Ors  where Kailasam J observed at 600 The raising of a tomb over the remains of an ancestor an ordinary person is not recognised as religious in nature
The burden is on the person setting up a case of religious practice in the community to prove it
This prohibition may not apply when an ancestor is cremated and a memorial raised for performing Shradha ceremonies and conducting periodical worship for this practice may not offend the Hindu senti ment which does not ordinarily recognise entombing the remains of the dead
 We are therefore inclined to hold that the provision made by the testator for construction of a Samadhi over his burial place and for its maintenance cannot be regarded as valid
But that however does not mean that the entire dedica tion of E Schedule properties must fail
It is one of the cardinal principles of construction of Wilts that wherever it is possible effect should be given to every bequest of the testator unless it is opposed to law custom or prac tice
If the testator has set apart the property intended for endowment and disclosed his charitable intent in any one of his directions such direction may be extricated leaving aside the directions which are repugnant to the recognised notions of Hindu religion 243 or Hindu Law
Attempt should be made to give effect to the provisions made for recognised charitable purposes even though the entire scheme of the testator cannot be saved
In the instant case the E Schedule has been endowed for con struction of a Samadhi and Matam and for performing reli gious rites and charitable acts
The Samadhi and Matam are constructed in the same survey number but are independent of each other separated by a distance of about 15 feet
Per formance of annual ceremonies conducting Guru Pooja feed ing the poor and distribution of saffron coloured clothes to mendicants appear to be independent and have no connection with the Samadhi
There is no indication in the Will that Guru Pooja should be performed to the testator
In fact he has not even indicated that his photo should be kept in the Matam
His directions are only to install pictures at the Matam put up light every day in the Matam and perform Guru Pooja once a year with the other charities
These provisions in the Will are not in close parallel with and indeed far removed from those obtained in the Privy Council decision in Subramania Pillai s case
The Division Bench of the High Court was therefore in error in relying upon that decision to invalidate the entire endowment
Counsel for the plaintiffs nevertheless argued that the defendant has been performing Guru Pooja only to the testa tor and not for the deity
He referred to us Ext
A 5 to A 9 which are the invitations sent by the defendant for the annual ceremonies and Guru Pooja to be performed to the testator
But in construing the validity of an endowment created under a Will we cannot be guided merely by the acts of the manager or the manner in which the executor of the Will has understood the directions of the testator
We are required to examine the dominant intention of the testator and that could be ascertained only by the terms of the Will
The terms of the Will in this case clearly specify the religious or charitable purposes
The defendant Ponnuswami Pillai DW 1 in his cross examination has also explained that there was a mistake in the writing of Ext
A 5 to A 9 for which he was not responsible
He has testified that he performed really the annual ceremonies on the date of death of the testator and no pooja was performed at Samadhi
The Poojas are performed only at Matam with Guru Pooja to Lord Subramania on Thai Poosam  every year
He has further stated that the annual ceremonies of the testator fall on Margali Mrisaseerusham Nakshatram and Guru Pooja is not performed on that day
It is undisputed that the testator died on Margali Mrigaseerusham Nakshatram
Ramaswamy Goundar DW 2 has also deposed 244 that no Guru Pooja was performed on the date of death of the testator and it was performed only to Lord Subramania in Thai month every year
He used to participate in the Guru Pooja every year alongwith the other villagers
The evidence of Marudamuthu Pillai DW 3 also supports these versions
We have no reason to disbelieve the testimony of the defendant and his witnesses
Even the evidence from the plaintiff indicates that the Matam is called Madam of Sri Subramanya Swami 
B 2 is a printed marriage invitation of the plaintiff PW 1 in which it has been expressly stated that the plaintiff s marriage will be performed at our Madam Sri Subramaniaswami Sannadhi built by our grandfa ther Karuppanna Pillai  Ext
A 11 also refers to the Matam as Subramaniaswami Sannadhi
A 2 is the Commis sioner s Report
The Commissioner has stated that there are pictures of Gods in the Matam
There is pooja room
Lord Subramania s picture is also in the pooja room
The deity of Sri Vinayagar in granite has been installed at a special place with material to indicate that pooja is also being performed to Sri Vinayagar
It is true that the directions of the testator are in general terms and there is no particular mention in the Will as to whom Guru Pooja is required to be performed since no particular deity is named in the Will
But trust cannot be rendered invalid on that ground
It is for the Court to ascertain the presumed intention of the testator and give effect to it
As observed by Patanjali Shastri J as he then was in Veluswami Goundan s case where no deity is named in the deed of endowment the court should ascertain the sect to which the donor belonged the tenets which he held the doctrines to which he was attached and the deity to which he was devoted and by such means the presumed intention of the testator as to the application of the property should be ascertained
We agree that these are the safe guides
If we peruse the various terms in the Will and the provisions made for offerings it will be clear that the testator was a great devotee of Lord Subramaniaswami
He has made provisions to perform annual pooja to Lord Subramanias wami and Sri Vinayagar in the different temples out of the income from A to C Schedules
The Matam also goes by the name of Subramanya
The evidence of DW 1 to DW 2 further indicates that Guru Pooja is being performed to Lord Subra manya followed by poor feeding and distribution of saffron coloured clothes
The endowment with regard to these pur poses must therefore be upheld
