Appeal No 236 of 1955
Appeal from the judgment and order dated August 3 1953 of the Punjab High Court in Civil Reference No 71952
M C Setalvad Attorney General for India K N Rajagopal Sastri and D Gupta for the appellant
N C Chatterjee and section K Sekhri for the respondent
July 27
The Judgment of the Court was delivered by 76 section K DAS J
This is an appeal on a certificate of fitness granted under the provisions of sub section 2 of section 66A of the Indian Income tax Act 1922 by the High Court of Judicature for the State of Punjab then sitting at Simla
The certificate is dated December 28 1953 and was granted on an application made by the Commissioner of Income tax Punjab appellant herein The relevant facts are shortly stated below
For the assesment year 1946 47 one Pandit Thakurdas Bhargava an advocate of Hissar and respondent before us was assessed to income tax on a total assessable income of Rs 58475 in the account year 1945 46
This sum included the amount of Rs 32500stated to have been received by the respondent in July 1945 for defending the accused persons in a case known as the Farrukbnagar case
The assessee claimed that the said amount of Rs 32500 was not a part of his professional income because the amount was given to him in trust for charity
This claim of the assessee was not accepted by the Income tax Officer nor by the Appellate Assistant Commissioner who heard the appeal from the order of the Income tax Officer
Both these officers held that the assessee had received the amount of Rs 32500 as his professional income and the trust which the assessee later created by a deed of Trust dated August 6 1945 did not change the nature or character of the receipt as professional income of the assessee they further held that the persons who paid the money to the assessee did not create any trust nor impose any obligation in the nature of a trust binding on the assessee and in fact and law the trust was created by the assessee himself out of his professional income  therefore the amount attracted tax as soon as it was received by the assessee as his professional income and its future destination or application was irrelevant for taxing purposes
From the order of the Appellate Assistant Commissioner a further appeal was carried to the Income tax Appellate Tribunal Delhi Branch
We shall presently state the facts which the Tribunal found but its conclusion drawn from the facts found was expressed in the following wordsThe income in this case did not at 77 any stage arise to the assessee
Keeping in mind the express stipulation made by the assessee when he accepted the brief there was a voluntary trust created which had to be and was subsequently reduced into writing after the money was subscribed
The payments received from the accused and other persons were received on behalf of the trust and not by the assessee in his capacity as an individual
In this view we delete the sum of Rs 32500 from the assessment
 The appellant then moved the Tribunal for stating a case to the High Court on the question of law which arose out of the order of the Tribunal
The Tribunal was of the opinion that a question of law did arise out of its order and this question it formulated in the following terms  Whether the sum of Rs 32500 received by the assessee in the circumstances set out in the trust deed later executed by him on August 6 1945 was his professional income taxable in his hands or was it money received by him on behalf of a trust and not in his capacity as an individual
 It appears that in stating a case the Tribunal framed an additional question as to whether the trust was created at or before the payment of Rs 32500  but expressed the view that this additional question was implicit in the principal question formulated by it
A case was accordingly stated to the High Court under section 66 of the Indian Income tax Act and the High Court by its judgment dated August 3 1953 answered the question in favour of the assessee hold ing that  the sum of Rs 32500 received by the assessee was not received by him as his professional income but was received on behalf of the trust and not in his capacity as an individual 
The appellant then moved the High Court and obtained the certificate of fitness referred to earlier in this judment
We shall presently state the facts found by the Tribunal in connection with the receipt of the sum of Rs 32500 by the assessee from which the Tribunal drew its inference
But the question as framed by the Tribunal and answered by the High Court was 78 whether in the circumstances set out in the trust deed dated August 6 1945 the amount of Rs 32500received by the assessee was professional income in his hand
It is therefore appropriate to refer first to the recitals in the trust deed
The respondent stated in the trust deed that he had decreased his legal practice for the last few years and had reserved his professional income accruing after June 1944 for payment of taxes and charity
He then said  accordingly I have been acting on that
In the Farrukh Dagar district Gurgaon case Crown vs Chuttan Lal etc the relatives and the accused expressed a strong desire to get the case conducted by me during its trial
At last on their persistence and promise that they would provide me with Rs 40000 for charitable purposes and I would create a public charitable trust thereof I agreed to conduct the case
The case is now over
The accused and their relatives have given me Rs 32500 for charity and creating a trust
