1. This reference under Section 66(1) of the Indian Income-tax Act raises a short point, though one which has shown a tendency to become obscure by the historical background and by the more prominent features concerning questions of fact, of recent times. The question which has been referred to us is in these terms:-

Whether in the circumstances of the case the sum of Rs. 23,515 received by the assessee as surplus income of the trust property of the Keshavji Jadhavji Trust, or any part of that sum, is exempt from taxation under Section 4(3) (i) of the Indian Income-tax Act ?

2. Before turning to the somewhat involved circumstances of the case, it is essential to consider and bear in mind the terms of Sub-section 4(5) (1) of the Act. It is that sub-section which exempts from the incidents of taxation certain types of income, described under twelve heads. The opening words are:

Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them, and it is with the first head or class with which we are coneerned in this case. It is (1) any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and then the sub-section continues to make provision for apportionment, in the case in which property is partly so held.

3. The sum of Rs. 23,515, mentioned in the question referred to us, is undoubtedly income, and the question is whether the "property", that is to say, the capital of the trust funds from which it springs is held in trust or other legal obligation which are wholly for religious or charitable purposes.

4. The involved nature of the facts of the case renders these preliminary observations necessary, unless' what is fundamental is to become clouded by considerations of the ultimate destination of the income. The facts are these.

5. By his will, dated February 8, 1886, Keshavji Jadhavji, who died the, day following, made provision for a number of capital funds and annual sums to be applied for purposes which cannot under the will, in view of various decisions of this High Court, with regard to the testator's dispositions, be challenged as being anything but religious or charitable in character. In each case where payments have to be made the total amount which can be expended annually is fixed by the will, and the sum total of these limits, so far as annual payments are concerned, amounts to the sum of Rs. 26,050. One of the executors of the will was the assessee's father and he was also the heir of the testator. Owing to the rise in land values in Bombay and the consequential increase in rents, the testator's estate began to produce a substantial surplus income, and in 1900 and 1903 the assessee's father commenced proceedings in this Court to have the destination of this surplus income and past accumulations of it determined. In the result it was decided that the assessee's father was beneficially entitled to the surplus, but he, being of a charitable disposition, desired that the surplus should go to similar objects to those which bene fit by the testator's bounty. Accordingly by a deed of settlement dated April 1, 1908, which was sanctioned by the Court, there was a settlement of parts of the testator's estate and of part of the accumulated surplus which was' calculated to be sufficient to produce the annual sum of Rs. 26,050 and it is that trust fund, which is the "property" within the meaning of Section 4(3) (i) of the Act and which has produced the Rs. 23,515 mentioned in the question referred to us.

6. Under the settlement of 1908, surplus income again began to accumulate, and the assessee's father brought a third suit in this Court to have the destination of that surplus determined. Again it was declared that the surplus belonged to the assessee's father and again in view of declarations of this Court challenge to the trusts of the 1908 settlement, as not being religious or charaitabla, does not lie. The assessee's father died in 1927 and the assessee" as his heir brought in 1934 a fourth suit in this Court to have the destination of the then existing accumulations and surplus determined. On October 12, 1934, Mr. Justice Tyabji declared that on the construction of the decree in suit No. 785 of 1903 and suit No. 989 of 1917 on the file of this Hon'ble Court, Carsandas Natha, the deceased mentioned in the plaint, was absolutely entitled to the surplus income remaining under the deed of trust dated April 1, 1908:

And this Court doth further declare that the deceased Carsondas Natha being entitled to the said income and accumulations thereof as aforesaid the plaintiff as his sole heir is entitled to the same and to execute a trust deed in respect of the accumulations and surplus of income to arise in future for the religious and charitable objects mentioned in the plaint.

7. It is to be observed that in those proceedings the assessee was plaintiff and the Advocate General and the two other trustees of the 1908 settlement, viz. Kanji Mulji and Mowji Mulji, were defendants.