245 The permanent dedication of properties for performance of annual ceremonies of the testator is equally valid
Whether one terms it as annual Shradha or anniversary it is certainly a religious rite and it is not uncommon among the Hindu testators to make provisions in their Wills for cele bration or performance of such anniversaries of themselves or their ancestors
We are therefore unable to agree with the decision of the Division Bench of the High Court
We are on the other hand in agreement with the views expressed by learned Single Judge
In the result the appeal is allowed
In reversal of the judgment of the Division Bench the judgment and decree of the learned Single Judge are restored
The respondents must pay the costs of this appeal to the appellants
TNA Appeal al lowed


Summary:
The appellant who was a firm acting as managing agents of a limited company the Mills purchased four plots of land adjoining the Mills on various dates between 1941 and 1942 and about five years later sold them to the Mills as a result
of which the appellant realised a sum of Rs 43887 in excess of the purchase price For the assessment year
1948 49 the Income tax Officer treated the amount as the income
of the appellant and assessed it to income tax under head business  on the ground that there was no evidence to show that the appellant had purchased the said lands for agricultural purposes or that they were acquired as an investment and that since the lands were adjacent to the Mills the appellant must have purchased them solely with a view to sell them to the Mills with
profit He considered that the transaction  had ill the elements of a business transaction  and was thus an adventure in the natural of trade within section 24of the Indian Income tax Act 7 The Appellate Tribunal rejected the explanation given by the appellate regarding the object with which it had purchased the plots of land agreed 641 with the view taken by the Income tax Officer
At the instance of the appellant the Tribunal referred to the High Court the question  whether there was material for the assessment of the sum of
Rs 43 87 being the difference between the purchase and sale price of the four plots of land as income from all adventure in the nature of trade
The High Court held that  the transaction in question was an adventure in the nature of trade and so the income tax authorities were justified in taxing the amount under the head business  for the relevant year
On appeal by special leave to the Supreme Court it was contend ed for the appellant that on the facts and circumstances of the case it was erroneous in law to hold that the transaction ill question was an adventure in the nature of trade
On the other hand it was urged for the respondent that the question as raised before the High Court was one of fact not liable to be challenged under section 661 of the Act
Held 1 that the expression  adventure in the nature of trade  in sub section
4 Of section 2 of the Indian Income tax Act 1922 postulates the existence of certain elements in the adventure which in law would invest it with the character of trade or business and that a tribunal while considering a question as to whether a transaction is or is not an adventure in the nature of trade before arriving at its final conclusion on facts has to address itself to the legal requirements associated with the concept of trade or business
Such a question is one of mixed law and fact and the decision of the tribunal thereon is open to consideration under section 661 of the Act
Meenakshi Mills Madurai vs Commissioner of Income tax Madras  and Oriental Investment Co Ltd vs Commissioner of Income tax Bombay   relied on
Edwards vs Bairstow   considered and held not inconsistent with the above said decisions
2 that in the circumstances of this case it would be more appropriate to frame the question in this from  whether on the facts and circumstances proved in the case the inference that the transaction in question is an adventure in the nature of trade is in law justified
 Held further that even an isolated transaction might be regarded as an adventure in the nature of trade within section 24 Of the Act if it is characterised by some of the essential features that make up trade or business
Though judicial decisions which deal with the character of transactions alleged to be in the nature of trade do not purport to lay down any general or universal test the presence of all the relevant circumstances mentioned by them my help the court to draw a similar inference but it is not a matter of merely counting the number of facts and circumstances pro and con it is the total effect of all the relevant factors and circumstances that determine the distinctive character of the transactions 648 If a person invests money in land intending to hold it enjoys its income for some time and then sells it at a profitthen it is a case of capital accretion and not profit derived from an adventure in the nature of trade
But where a purchase has been made solely and exclusively with the intention to resell at a profit and the purchaser had no intention of holding the property for himself or otherwise enjoying or using it there would be a strong presumption that the transaction is an adventure in the nature of trade but this may be rebutted by the other facts or circumstances of the case
The Californian Copper Syndicate Limited and Reduced vs Harris Surveyor of Taxes  T Beynon lnland Revenue vs Livingston  Martin vs Lowry  Rutledge vs Commissioners of Inland Revenue  Balgownie Land Trust Ltd vs The Commissioners of Inland Revenue  F A Lindsay A E Woodward and W Hiscox vs Commissioners of Inland Revenue and Cayzer Irvine and Co Ltd vs Commissioners of Inland Revenue  considered
Commissioners of Inland Revenue vs Reinhold  distinguished and considered as not laying down any general proposition of law
In the present case the circumstances showed that the appellant whose ordinary business was not to make investment in lands had purchased the plots of land with the sole intention of selling them to the Mills at a profit and this intention raised a strong presumption that the purchase and the subsequent sale were an adventure in the nature of trade and it was held that in the absence of any rebutting evidence the Income tax authorities were justified in taxing the amount in question as income from business