The said amount has been deposited in the Bank
If they pay any other amount that will also be included in that
Accor dingly I create this trust with the following conditions and with the said amount and any other amount which may be realized afterwards or included in the trust
then followed the name and objects of the trust etc
The Tribunal accepted as correct the statements of the respondent that he was at first unwilling to accept the brief in the Farrukhnagar case he was then persuaded to accept it at the request of some members of the Bar and some influential local people on the understanding as the respondent put it that the accused persons of that case would provide Rs 40000 for a charitable trust which the respondent would create
Eventually the sum of Rs 32500 was paid by or on behalf of the accused persons and as the Tribunal has put it a charitable trust was created by the respondent by the trust deed dated August 6 1945 the recitals whereof we have q noted above
The question before us is what is the proper legal inference from the aforesaid facts found by the Tribunal
Both the Tribunal and the High Court have drawn the inference that a charitable trust was created 79 by the persons who paid the money to the assessee and all that the assessee did under the deed of trust dated August 6 1945 was to reduce the terms of the trust to writing
The High Court therefore applied the principle laid down by the Privy Council in Raja Bejoy Singh Dudhuria vs Commissioner of Income tax Bengal 1 and observed that by the overriding obligation imposed on the assessee by the persons who paid the money the sum of Rs 32500 never became the income of the assessee and the amount became trust property as soon as it was paid there being no ques tion of the application of part of his income by the assessee
On behalf of the appellant it has been contended that the inference which the Tribunal and the High Court drew is not the proper legal inference which flows from the facts found and according to the learned Attorney General who appeared for the appellant the proper legal inference is that the amount was received by the assessee as his professional income in respect of which he later created a trust by the deed of trust dated August 6 1945
He has submitted that there was no trust nor any legal obligation imposed on the assessee by the persons who paid the money at the time when the money was received which prevented the amount from becoming the professional income of the assessee
He has also contended that even the existence of a trust will make no difference unless it can be held that the money was diverted to that trust before it could become professional income in the hands of the assessee
We think that the question raised in this case can be decided by a very short answer and that answer is that from the facts found by the Tribunal the proper legal inference is that the sum of Rs 32500 paid to the assessee was his professional income at the time when it was paid and no trust or obligation in the nature of a trust was created at that time and when the assessee created a trust by the trust deed of August 6 1945 he applied part of his professional income as trust property
If that is the true conclusion as we hold it to be then the principle laid down 1 80 by the Privy Council in Bejoy Singh Dudhuria s case 1 has no application
It is indeed true as has been observed by the High Court that a trust may be created by any language sufficient to show the intention and no technical words are necessary
A trust may even be created by the use of words which are primarily words of condition but such words will constitute a trust only  where the requisites of a trust are present namely where there are purposes independent of the donee to which the subject matter of the gift is required to be applied and an obligation on the donee to satisfy those purposes
 The findings of the Tribunal show clearly enough that the persons who paid the sum of Rs 32500 did not use any words of an imperative nature creating a trust or an obligation
They were anxious to have the services of the assessee in the Farrukhnagar case the assessee was at first unwilling to give his services and later he agreed proposing that he would himself create a charitable trust out of the money paid to him for defending the accused persons in the Farrukhnagar case
The position is clarified beyond any doubt by the statements made in the trust deed of August 6 1945
The assessee said therein that he was reserving his professional income as an advocate accruing after June 1944 for payments of taxes and charity and accordingly when he received his professional income in the Farrukhnagar case he created a charitable trust out of the money so received
The clear statement in the trust deed a statement accepted as correct by the Tribunal is that the assessee created a trust on certain conditions etc
It is not stated anywhere that the persons who paid the money created a trust or imposed a legally enforceable obligation on the assessee
Even in his affidavit the assessee had stated that  it was agreed that the accused would provide Rs 40000 for a charitable trust which I would create in case I defend them on an absolutely clear and express understanding that the money would not be used for any private and personal purposes
 Even in this affidavit there is no suggestion that the persons who paid the money created the 1 81 trust or imposed any obligation on the assessee
