Case: Commissioner of Income Tax West Bengal III, Calcutta Vs. Sri Jagannath Jee (Through Shebaits)

To appreciate the exigibility issue, we have to flash back to 19th Century Bengal and the then prevailing societal ethos of affluent Hindu piety, and we find ourselves in the spiritual-legal company of Raja Rajendra Mullick, at once holy and wealthy, who, in advancing years, executed a comprehensive will to promote his cherished godly wishes and to provide for his secularly dear cause and near relatives. The construction of this testamentary complex of dispositions and location of its destination are the principal exercises in these appeals.2. Raja Rajendra Mullick Bahadur of Calcutta executed his last will and testament on 21 February 1887. While the author of the will was a Bengali brahmin of the last century, the draftsman of the document was John Hart, an English Solicitor. While the authors wishes are usually transmitted into the deed by the draftsman, the diction and accent are flavoured by the draftsmans ink. So it happens that this will represents pious Bengali wishes and dispositions but draped in an English Solicitors legalese. The Courts function in such an ambiguous situation is to steer clear of the confusion imparted by the diction and to reach the real intendment (of the testator). Such an essay in ascertaining the true intent of Raja Rajendra Mullick is fraught with difficulties and our guideline has to he to pick it up from the conspectus of clauses rather than from particular expressions or isolated features. Only the totality tells the story of the authors mind as he unburdened himself of his properties for causes and purposes dear to his heart. The Courts discerning loyalty is not to the formalistic language used in drawing up the deed but to the intentions which the disponer desired should take effect in the manner he designed This back-drop of observations made, we proceed to a broad delineation of the actual provisions.3. The munificent testator bad enormous estates, lavish charity,piety aplenty and a large family. So he trifurcated his assets as it were, provided for religious objects, eleemosynary purposes and members of his family. The last was distinctly and separately dealt with and we are not concerned with the bequests so made. But the first two were more or less lugged together and ample properties earmarked therefore.The story of this tax entanglement began nearly two decades ago with the I.T.O. issuing notices and the assessed deity responding with nil returns u/s 22(2) of the Indian income tax Act, 1922 for the assessment years 1956-57 and 1957-58. A portion however was, by legitimate concession of the Income Tax Department, carved out of the total income non-taxable. According to the High Court,When the proceedings for the assessment year 1955-56 were pending before the Income Tax Officer, the assessee had tiled an application under Article 221 of the Constitution of India and had obtained an interim stay against the said proceedings. It appears that on the 9th October 1961 in terms of the settlement arrived at between the Income Tax Department and the assessed the interim stay of proceedings was vacated. It was recorded in the said order that part of the income of the asses see which would be proved before the Income Tax Authorities to have been applied in connection with (a) feeding of the poor. (b) subscription to other charities entering for the benefit of the public would be exempted u/s 4(3)(i) of Indian income tax. Act, 1922.For assessment for the year 1956-57 the income tax Officer was, of the opinion, on the construction of the said will, that besides directions for spending amounts on charitable objects, the Will had also provided for payment of certain fixed allowances to the acting shebaits as well as the widows of the deceased shebaits, maintenance of horse-drawn carriages and motor cars for the use of the shebaits, medical aids to the shebaits, and the members of their families, expenses on account of Sradh ceremony of the ancestors of the shebaits and other private chaities. On behalf of the assessee it war claimed before the ITO that the remuneration of the trustees and the allowances to the widows of the deceased trustees as provided in the will created a charge on the income of the Trust estate and should therefore be treated as diversion of the income of the trust before it accrued in the hands of the trustees. The ITO rejected that contention. He held that reading the will as a whole it was clear that the remuneration to the shebaits and the allowances to the widows were merely applications of the trust income and as such not deductible. According to the ITO. under the Will, the she-baits and trustees were to collect the income of the whole debutter property in the first instance and after paying the government revenues and taxes and rates and other outgoings, perform the puja and the other ceremonies for the worship of the; family deity and therefore spend amounts on charitable and public purposes and lastly to pay the remuneration, allowances and private donations. The ITO therefore determined the income of the trust estate u/s 9 and 12 of the Indian IT. Act, 1922 and computed income from property at Rupees 1,94,377/- annual income from other sources at Rs. 97,248/- making a total of Rs. 2,91,625/-. From the above he deducted the amounts spent on charitable objects such as feeding of the poor, maintenance of art gallery and menagerie for birds and non-carnivorous animals. A sum of Rs. 1,32,023/- was subjected to tax for the assessment year 1956-57. The ITO followed the same principle for the assessment year 1957-58 and determined the assessable income at Rs. 1,06,067/-8. The assessee preferred appeals before the Appellate Asstt.Commissioner, who passed a consolidated order on November 25, 1963 dismissing the assessees appeals on all the grounds.9. On appeal to the Tribunal, a full legal debate followed and, while the Revenue won substantially, some items more were held exempt on the holding that the direction contained in the will for the expenditure on the performance of Sradh and other ceremonies for the spiritual benefit of the testator and his ancestors must also be held to be obligations created by the testator which the trustees or the shebaits were obliged to discharge before applying the income for the benefit of the deity. Both parties moved the Tribunal for referring certain questions of law u/s 66(1) and the sequel was a reference of two questions at the in stance of each.10. The High Court, on a meticulous consideration of the entire will decided against the Revenue on the spinal issue and took the view thatreading the will as a whole we are of the opinion that the entire beneficial interest in the properties did not vest in the assessee deity. The assessee deity was not the owner of the properties. Therefore the only income which could be subjected to income tax in the hands of assessee would be the beneficial interest of the said deity under the will, which would be expenses incurred for the sevapuja of the deity and for the various religious ceremonies connected with the said deity and the value of the residence of the deity in the Temple.

