Calcutta H.C : Whether, on the facts and in the circumstances of the case and on a correct interpretation of the deed dt. 26th Sept., 1970, the Tribunal was right in law in holding that a valid trust came into existence by the said deed dt. 26th Sept., 1970, and the property bearing No. 37/1, Jatindra Mohan Avenue, Calcutta, belonged to the Ganapatrai Sagarmull Charitable Trust and in deleting Rs. 14,384 (asst. yr. 1973-74) and Rs., 14,870 (asst. yr. 1974-75) representing income of the said property from the assessments in the hands of the assessee for the asst. yrs. 1973-74 and 197475 ?

S.C. SEN, J.:

The Tribunal has referred the following question of law to this Court under s. 256(1) of the IT Act, 1961 : “Whether, on the facts and in the circumstances of the case and on a correct interpretation of the deed dt. 26th Sept., 1970, the Tribunal was right in law in holding that a valid trust came into existence by the said deed dt. 26th Sept., 1970, and the property bearing No. 37/1, Jatindra Mohan Avenue, Calcutta, belonged to the Ganapatrai Sagarmull Charitable Trust and in deleting Rs. 14,384 (asst. yr. 1973-74) and Rs., 14,870 (asst. yr. 1974-75) representing income of the said property from the assessments in the hands of the assessee for the asst. yrs. 1973-74 and 197475 ?”

This reference relates-to the asst. yrs. 1973-74 and 1974-75. The dispute in this reference is whether the income derived from the property of Ganapatrai Sagarmull Charitable Trust should be assessed in the hands of the assessee or Ganapatrai Sagarmull Charitable Trust. This Court, in the case of Ganpatrai Sagarmal (Trustees) for Charity Fund vs. CIT (1963) 47 ITR 625 (Cal), examined the trust deed and came to the conclusion that the properties described as trust properties had remained as properties of the settlors and that, therefore, the entire income was chargeable to tax in the hands of the settlors. By the document, merely an intention to set apart one- fourth of the income was indicated but actual setting apart of the sums had not taken place. After the judgment was given in that case, the defects pointed out by the Court were rectified and the Tribunal has come to the, finding that the property bearing premises No. 37/1, Jatindra Mohan Avenue, Calcutta, belonged to the Ganapatrai Charitable Trust. The finding of the Tribunal in that respect, is as follows: “…… the property, viz., the land and building at 37/1, Jatindra Mohan Avenue, was transferred to and vested in the trustees of the charitable trust only. The infirmities that were pointed out by their Lordships in Ganpatrai Sagarmal (Trustees) for Charity Fund vs. CIT (supra) have been removed by the parties who created a separate deed of trust and registered it vesting the trust property in the trustees. The line of distinction sought to be drawn by the Revenue that this deed was a mere declaration of trust, and that it did not vest the property in the trustee is, therefore, clearly untenable and cannot be accepted in the face of the recitals quoted above. The municipal tax receipt issued by the Calcutta Municipal Corporation shows that the property in question stands registered in the name of the trust represented by the three trustees specified in the deed dt. 26th Sept., 1970. The certificate of registration under s. 12A of the IT Act, 1961, issued by the CIT, West Bengal VI, Calcutta, clearly shows that the Revenue has examined the trust deed and satisfied itself before granting the said certificate to the effect that the appellant will be entitled to the benefits of ss. 11 and 12 of the Act. These certificates cannot be ignored as irrelevant as pointed out for the Revenue as they are unimpeachable evidence available on the Department’s record itself. The assessment order for the assessment year 1973-74 dt. 19th Jan., 1976, made on the trust, though said to be a protective measure, shows that the property in question belonged to the trust and that it did not belong to the appellant-firm. Learned counsel for the appellant also produced the original sale deed for the purchase of this property on 8th Aug., 1961. A copy of the sale deed is also available at page 30 of the paper book. This sale deed shows that this property was purchased by the trustees in their names and in their capacity as trustees of the trust known as ‘Ganapatrai Sagarmal Charitable Trust’.

In view of the evidence produced by the appellant in support of its claim, we hold that the property bearing No. 37/1, Jatindra Mohan Avenue, Calcutta, did not belong to the appellant firm, but belonged to the ‘Ganpatrai Sagarmull Charitable Trust’ and that the income from the said property cannot be included in the hands of the appellant firm.”

Mr. Prosad, appearing for the Revenue, has not been able to point out any infirmity in the findings of fact made by the Tribunal. The Tribunal has taken all facts into consideration and then came to the conclusion that the defects which had been pointed out by the Court in the judgment in the case of Ganpatrai Sagarmal (Trustees) for Charity Fund (supra) have been rectified by a subsequent deed and the property had been validly converted into a trust property. Therefore, the income derived from that property cannot be included in the hands of the assessee-firm. On the aforesaid finding of the Tribunal, the question will have to be answered in favour of the assessee.

Under the circumstances, the question referred to this Court is answered in the affirmative and in favour of the assessee.

There will be no order as to costs.

BHAGABATI PRASAD BANERJEE, J.:

I agree.

[Citation :182 ITR 89]