It was the assessee s own voluntary desire that he would create a trust out of the fees paid to him for defending the accused persons in the Farrukhnagar case
Such a voluntary desire on the part of the assessee created no trust nor did it give rise to any legally enforceable obligation
In the circumstances the Appellate Assistant Commissioner rightly pointed out that  if the accused persons had themselves resolved to create a charitable trust in memory of the professional aid rendered to them by the appellant and had made the assessee trustee for the money so paid to him for that purpose it could perhaps be argued that the money paid was earmarked for charity ab initio but of this there was no indication anywhere
In our opinion the view taken by the Appellate Assistant Commissioner was the correct view
The money when it was received by the assessee was his professional income though the assessee had expressed a desire earlier to create a charitable trust out of the money when received by him
Once it is held that the amount was received as his professional income the assessee is clearly liable to pay tax thereon
In our opinion the correct answer to the question referred to the High Court is that the amount of Rs 32500 received by the assessee was professional income taxable in his hands
Learned Counsel for the respondent has referred us to a number of decisions where the principle laid down in Bejoy Singh Dudhuria s Case 1 was applied and has contended that where there is an allocation of a sum out of revenue as a result of an overriding title or obligation before it becomes income in the hands of the assessee the allocation may be the result of a decree of a court an arbitration award or even the provisions of a will or deed
In view of the conclusion at which we have arrived the decisions relied upon can hardly help and it is unnecessary to consider them
Our conclusion is that there was no overriding obligation imposed on the assessee at the time when the sum of Rs 32500 was received by him
1 82 Accordingly we allow this appeal and set aside the judgment and order of the High Court
The answer to the question is in favour of the appellant namely that the sum of Rs 32500 received by the assessee was his professional income taxable in his hands
The appellant will be entitled to his costs throughout
Appeal allowed


Summary:
A writ of certiorari cannot be granted to quash the decision of an inferior court within its jurisdiction on the ground that the decision is wrong
It must be shown before such a writ is issued that the authority which passed the order acted without jurisdiction or in excess of it or in violation of the principles of natural justice
Want of jurisdiction may arise from the nature of the subject mat ter so that the inferior court might not have authority to enter on the inquiry or upon some part 0 697 it
It may also arise from the absence of some essential preliminary or upon the existence of some particular facts collateral to the actual matter which the court has to try and which are conditions precedent to the assumption of jurisdiction by it
But once it is held that the court has jurisdiction but while exercising it it made a mistake the wronged party can only take the course prescribed by law for setting matters right inasmuch as a court has jurisdiction to decide rightly as well as wrongly
When an inferior court or tribunal which has the power of deciding facts is established by the legislature
it may in effect say that if a certain state of facts exists and is shown to such tribunal or body before it proceeds to do certain things it shall have jurisdiction to do such things but not otherwise
There it is not for them conclusively to decide whether that state of facts exists and if they exercise the jurisdiction without its existence what they do may be questioned and it will be held that they have acted without jurisdiction
But the legislature may entrust the court or tribunal itself with a jurisdiction which includes the jurisdiction to determine whether the prelimi nary state of facts exists and on finding that it does exist to proceed further or do something more
In the second case the rule that a tribunal cannot give itself jurisdiction by wrongly deciding certain facts to exist does not apply
Ordinarily a court of appeal has not only jurisdiction to determine the soundness of the decision of the inferior court as a court of error but by the very nature of things it has also jurisdiction to determine any points raised before it in the nature of preliminary issues by the par ties
Such jurisdiction is inherent in its very constitu tion as a court of appeal
Whether an appeal is competent whether a party has locus standi to prefer it whether the appeal in substance is from one or another order and whether it has been preferred in proper form and within the time prescribed are all matters for the decision of the appel late court so constituted
An order by an Additional Custodian in a proceeding under Ordinance No XXVII of 1949 refusing to declare a person an evacuee and his property evacuee property is an order under section 7 of of the Ordinance and is appealable under section 24
A person claiming to be interested in an enquiry as to whether a person is an evacuee and his property evacuee property who has filed a written statement and adduced evidence is a person aggrieved by an order that the latter is not an evacuee and has a locus standi to prefer an appeal from the order