Reasoning: We regard this stand of the Revenue as correct in the light of the provisions of Section 4(3)(i) and hold, in line, that whatever the outcome of the contest, the amounts spent on poor feeding and other public charitable purposes are outside the reach of the tax Pet &.and are totally exempt. We may, in fairness, state here that counsel for the Revenue, Shri Sharma, rightly agreed that the correct legal position, on a sound understanding of Section 4(3)(i) of the Act, was that these charitable expenditures were totally deductible from the computation for fixing the tax12. It is fair to comment that, even making allowance for annual variations, price fluctuations and change in circumstances, the pujas consume but a small fraction, that public charitable purposes bulk prominently in the budgeted expenditure and that the sums spent on the she-baits and trustees are liberal enough to exceed prudent reward for services. To set the record straight, it must be stated that a preponderant part of the income was spent on general public charitable causes like poor feeding, art gallery, aviary, menagerie and keeping a garden. Together with the cost of the rituals the budget was dominantly religio-charitable. These facts have no bearing on the construction of the will but invests the perspective with a touch of realism.12. It is fair to comment that, even making allowance for annual variations, price fluctuations and change in circumstances, the pujas consume but a small fraction, that public charitable purposes bulk prominently in the budgeted expenditure and that the sums spent on the she-baits and trustees are liberal enough to exceed prudent reward for services. To set the record straight, it must be stated that a preponderant part of the income was spent on general public charitable causes like poor feeding, art gallery, aviary, menagerie and keeping a garden. Together with the cost of the rituals the budget was dominantly religio-charitable. These facts have no bearing on the construction of the will but invests the perspective with a touch of realism.15. Two paramount background considerations of assistance to decipher the intention of the testator, which have appealed to us, may be mentioned first. We are construing the will of a pious Hindu aristocrat whose faith in ritual performances was more than matched by his ecumenical perspective, whose anxiety for spiritual merit for himself and his manes was balanced by a universal love and compassion. Secondly, the sacred sentiment writ large in the will is his total devotion and surrender to the family deity Sree Jagannathjee,It is trite but true that while the label debutter may not clinch the legal character, there is much in a name, fragrant with profound sentiment and expressive of inner dedication. It looks like doing violence to the heart of the will if we side-step Sree Jagannathjee as the divine dedicatee, down-grade him to the status of but one of the beneficiaries and, by judicial construction, transmit the sanctified estate into human hands as the legal owners to distribute the income, one of the several objects being doing pujas prescribed.17. The will, right in the forefront, declares : I hereby dedicate and make debutter, I do hereby dedicate and make debutter in the name and for the worship of my Thakoor Sree Sree Jagannath Jee the following properties ... I hereby give, dedicate and make debutter all the jewels... to the said Thakoor Sree Sree Jagannathjee. These solemn and emphatic dedicative expressions cannot be wasted words used by an English Solicitor but implementatory of the intention of the donor whose inmost spiritual commitment gathered from the many clauses, appears to be towards his family Thakoor. Of course, if there are the clearest clauses striking a contrary note and creating but a partial debutter, this dedicative diction must bow down. The law is set down thus by B.K. Mukherjea :The fact that property is ordinarily described as Debutter is certainly a piece of evidence in favour of dedication, but, not conclusive. In Binod Behari v. Manmatha Nath 21 Cal LJ 42 Cox J. observed as follows:The fact that the property is called Debutter is a doubtless evidence in the plaintiffs favour but it does not. relieve them of the whole burden of proving that the land was dedicated and is inalienable, (p. 131)Though inconclusive, it carries weight in the light of what we may call the mission of the disposition which is inspired by devotion to my Thakoor and animated by a general religious fulfilment. It must be remembered that the donor was not tied down by bigotry to performance of pujas, important though they were. A more cosmic and liberal view of Hinduism informed his soul and so in his declaration of dedication to Sree Jagannathjee he addressed to the managers many directions of a broadly religious and charitable character. His injunction to feed the poor was Narayana Seva, for worship of God through service of man in a land where the divinity in daridra narayana is conceptually commonplace and, while it is overtly secular. its motive springs from spiritual sources. It is religion to love the poor. Likewise, his insistence on the aviary and the menagerie and throwing open both to the people to see and delight is not a mundane mania but has deeper religious roots. Hinduism worships all creation:1/4k uks vLrq fins k prqkns1/2(Peace be unto all bipeds and even so to all quadrupeds). Indeed, the love of sub-human brethren is high religion. ForHe prayeth best, who loveth best All things both great and small; For the dear God who loveth us, He made and loveth all.