8. Thereafter, viz. on October 7, 1940, the assessee executed a deed poll of which the material provisions are as follows:-

Now Know Ye And These Presents Witness that I, the said Vullabhdas Karsondas Natha, Do Hereby declare that all my rights and interest into or to the immoveable properties and the securities described and mentioned respectively in Schedules 'A' and 'B' hereunder written, and the income of which being the surplus referred to above, is payable to me every year in accordance with the terms of the decree in Suit No. 1293 of 1934 (O.S.) is dedicated for >ever by me for religious and charitable objects such as (1) Poor Relief (2) Famine Relief (3) Providing Medical and Surgical relief to the needy and poor (4) Supply of fodder to animals and cattle (5) Advancement of education (6) Advancement of Hindu Religion (7) Upkeep and maintenance of Charitable Institutions and (8) Such purposes beneficial to the Hindu Community and Indians in general not falling under preceding heads: And I Do Hereby Further Declare that I do now hold my right title and interest in the said immoveable properties and securities, subject to deduction therefrom of the expenses incurred, upon Trust for religious and charitable objects aforementioned And that in the event of my share in the said immoveable properties and the securities being separated and conveyed and given over to me, I shall also continue to hold my said share, deducting therefrom the expenses incurred by me till then, upon Trust as aforesaid, either myself alone or with any two or more Trustees whom I may appoint along with me, with and subject to the powers and provisions hereinafter declared.

And later on in the deed, it is provided that During my lifetime and while I continue to be a Trustee either alone or with others along with me, the entire management of the Trust properties and the Trust Funds shall remain with me and be conducted by me and according to my desire; And all the powers hereinbefore mentioned shall be vested in me and be exercised by me alone. And Provided Further That I do hereby reserve to myself the liberty and power to Revoke this Trust at any time after six years from the date hereof.

9. The assessee is still the sole trustee of this deed, and there is nothing on the record to show that express notice of the 1940 deed was given to the trustees of the 1908 settlement, though Sir Jamshedji Kanga, on behalf of the assessee, states that notice was in fact given. However, the assessee is one of the three trustees of the 1908 settlement, and he is also the sole trustee of the 1940 deed, and in my opinion from the circumstances constructive notice must be assumed, in the absence of proof of express notice having been given.

10. Mr. Setalvad, on behalf of the Commissioner, challenges the trusts of the 1940 deed, and contends that some of the objects are neither religious nor charitable. Objection is taken to objects numbered 4 and 8, with regard to which he submits that if any of the objects are bad, then the whole of the funds could be applied for that object or objects so as to vitiate the whole of the trust as being either religious or charitable, and he relies upon the case of In re Tilak Jubilee Fund . But in the case before us the material words are that what is settled is to be dedicated "for ever by me for religious and charitable objects, such as"; and then are set out the eight objects, and the question is whether those eight objects predominate and govern the preceding trust or whether they are to be regarded as illustrative of the type of religious or charitable objects to which the trustees may apply the funds. In my opinion the latter is the correct view, the words "such as", it is submitted by Sir Jamshedji Kanga, being equivalent to the word "like". That being so, it does not become essential to consider the two objects to which objection is taken by Mr. Setalvad on the ground that they are neither religious nor charitable. However, as this is a ease of some importance, we think it right to express our view upon objects 4 and 8.

11. Object 4 is, "supply of fodder to animals and cattle". In my opinion such a disposition, if it had to be construed by English law, would not be a charitable trust: see, Grove-Grady, In re. [1929] 1 Ch. 557, which is a decision of the Court of Appeal, with a dissenting judgment by Lord Justice Lawrence. I desire to refer only to one passage, viz. that which appears at p. 582 in the judgment of Lord Justice Russell, in which he says:

There can be no doubt that upon the authorities as they stand a trust in perpetuity for the benefit of animals may be a valid charitable trust if in the execution of the trust, there is necessariiy involved benefit to the public; for if this be a necessary result of the execution of the trust, the trust will fall within Lord Macnaghten's fourth class in Pemsel's Case [1891] A.C. 581, 583 namely, 'trusts for other purposes beneficial to the community.'

12. As I have said, if we were construing this object in England, I should be of opinion that this was not charitable because the feeding of animals which are obnoxious to mankind cannot, in my view, be said to be beneficial to the public. However, we are considering the will of a Hindu, and apart from the charitable aspect of the matter, the feeding of dumb creatures is in Hindu religion regarded as religious. Further, as has been pointed out in All India Spinners' Association v. Commissioner of Income-tax, Bombay (1941) 47 Bom. L.R. 233, P.C. by Lord Wright in delivering the judgment of the Board (p. 237):

The Indian Act gives a clear and succinct definition which must be construed according to its actual language and meaning. English decisions have no binding authority on its construction, and though they may sometimes afford help or guidance, cannot relieve the Indian Courts from their responsibility of applying the language of the Act to the particular circumstances that emerge under conditions of Indian life.

13. The definition to which Lord Wright there refers to is to be found at the end of Section 4(3) of the Act, and it is in these terms:-

In this sub-section 'charitable purpose' includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility.

