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HIGH COURT OF CALCUTTA
S. C. GHOSH
BIRLA JANKALYAN TRUST - Appellant
Versus
STATE OF WEST BENGAL - Respondent
Matter 507 Of 1970
Decided On : SEPTEMBER 18, 1970
CHARITABLE AND RELIGIOUS TRUSTS ACT - SECTION 7 - OPINION, ADVICE, OR DIRECTION - TRUSTEES OF A PUBLIC CHARITABLE TRUST CAN APPLY FOR OPINION, ADVICE, OR DIRECTION FROM THE COURT ON ANY QUESTION AFFECTING THE MANAGEMENT OR ADMINISTRATION OF THE TRUST PROPERTY - COURT MAY GIVE OPINION, ADVICE, OR DIRECTION FORTHWITH OR FIX A DATE FOR HEARING - NOTICE TO BE SERVED ON INTERESTED PERSONS - COURT WILL NOT GIVE OPINION, ADVICE, OR DIRECTION ON QUESTIONS NOT PROPER FOR SUMMARY DISPOSAL.
Fact of the Case:
The Trustees of the Birla Jankalyan Trust, a public charitable trust, applied to the court under Section 7 of the Charitable and Religious Trusts Act, 1920, for an opinion or advice or direction in respect of the holding of the paid Trust in Jiyajeerao Cotton Mills Ltd. and Pilani Investment Corporation Ltd., specially as to what steps should be taken by the Trustees with regard to the said shares in the said two companies.
Finding of the Court:
The court held that the Income-tax Officer and the Commissioner of Income-tax were not interested persons within the meaning of Section 7(2) of the Charitable and Religious Trusts Act, 1920, and therefore could not be served with notices of the application. The court also held that it was not appropriate to express an opinion or give advice or directions on the construction of Clause (h) of Sub-section (2) of Section 13 of the Income-tax Act, 1961, as substituted, as the construction of the said clause was a complicated question of law that may have to be construed by different courts in India.
Issues: 1. Whether the Income-tax Officer and the Commissioner of Income-tax were interested persons within the meaning of Section 7(2) of the Charitable and Religious Trusts Act, 1920? 2. Whether it was appropriate to express an opinion or give advice or directions on the construction of Clause (h) of Sub-section (2) of Section 13 of the Income-tax Act, 1961, as substituted?
Ratio Decidendi: 1. The court held that the Income-tax Officer and the Commissioner of Income-tax were not interested persons within the meaning of Section 7(2) of the Charitable and Religious Trusts Act, 1920, because they were not connected with the trust in any way and had no interest in the trust property. 2. The court held that it was not appropriate to express an opinion or give advice or directions on the construction of Clause (h) of Sub-section (2) of Section 13 of the Income-tax Act, 1961, as substituted, because the construction of the said clause was a complicated question of law that may have to be construed by different courts in India.
Final Decision: The court dismissed the application of the Trustees and directed them to pay the costs of the application to the Income-tax Officer and the Commissioner of Income-tax out of the funds of the trust.
( 1 ) THIS is an application made by the Trustees of the Birla Jankalyan trust constituted by a deed of settlement dated March 13, 1964, as rectified by the supplementary deed dated January C, 1965, inter alia for an opinion or advice or direction under Section 7 of the Charitable and Religious Trusts Act, 1920, in respect of the holding of the paid Trust in Jiyaieerao Cotton Mills Ltd. , and Pilani Investment Corporation Ltd. , specially as to what steps should be taken by the Trustees with regard to the said shares in the said two companies.
( 2 ) THE application has been made under Section 7 of the Charitable and Religious Trusts Act. Notice of this application was directed to be given upon the Income-tax Officer, "b" Ward, Companies Dist. I, Calcutta, and Commissioner of Income-tax, West Bengal I.
( 3 ) THE said Trust was established by a deed of settlement dated March 13, 1964, by one J. K. Birla since deceased for public Charitable purposes. The office of the said Trust is situate at 8-A, Chowringhee Place, within the jurisdiction of this Court. The objects and purposes of the said Trust are inter alia advancement of education, learning research and culture by inter alia establishing schools, colleges, libraries, reading rooms, etc. , as well as rendering help to poor students giving medical relief to people as well as relief to poor by founding or granting aid to orphanages, poor houses, etc.
( 4 ) BY and under the said deed of trust a sum of Rupees 1,000/- was conveyed to the trustees as trust fund for carrying out the aforesaid objects of trust. The said deed of settlement was rectified by a supplementary deed dated January 6, 19g5.
( 5 ) IN or about March, 1964, the trustees by viitue of express power con-ferred upon them by the said deed of Trust received by way of donation shares in various Joint Stock Companies of the face value of Rupees 61,21,670/- from Raia Baldreodas Birla, Santati-Khosh, Subsequently the trustees received Equity Shares in Gwalior Rayon Silk Manufacturing (Weaving) Co. Ltd. , by way of bonus in respect of shares received and held by the trustees for the purpose of the trust. The said trust derived considerable income in the form of dividend in respect of the said shares. As a matter of fact between 1964 and 1970 tho trustees received diverse amounts every year varying from Rupees 456,057-75 P. to Rs. 824,497. 75 P. as dividend in respect of the said shares The trustees have been applying the said Income for preservation, repairs, renovation of architectural and archaeological works, running dispensaries, giving relief to drought and flood affected people and granting stipends to students as well as professors.
( 6 ) THE income of the said trust is exempted under Section 11 of the Income-tax Act, 1961 (hereinafter mentioned as the Act) from paying Income-tax, in view of the fact that the said trust was and is wholly for Charitable or religious purposes.
( 7 ) BY the Finance Act, 1970, the provisions of Section 11 of the said Act were amended and Section 13 of the said Act was substituted by a new section The relevant portions of the said new Section 13 which shall come into effect from 1st April, 1971, are set out here-under:--13 (1) Nothing contained in Section 11 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof- (a ). . . . . . (b ). . . . . . (c) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof- (i ). . . . . . (ii) if any part of such income or any property of the trust or institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in Sub-section (3) (2) Without prejudice to the generality of the provisions of Clause (c) of Sub-section (1), the income or the property of the trust or the iastitution of any part of such income or property, shall fo
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