(Coleridge, in Ancient Mariner)From the Buddha and Mahavira to St. Francis of Assisi and Gandhiji, compassion for living creatures is a profound religious motivation. The sublime mind of Mullick was obviously in religious sympathy with fellow-beings of the lower order when he showed this tenderness to birds and beasts and shared it with the public. The art gallery too had link with religion in its wider connotation although it is plainer to regard it as a gesture of aesthetics and charitable disposition. God is Truth. Truth is beauty, beauty Truth. A thing of beauty is a joy for ever. In fact, for a highly elevated Indian mind, this conceptual nexus is not far-fetched. The garden and the love of flowers strike a psychic chord at once beautiful and religiously mystical, as any reader of Wordsworth or other great poet in English or Sanskrit will agree. The point is that the multiform dispositions had been united by a spiritual thirst and, if read in their integrality, could be designated religious-cum-charitable. In sum, the primary intendment was to dedicate as debutter and to direct fulfilment of uplifting religious and para-religious purposes, the focus being on worship of Sree Jagannathjee and the fall-out some subsidiary, yet significant, charitable items. The finer note struck by the felt necessities of his soul was divinised and humanised, the central object being Sree Jagannathji, the Lord of the Universe.18. Of course Sri Sen submits that verbalism cannot take us far and the description of debutter can not be decisive because the magnitude of the expenses on the various items, apart from other telling clauses : which (we) will presently advert to, was indicative not of a dedication to the idol but of a general charitable bunch of disposition to be carried out through the agency of trusteeship in the sense of the English instance, he argues that feeding the poor, maintenance of the art gallery, managerie, aviary and gardens and fulfilment of the other charities have little to do with idol qua idol. Moreover, making a substantial margin for the remuneration of the Shebaiti, there is some clear excess in favour of donors family members in the amounts to be paid or spent on behalf of the shebaits-cum-trustees. These are strongly suggestive of a non-debutter character, especially because the cost of the poojas makes but a small bite on the total income. He reinforces the submission by many other points which may be mentioned at this stage. He states that the donor, if he meant a straightforward case of debutter, would have confined himself to the expression shebaits but there was a sedulous combination of shebaits and/or trustees and there was also reference to trusts in some places. Provision for the heirs, for the residence of the shebaitees families, the horse carriages and the like also do not smack of debutter. A specification of the minimum age of 18 to become shebaits and trustees also savours of trusteeship rather than shebaitship. Appointment of a Board of Trustees on shebaits failing in succession throws clear light on the creation of a trust in the English sense rather than a debutter in the Hindu sense.In any case, a fair conclusion, according to Sri Sen, would be to regard the appointees as shebaits for purposes of pooja and management of the shrine and as trustees for the other substantial purposes. Which means that there is a partial debutter and the vesting of the estate in the trustees20. Mr. Sen cited several decisions which are more appropriate to a contest between shebaits and heirs and do not directly bear on rival considerations decisive of the absolute or partial nature of a debutter and so we do not burden this judgment with those many citations but may refer to a few.21. In Har Narayan, 48 Ind App 143 the Judicial Committee was dealing with a case where a dispute was between the heirs and the shebaits and it was held thatalthough a will provides that the property of the testator shall be considered to be the property of a certain idol, the further provisions such as that the residue after defraying the expenses of the temples shall be used by our legal heirs to meet their own expenses, and the circumstances, such as that in the ceremonies to be performed were fixed by the will and would absorb only a small proportion of thetotal income, may indicate that the intention was that the heirs should take the property subject to a charge for the performance of the religious purposes named.Granting the creation of a debutter, the telling tests to decide as between an absolute and partial debutter cannot necessarily be gathered from this ruling. On the other hand, this very ruling emphasized that a substantial part of the income was to go to the legal heirs to meet their own expenses and that circumstance deflected the decision. Moreover, Lord Shaw of Dunfermline, there observed :The case Jadu Nath Singh 44 Ind App 187 merely illustrates the inexpediency of laying down a fixed and general rule applicable to the construction of settlements varying in terms and applying to estates varying in situation.