Bihar State Board of Digambar Jain Religious Trust vs District Judge, Singhbhum and anr

S.B. Sinha, J.—In this writ petition the petitioner has prayed for quashing of a judgment dated 17th December, 1982, as contained in Annexure 2 to the writ petition, passed by Shri Bhuvneshwar Prasad, District Judge, Singhbhum in Miscellaneous Appeal No. 6 of 1980, whereby and whereunder he allowed the appeal preferred by the Shri Digamber Jain Trust, Chaibassa (respondent No. 2 hereof) which arose out of an order of assessment dated the 17th September 1979 made u/s 70(1) of the Bihar Hindu Religious Trusts Act, 1950 (hereinafter referred to as ''the said Act'') and the rules framed thereunder. The facts of the case lie in a very narrow compass.

The respondent No. 2 is a trust within the meaning of the provision of the said Act and rules framed thereunder. It is admitted that one Shri Mishrilal Jain donated a sum of Rs. 2,50,000/- to the appellant-trust. According to the respondent No. 2 the said amount was donated with a specific direction that the said sum would form part of the corpus of the Trust.

By reason of an order dated the 17th September, 1970 the appellant--Board held that the aforementioned amount of Rs. 2,50, 000/- being income of the trust, the same has also to be taken into consideration for the purpose of assessment of the respondent No. 2 trust for accounting year 1979-80 in terms of Section 70(1) of the said Act. The aforementioned order is contained in Annexure 1 to the writ petition.

The respondent No. 2 being aggrieved by and dissatisfied with the said order preferred an appeal before the District Judge, Singhbhum at Chaibassa who by the impugned judgment dated 17.12.1982 held that the aforementioned amount does not come within the purview of ''income'' of the trust in question and as such no fee is livable in relationthereto.

Mr. Debi Prasad, learned counsel appearing for the petitioner submitted that the word ''income'' is of wide amplitute and in that view of the matter there is no reason as to why a donation given by any person to the trust would be subject to an assessment.

For the purpose of appreciating the point involved in this writ petition the following provisions of the said Act may be taken into consideration: --

Section--2(O) "Trust Fund means the Bihar State Board of Religious Trust Fund, the Bihar State Board of Swetamber Jain Religious Trust under the Bihar Board of Digamber Jain Religious Trust Fund, as the case may be, founded u/s 69.

Section--2(P)--"Trust Property" means the property appertaining to a religious trust.

Section--69--Creation of Trust Funds--(1) --There shall be formed a separate Trust Fund for each of the Bihar State Board of Religious Trust, the Bihar State Board of Swetamber Jain Religious Trusts and the Bihar State Board of Digamber Jain Religious Trusts to be respectively known as the Bihar State Board of Religious Trust Fund, the Bihar State Board of Swetamber Jain Religious Trust Fund and the Bihar State Board of Digamber Jain Religious Trust Fund, and there shall be placed to the credit of--

X X X

69 (iii)-The Bihar State Board of Digambar Jain Religious Trust Fund--

(a) all sums received by the Bihar State Board of Digamber Jain Religious Trust as donation and grants;

(b) all sums received from trustees of Digamber Jain Religious Trusts as fines u/s 67;

(c) all sums received from trustees of Digamber Jain Religious Trust as fee u/s 70;

(d) all receipts by the Bihar State Board of Digambar Jain Religious Trust in respect of fees for inspection and supplying copies of any document;

(e) all sums received or recovered by the Bihar State Board of Digambar Jain Religious Trusts as costs awarded to it in any suit or proceeding; and

(f) all sums received or recovered by the State Board of Digambar Jain Religious Trusts on any other account except certified sums received or recovered by it u/s 64.

Section 71(1) Fee payable by religious trusts to Board.--For the purpose of defraying the expenses incurred or to be incurred in the administration of this Act, the trustee of every religious trust shall, in each financial year, pay to the Board such fee, not exceeding five per centum of its net income in the last preceding financial year, as the Board may from time to time, with the previous sanction of the State Government, determine.

There cannot be any doubt that any sum received by the Board shall form part of the trust fund, but, section 70of the Act being a charging provisions the fee at the prescribed rate is only payable by the trustees of every religious trust not exceeding 5% of its ''net income'' in the last preceding financial year.

From a plain reading of section 70 (1) aforementioned it is evident that fee is not livable on the trust fund but is livable in the next income.

It has not been denied that the aforementioned sum of Rs. 2,50,000/- was donated by Shri Mishrilal Jain with a clear direction that the same would form part of the corpus of the trust. Reference in this connection may be made to Barclays Bank Ltd. v. Quistolose Investment Limited, 1970 A.C. 567: (1968) 3AER 651, wherein it has been held that in respect of a trust if a particular sum is to be utilised for a particular purpose the same cannot be utilised for any other purpose whatsoever. Evidently, therefore, the trustees were not empowered to treat the said sum in any manner other than for the purpose of corpus of the trust. The word ''income'' has been defined in section 2 (24) of the Income Tax Act which reads as follows:--

2(24):--"income" includes:--

(i) profits and gains;

(ii) dividend;

(iii) voluntary contribution received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution...

Clause (iia) in the aforementioned definition was inserted by Finance Act, 1972 with effect from 1.4.1973. The very fact that even under the Income Tax Act contribution with a specific direction that it shall form part of the corpus of the trust does not come within the purview of the definition of income is clearly demonstrative of the fact that such donation cannot come within the purview of the definition of income even for the purpose of the said Act. In this connection reference may also be made to section 12 of the Income Tax Act, 1961 which reads as follows:--

12 Any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purposes of section 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply accordingly.

From the aforementioned provision it is absolutely clear that sum in question cannot be treated as income of a trust.

u/s 70of the said Act Fee is livable upon net income of the trust.

Evidently therefore section 70of the Act imposes a fiscal liability upon the trust. It is now well settled canon of interpretation of statute that in case of any doubt a fiscal statute should be construed in favour of the assessee. Reference in this connection may be made in 1985 PLJR 1523. In this view of the matter I do not find merit in the writ petition which is accordingly dismissed with costs.