IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR FRIDAY, THE 4TH APRIL 2008 / 15TH CHAITHRA 1930 ITR.No. 116 of 1996 --------------------------- (ORDER NO. H6-12426/93/TX DT. 21/05/93 OF THE COMMISSIONER OF AGRICULTURAL INCOME TAX, THIRUVANANTHAPURAM) .................. APPLICANT: ------------------ SRI. KOLADI GOVINDANKUTTY MENON, ADVOCATE, PONNANI. BY ADV. SRI.P.BALACHANDRAN (SR.). RESPONDENTS: ----------------------- THE COMMISSIONER OF AGRICULTURAL INCOME TAX, THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER SRI. E.P. GOVINDAN. THIS TAX REFERENCE HAVING BEEN FINALLY HEARD ON 04/04/2008, ALONG WITH ITR NOS. 117/1996, 118/1996 119/1996, 120/1996, 121/1996, 122/1996, 123/1996 & 124/1996 THE COURT ON THE SAME DAY PASSED THE FOLLOWING: C.N. Ramachandran Nair & T.R. Ramachandran Nair, JJ. - - - - - - - - - - - - - - - - - - - - - - - - I.T.R.Nos.116 to 124 of 1996 - - - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 4th day of April, 2008. JUDGMENT C.N. Ramachandran Nair, J. We have heard Shri P. Balachandran, learned Senior Counsel appearing for the impleaded legal heirs of the original applicant and the learned Govt. Pleader. 2. The question referred is whether the Commissioner was justified in setting aside the order of the appellate authority directing assessment of income from 'K' Schedule property shown in the family partition deed of the applicant's family in the joint names of the family members as tenants in common, is correct or not. For the assessment years 1972 -73 to 1982-83 except for the years 1976-77 and 1977-78 the applicant was the senior member of the family and in that capacity he was managing the common family property set apart under the partition deed, for religious and charitable purposes, particularly to meet the cost of Navami celebrations of Guruvayur temple traditionally conducted by the applicant's father. The contention of the assessee is that the assessee, during the relevant time was only the manager of the property in his capacity as the senior family ITR 116/96 etc. -2- member and the entire income from the property was ear-marked for religious purposes, particularly the Navami celebrations of Guruvayur temple traditionally sponsored by the family every year. The first appellate authority held that there is no justification for assessment of income from the property set apart by the family in the hands of the senior member of the family, as he is not the individual owner of the property or the beneficiary of the income therefrom. Since the property belong to all family members together and the assessee, during the relevant time, was only the manager of the property, the first appellate authority held that income from the property has to be assessed in the status of tenants in common. The Deputy Commissioner, exercising the revisional power of the Commissioner, ordered assessment of the income from the common property as assessee's individual income, for the simple reason that the other family members have not got any financial benefits, but got probably only spiritual benefits. 3. Learned Senior Counsel for the assessee rightly pointed out that the Commissioner, while finding that the other family members have not got any financial benefits, have not held that the assessee has got any financial benefits from the property as well. The trust constituted by the partition deed specifically earmarks the property for the purposes set out therein. No family member is entitled to take any income from the property and under ITR 116/96 etc. -3- the trust deed created by the family partition, the entire income from 'K' schedule property is to be utilised for the religious functions including the temple festival stated therein. Provision is made to carry over the surplus income for the succeeding years. In the absence of any provision in the trust deed enabling the senior member to appropriate any income from the property, the order of the Commissioner is not justified. In fact, if the assessee had applied for exemption from payment of tax for the income from 'K' schedule probably, he would have got the same because the purpose is only religious and charitable. However, so long as the assessee has not proved that the property held under the trust is a public charitable one, the assessee was not entitled to exemption. However, since the property belongs to all the family members together, the income therefrom is to be assessed under the status of tenants in common. In the absence of any provision for distribution of income among the members of the family, probably shares have to be allotted equally among all the members. We are, therefore, of the view that the order of the first appellate authority directing assessment of the income from 'K' schedule property under the status tenants in common, is the only permissible assessment of the income from the property and there is no justification to assess the income from 'K' schedule property as income of the eldest member of the family who had ITR 116/96 etc. -4- only right of management and appropriation of income for the purpose for which it was earmarked which is charitable and religious. 4. In view of the above finding, we answer the question referred in favour of the assessee and against the Revenue and consequently, set aside the order of the Commissioner. Consequential orders will be passed by the assessing officer. The Reference Cases are disposed of as above. (C.N. Ramachandran Nair, Judge.) (T.R. Ramachandran Nair, Judge.) kav/