(p. 149)The observations of this Court in Charusila Dasi (1959) Supp 2 SCR 601- a case dealing with the question of legislative competency on the constitutionality of the Bihar Hindu Religious Trusts Act - seem to suggest that the establishment of a hospital for Hindu females and a charitable dispensary for patients of any religion or creed were consistent with the creation of a religious and charitable trust.From a bestowal of reflection on the subject and appraisal in the light of the then conditions, sentiments and motivations of the author, we are inclined to the view that Raja Mullick, the maker of the will, dedicated as debutter to his Maker and Thakoor the entire estate, saddling the human agents or shebaits with duty to apply the income for Godly and near-Godly uses and for reward of the shebaits and for their happy living. Of course, he had horses and carriages and other items to make life enjoyable. Naturally, his behest covered the obligation to keep these costly things in good condition and regular use. The impact on the mind, if one reads the provisions reclining in a chair and lapsing into the mood of the maker of the will, is that he gave all he did to his Thakoor, as he unmincingly said, and thus dedicated to create an absolute debutter. The various directions are mostly either religious or philanthropic but not so remote as to be incongruous with dedication to an idol or creation of a debutter. The quantum of expenditure on the various items is not so decisive of the character of the debutter as absolute or partial as the accent on and subjective importance of the purposes, in the setting of the totality of commands and cherishments. His soulful wishes were for the religious and charitable objects and the other directions were secondary in his estimate Not counting numbers nor computing expenses, marginally relevant though they are, but feeling the pulse of his passion to do Godly good and promote public delight, that be lights the spirit of his testament.Essentially, Raja Rajendra Mullick gave away his estate to his Thakoor and created an absolute debutter. He obligated the managers of the debutter with responsibility to discharge certain secular but secondary behests including benefit to family members, their residence and transportation.We think that the expressions shebaits and trustees, shebaits or trustees, she- baits, trustees, and trusts were indiscriminately used, indifferent to sharp legal semantics and uncertain of the precise import of these English legal terms in the Indian con text. More, an English solicitors familiar legal diction super-imposed on an unfamiliar Indian debutter, rather 1han an exercise in ambiguity or deliberate dubiety, explains the odd expressions in the will. The author merely intended to dedicate to Sree Jagnnnathji and manage through shebaits. Of course, the reference to the Board of Trustees, the majority vote and the like, strike a discordant note but the preponderant intent is what we have held it is.24. The magnitude of the expenditure on the items, secular and sacred, may vaguely affect the conclusion but cannot conclusively decide the issue. The religious uses related to Sree Jagannathji, the Lord of the Universe, cannot be narrowly restricted to rituals but must be spread out to embrace universal good especially when we read the mind of a Hindu highly evolved and committed to a religion whose sweep is vasudhaiva kudumbakam (All creation is His family). The blurred lines between the spiritual and the secular, in the context of this case, do not militate against our construction.If, on a consideration of the totality of terms, on sifting the more essential from the less essential purposes, on sounding the depth of the donors wishes to find whether his family or his deity were the primary beneficiaries and on taking note of the language used, if the vesting is in the idol an absolute debutter can be spelt out. So considered, if .the grant is to the heirs with a charge on the income for the performance of pujas, the opposite inference is inevitable. Before us, there is no dispute between the heirs and the idol. The point mooted is about the creation of an English trust, an unconventional legal step where the dedication is to a deity. On a full study of the will as a whole, we think that this benignant Bengalees testament, draped though in Victorian verbal haberdashery, had, on legal auscultation, the Indian heart-beats of Hindu religious culture, and so scanned, his will intended vesting the properties in absolute debutter. The idol was, therefore, the legal owner of the whole and liable to be assessed as such.28. The respondent, however, has a second string to his bow. Assuming an absolute debutter, there is still many a slip between the lip and the cup, between the income and exigibility to tax. For, while, ordinarily, income accrues in the hands of the owner of property and is taxable as such, it is quite on the cards that in view of the special provisions in the deed of grant certain portions of the income may be tied up for other purposes or persons