14. I do not feel any difficulty with regard to object No. 8, which is, "such other purposes beneficial to the Hindu Community and Indians in general not falling under preceding heads", it comes directly under the last object in the definition of "charitable purpose". If authority be needed, that such a disposition comes within the definition, it is to be found in the well-known case of Trustees of Tribune Press v. Commissioner of income-tax, Punjab.

15. The result is that the property both immovable and moveable comprised in the 1908 trust is held under the trusts of that deed to pay out of the income Rs. 26,050 for purposes which are either religious or charitable, and that up to October 7, 1940, the balance of the income was payable to the assessee personally and to him as trustee of the 1940 deed since that date upon the trusts which I have already held are either religious or charitable. What we are dealing with under Sub-section 4(3) (i) of the Act, is income, and it is the surplus income derived from the immoveable and moveable properties held by the trustees of the 1908 trust deed. Freedom from taxation is dependent on the property from which the income is derived being held under trust or other legal obligation wholly for religious or charitable purposes. Admittedly so far as these trust funds produce Rs. 26,050 per annum the property is held under such trust or legal obligation; but how is the property held so far as the surplus income is concerned? The declarations of this Court in 1934 make it clear that it is payable to the assessee personally, and up to October 7, 1940, there can be no doubt that it cannot be exempted from taxation under section 4(3) (i), but since October 7, 1940, its destination is for religious or charitable purposes, so that the property comprised in the 1908 trust deed is now held to apply, Rs. 26,050 to religious and charitable purposes contained in that deed and to pay the surplus to the trustees or trustee of the 1940 deed to hold it or apply it-it makes no difference which-for purposes or objects which are religious or charitable being those comprised in the 1940 deed. It follows that the whole income, either under the trusts of the 1908 settlement or the 1940 deed, is applicable to objects which fall directly within the ambit of Section 4(3) (i). In my opinion the words "or other legal obligation" in that subsection cover such a case as this, in which the trustees of the original settlement are bound to pay income to other trustees who in their turn are bound to apply it for purposes which are religious or charitable. If that be so the capital fund from which the whole income springs is held by the 1908 trustees since October 7, 1940, for religious or charitable purposes since the whole of the income is by the conjoint effect of the 1908 settlement and the 1940 deed to be applied for religious or charitable purposes.

16. Accordingly in my opinion the question should be answered by saying that the Rs. 23,515 must be apportioned and that that part of it which is attributable to the periods November 1, 1939, to October 7, 1940, does not escape taxation but that the portion attributable to the period October 7 to October 31, 1940, is exempted from taxation under Section 4(3) (i) of the Act. Commissioner must pay the costs.

Chagla, J.

17. The assessee before us claims exemption in respect of the sum of Rs. 23,515 as falling under Section 4, Sub-section (3), Sub-clause (i), of the Indian Income tax Act. Now before that sub-clause can be applied, two conditions have got to be satisfied. There must be a property held under trust or other legal obligation wholly for religious or charitable purposes; and there must be an income which must be derived from that property. In other words, there must be a nexus between the property held under trust or other legal obligation wholly for religious or charitable purposes and the income in respect of which an exemption is sought; or again, to put it in a different language, the sum of money in respect of which the assessee claims an exemption must represent the property held in trust for religious or charitable purposes. Now in this case the assessee's contention is that the sum of Rs. 23,515 or at least to the extent that a portion of it was earned after October 7, 1940, was an income which was derived from property which was held in trust for religious or charitable purposes under a deed of trust executed on October 7, 1940. In order to appreciate the assessee's contention, it is necessary to consider the terms of that deed of trust. Now what was settled under that deed of trust was the right, title and interest to the assessee into or to the immoveable properties and the securities described and mentioned respectively in the schedules to the deed of trust of April 1, 1908. Mr. Setalvad's contention is that the asaessee had no right, title and interest in the trust properties held under the deed of trust of 1908. I am not prepared to accept that contention. As a result of the judgment of Mr. Justice Tyabji delivered on October 12, 1934, and the decree following upon it, it was held that there was a resulting trust in favour of the assessee to the extent of the income derived from the trust properties which were in excess of the stun of Rs. 26,000. Now under the deed of trust of April 1, 1908, the whole legal estate in the trust properties was vested in the trustees and they were directed to spend the income of the trust properties on certain religious and charitable objects set out in that deed of trust; but there was no direction as to what they were to do with the surplus income. It was, therefore, as a result of the judgment and decree of October 12, 1934, that the trustees of the deed of trust of April 1, 1908, became trustees as a consequence of the resulting trust for the assessee in respect of the surplus income. To my mind, reading the judgment and the decree, it is clear that a right was conferred upon the assessee of payment of the surplus income out of a specific property and that specific property was the trust properties held in trust under the deed of trust of April 1, 1908. If that be so, I fail to understand how it can be argued that the assessee had no right, title or interest in the trust properties held under the deed of trust of April 1, 1908. The right, title and interest of the assessee was the right to receive the surplus income out of the trust properties and it is this right, title and interest that is settled upon trust by the deed of trust of October 7, 1940, and it is not disputed that the surplus income of Rs. 23,515 or a portion of it is the income derived from this property.

