Case: The Guru Estate Throughdwarkadas Guru And Others Vs. The Commissioner Of Income-Taxbihar And Orissa

income of a religious or charitable institution derived from voluntary contributions and applicable solely to religious or charitable purposes."5. It is manifest on a bare perusal of the two clauses that income of the assessees would be admissible to exemption under cl. (i) of sub-s. (3) if it be derived from property held under a trust or other legal obligation, solely for religious or charitable purposes, and under cl. (ii) if it be income of a religious or charitable institution derived from voluntary contributions applicable exclusively to purposes religious or charitable. Income sought to be taxed does not answer either of these descriptions; it is not income derived from property held under a trust or other obligation for the purposes specified and the assessees are not an institution religious or charitable. They are members of joint Hindu family who carry on the vocation of Pandas : and the income on the findings of the Tribunal is not applicable exclusively to purposes religious or charitable. On this limited ground the claim of the assessees for exclusion of the receipts under the Annadan Patras from their total income is liable to be rejected.This interpretation of the relevant provisions is sufficient to dispose of the appeals, but we deem it necessary, having regard to the manner in which the case was approached by the High Court, to indicate the restrictions inherent in the exercise of its jurisdiction by the High Court. The Tribunal held that the receipts called Annadan were earned by the assessees in the conduct of their business as Pandas and the facts did not indicate that any trust was intended or created by the pilgrims. Under the scheme of the Income-tax Act the function of determining facts rests with the Tribunal, and on the facts found the High Court has to advise the Tribunal as to the law applicable. The Tribunal having found that the receipts were in the nature of income of a business, and no trust was ever intended by the pilgrims who gave Annadan the High Court had to record its opinion on the basis of those facts. A finding of fact recorded by the Tribunal may not be regarded as final if it is not supported by any evidence, or is founded upon a view of facts which cannot reasonably be entertained, or upon a misconception, vide Edward v. Bristow [(1955) 36 Tax Cas. 207.]. The High Court made an order under s. 66(2) because in their opinion the consideration whether the pilgrims understood the true character or the implication of the Annadan Patras signed by them was irrelevant, and that merely because there was a breach of trust committed by the assessees, the trust was not destroyed. But it was not open to the High Court to ignore the finding of the Tribunal that there was no trust, and the receipts under Annadan Patras were income from "the business of pilgrim traffic". Under the Income-tax Act, on conclusions on questions of fact recorded by the Tribunal, if a question of law arises, the High Court will deliver its opinion provided it is properly referred. The conclusion of the Tribunal was based on a review of the evidence. The Tribunal on the evidence relating to the manner in which the pilgrims were attracted, brought to Puri, treated there and taken to the temple, fed and ultimately induced to make a payment inferred that the receipts were in the course of business.At the hearing of the reference the High Court addressed itself to a question which was not referred by the Tribunal. The High Court on the assumption that a trust was intended to be created by the pilgrims by giving Annadan, proceeded to hold that the trust was a private trust. In so holding the High Court attempted to exercise not the advisory jurisdiction in respect of the decision of the Tribunal which alone is conferred by s. 66(2) of the Indian Income-tax Act, but jurisdiction which in substance was appellate.6. The Tribunal had recorded a finding that there was in fact no trust intended or created by the pilgrims. On that finding no question as to the applicability of s. 4(3)(i) in any event could arise. It was open to the assessees to demand that a question that the finding was based on no evidence or that it could not reasonably be arrived by any person acting judicially and properly instructed as to the relevant law. Some vague statement was made in the application to the High Court for an order for calling for a statement of the case that the finding was based on no evidence, but the High Court, was not asked to call upon the Tribunal by an order under s. 66(2) to submit a statement on the question that the finding, that there was no trust, was based on no evidence. On the question referred the High Court was bound to accept the findings of the Tribunal and to decide the question of law, if any, arising therefrom. The High Court however ignored the finding that the income received as Annadan was part of the income or properties of a business carried on by the assessees, and on the assumption that a trust was created they regarded the trust as a private religious trust. In so doing the High Court did not in substance answer the question submitted to it.Normally in circumstances such as this case discloses, we would have called for a finding from the High Court on the question which was referred by the Tribunal, but on the view we have already expressed no useful purpose will be served by adopting that course. On the true meaning of s. 4(3)(i) in in the absence of any finding that the Annadan income was derived from property held under a religious or charitable trust, the claim of the assessees for exemption must fail. Their claim to exemption under s. 4(3)(ii) must fail because they are not a religious or charitable institution.7.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]It is manifest on a bare perusal of the two clauses that income of the assessees would be admissible to exemption under cl. (i) of sub-s. (3) if it be derived from property held under a trust or other legal obligation, solely for religious or charitable purposes, and under cl. (ii) if it be income of a religious or charitable institution derived from voluntary contributions applicable exclusively to purposes religious or charitable. Income sought to be taxed does not answer either of these descriptions; it is not income derived from property held under a trust or other obligation for the purposes specified and the assessees are not an institution religious or charitable. They are members of joint Hindu family who carry on the vocation of Pandas : and the income on the findings of the Tribunal is not applicable exclusively to purposes religious or charitable. On this limited ground the claim of the assessees for exclusion of the receipts under the Annadan Patras from their total income is liable to be rejected.This interpretation of the relevant provisions is sufficient to dispose of the appeals, but we deem it necessary, having regard to the manner in which the case was approached by the High Court, to indicate the restrictions inherent in the exercise of its jurisdiction by the Highthat finding no question as to the applicability of s. 4(3)(i) in any event could arise. It was open to the assessees to demand that a question that the finding was based on no evidence or that it could not reasonably be arrived by any person acting judicially and properly instructed as to the relevant law. Some vague statement was made in the application to the High Court for an order for calling for a statement of the case that the finding was based on no evidence, but the High Court, was not asked to call upon the Tribunal by an order under s. 66(2) to submit a statement on the question that the finding, that there was no trust, was based on no evidence. On the question referred the High Court was bound to accept the findings of the Tribunal and to decide the question of law, if any, arising therefrom. The High Court however ignored the finding that the income received as Annadan was part of the income or properties of a business carried on by the assessees, and on the assumption that a trust was created they regarded the trust as a private religious trust. In so doing the High Court did not in substance answer the question submitted to it.Normally in circumstances such as this case discloses, we would have called for a finding from the High Court on the question which was referred by the Tribunal, but on the view we have already expressed no useful purpose will be served by adopting that course. On the true meaning of s. 4(3)(i) in in the absence of any finding that the Annadan income was derived from property held under a religious or charitable trust, the claim of the assessees for exemption must fail. Their claim to exemption under s. 4(3)(ii) must fail because they are not a religious or charitable institution.