and may not reach the grantee as his income. By an overriding charge, sums of money may be diverted at the very source to other destinations and only the balance of income may legally be received by the donee as his income. The argument of the respondent is that even if the estate vested in the deity, an assessable entity in our secular system as held in Yogendra Nath Naskar Vs. Commissioner of Income Tax, Calcutta, still all the amounts meant to be spent on the shebaits and the members of the family, on the upkeep of horses and carriages and repair of buildings etc., were charged on the income and by paramount provisions, directed to these uses. These sums did not and could not come into the hands of the deity as its income and could not be taxed as such. If the shebaits and trustees collected the income by way of rents and interests, to the extent of these other disbursements they received the amounts merely as collectors of rents etc.; not as receivers of income. Such amounts were free from income tax in the hands of the idol.The leading ruling on the subject is by the Judicial Committee in Bijoy Singh Dudhuria v. Commr. of Income Tax, Calcutta., AIR 1933 PC 145   . Lord Macmillan there observed as follows:Section 3 subjects to charge all income of an individual it is what reaches the individual as income which it is intended to charge. In the present case the decree of the court by charging the appellants whole resources with a specific payment to his step-mother has to that extent diverted his income from him and has directed it to his step-mother; to that extent what he receives for her is not his income. It is not a case of the application by the appellant of part of his income in a particular way, it is rather the allocation of a sum out of his revenue before it becomes income in his hands.(pp. 138-139)30. In The Commissioner of Income Tax, Bombay City II Vs. Shri Sitaldas Tirathdas, this Court referred to many reported decisions some of which we have just mentioned. Mr. Justice Hidayatullah, speaking for the Court, summed up the rule thus (at p. 374):In our opinion, the true test is whether the amount sought to be deducted, in truth, never reached the assessee as his income. Obligations, no doubt, there are in every case, but it is the nature of the obligation which is the decisive fact. There is a difference between an amount which a person is obliged to apply out of his income and an amount which by the nature of the obligation cannot be said to be a part of the income of the assessee. Where by the obligation income is diverted before it readies the assessee, it is deductible; bet where the income is required to be applied to discharge an obligation after such income reaches the asses-see, the same consequence in law does not follow. It is the first kind of payment which can truly be excused and not the second. The second payment is merely an obligation to pay another a portion of ones own income, which has been received and is since applied. The first is a case in which the income never reaches the assessee, who, even if he were to collect it, does so, not as part of his income, but for and on behalf of the person to whom it is payable. In our opinion, the present case is one in which the wife and children of the assessee who continued to be members of the family received a portion of the income of the assessee, after the assessee had received the income as his own. The case is one of application of a portion of the income to discharge an obligation and not a case in which by an overriding charge the assessee became only a collector of anothers income.31. The High Court, in a laconic paragraph, dismissed this contention but Shri Sen submitted that there was merit in it and had to be accepted. We agree with the High Court because the terms in which the directions are couched do not divert the income at the source but merely command the shebaits to apply the income received from the debutter properties for specified purposes. We may quote to illustrate:I direct that the shebaits and trustees shall out of the Debutter funds maintain and keep a sufficient number of carriages and horses for their use, and comfort and that of their families and after providing for the purposes aforesaid out of the Debutter income I direct the shebaits and Trustees to pay to each of the shebaits for the time being who shall actually take part in the performance of the duties of the shebaits and the execution of the Trusts of this fund as and by way of remuneration for their services the sum of Rupees Five hundred a month....I direct that the widows of my three deceased sons Greendro Sorrendro and Jogendra who assist in the work of preparing articles of offerings to the Thakoors and for the feeding and distribution to the poor and all the widows of shebaits hereby appointed and future shebaits who shall in like manner assist in the said work shall be fed and clothed and maintained and shall receive a remuneration of the sum of Rupees fifty each a month from the income of the debutter fund....So the shebaits first get the income and then apply it in conformity with the directives given in the will. The rulings relied on by both sides do not shake the position we have taken and may not merit discussion.