Remuneration received by a trustee for managing religious institutions and properties is not exempt from income tax as agricultural income, even if the trust income is derived from agricultural lands.

Judgment

SHAH, J. : The appellant executed a deed of trust settling certain lands described in schedule "A" and the rents of lands described in schedule "C" for the maintenance of certain temples and Thakoorbaries. The material terms of the deed of trust are :

Cl. 6 :- "And whereas the declarant feels that a Declaration of Trust should be made whereby the income of a part of the Raj properties may be earmarked and specifically devoted to the maintenance of the aforesaid institutions as also the Declarant may as hitherto treat himself and be treated by others as a legal Trustee of the said institutions and the properties out of the income of which the said maintenance is being and will be provided for."

Cl. 7 :- "The declarant declares that henceforth he holds and will hold the properties detailed at the foot thereof in Schedule "A" in trust for religious purposes of maintaining the religious institutions more fully described in Schedule "B" annexed hereto."

Cl. 8 :- "The declarant further declares that in all lands now held by him in the aforesaid properties as Bakast or proprietor s private lands as in the schedule "C" which are in direct khas cultivation of the Declaration shall henceforth be or continue to be his tenancy lands for which the Declarant shall pay the rental as noted against such lands, annually to the trustee for the use and benefit of the aforesaid institutions and the rights of the Declarant in them shall be those of a rayat under the Bihar Tenancy Act."

2. The net income of all the lands set out in Schedule "A" after providing for the expenses of management and the taxes payable thereon was estimated at Rs. 1,81,717/- and the net rental of the properties described in Schedule "C" was estimated at Rs. 10,208/- and from the aggregate of these two amounts after deducting 15 per cent as trustee s remuneration, the balance of the income estimated at Rs. 1,63,136-4-0 was to be utilised for the objects of the trust.

3. In the assessee s income determined by the Income Tax Officer for the assessment year 1950-51, Rs. 6,000/- were included as income from non-agricultural properties of the trust. In the view of the Income Tax Officer, the trust was not public religious trust and the income derived from properties not used for agriculture was not exempt from liability to pay tax in the hands of the appellant. In appeal against the order of assessment, the Appellate Assistant Commissioner held that the income coming to the hands of the appellant from the trust properties, was not taxable as private income of the appellant, but in his view, the remuneration amounting to Rs. 21,274/- computed at the rate of 15 per cent of the net income of the trust properties in the year in question not being agricultural income in the appellant s hands were liable to be taxed. In appeal to the Income Tax Appellant Tribunal, Patna Bench, Patna, the order passed by the Appellate Assistant Commissioner in so far as it related to remuneration received by the appellant was affirmed. The High Court of Judicature at Patna thereafter at the instance of the appellant directed the Income Tax Appellate Tribunal to submit a statement of the case on five questions set out in the order. The fifth question (which is the only question material in this appeal) was as follows :

"Whether, in the facts and the circumstances of the case, the amount of Rs. 21,274 being the amount paid to the assessee in his character of a Shebait of the Trust properties should have been held to be exempted from taxation on the ground that it is agricultural income?"

4. The High Court agreed with the Tribunal that the remuneration was received by the appellant under a contract, and it was not agricultural income, merely because the source of the money was agricultural income. The High Court accordingly answered the fifth question "against the assessee." This appeal is filed by the appellant with leave under S. 66A(2) of the Act granted by the High Court limited to the question whe