18. Even assuming I am wrong, the fact still remains that by the decree of October 12, 1934, the right to receive the surplus income was conferred upon the assessee. Now a right to receive income from a property, even though through the intervention of trustees, is property. The Privy Council in M.E. Moolla Sons, Ltd. v. Official Assignee, Rangoon (1936) L.R. 63 I.A. 340, S.C. 38 Bom. L.R. 1011, have so held. In that case A obtained a vested right in the income and contingent rights in the corpus of a settled property under a registered deed of settlement made by Ms father. He conveyed his interest under the settlment to B together with certain other rights. B, in his turn, by unregistered articles of agreement made between him and the appellant company, agreed to sell to the company his busniess and certain specified properties and assets which included the purchase by B of the right of A in the estate of his father. No registered iustrument was executed at any time to carry out this contract of sale. B was adjudicated insolvent and the appellant company was ordered to be wound up compulsorily. The liquidator of the appellant company made a claim that he was solely entitled to all the rights and interests acquired by B under the assignment between A and B. The Privy Council held that A's share in the rents and profits accruing due was an interest in immoveable property and as such compulsorily registrable and, therefore, no title passed to the appellant company. The contention was advanced before the Privy Council that while a right in respect of future rents might be immoveable property where the owner of the right was himself entitled vis-a-vis the tenants to collect and enjoy the profits of the land, the same reasoning could not be applied to a case, such as the present, where the right granted was subject to the intervention of trustees, and was no more than a right to receive from the trustees a sum of money out of the income of the property. This contention was rejected by the Privy Council.

19. Putting it at the highest from the point of view of Mr. Setalvad, the right conferred upon the assessee is the right to receive from the trustees of the deed of settlement of April 1, 1908, a sum of money out of the income of the property, and that is exactly what the Privy Council held to be property. Then says Mr. Setalvad that even if that be property, what is received by the assessee is not income, because, according to him, only that sum of money can be income which is yielded by a corpus. I am not prepared to place upon section 4, sub-section (3), sub-clause (i), the narrow construction for which Mr. Setalvad contends. As I have pointed out, all that the section required is a nexus between the property and the income or a sum of money which should represent property held in trust. Undoubtedly the amount derived by the assessee and for which he claims an exemption is represented by his right to receive the surplus income from the trustees of the 1908 trust out of the income of the trust properties. With respect to the Tribunal, they seemed to have taken a view which is entirely unwarranted by the true position in law. They seemed to take the view that as this income was contingent upon there being any surplus at all, therefore it was not property. Now it is almost an elementary proposition that even a contingent interest is transferable and attachable and is as much property as a vested interest.

20. The next question is whether the property is settled upon religious and charitable trusts. Now the settlor in the 1940 trust dedicates the property for ever for religious and charitable objects; and then he goes on to state, as and by way of illustration, what, according to him, those objects are. Now, in my opinion, the trust deed discloses a dominant and overriding charitable intention. The dedication is to religious and charitable objects and the trustees have no discretion to apply any of the trust income except to religious and charitable objects. If any of the eight objects which are specified as and by way of illustration do not fall within the category of religious and charitable objects, then the trustees must discard such objects and apply the trust income only to religious and charitable objects. Mr. Setalvad has contended that objects Nos. 4 and 8 are not religious and charitable objects. Object (4) is supply of fodder to animals and cattle. I should have thought that to a Hindu and in this case the settlor happens to be a Hindu-nothing can be of greater religious merit than to relieve suffering of dumb cattle and animals by giving them fodder. It is hardly necessary to emphasize that, according to Hindu religion and philosophy, animals have the same soul as human beings have and the spark of divinity is as much present in them as in human beings. But Mr. Setalvad says that Hindu religion makes it meritorious only to supply fodder to a certain class of animals and on certain specified occasions. He does not dispute that giving fodder to cattle would be even from the strictest Hindu religious point of view a matter of religious merit. If that be so, object (4) is cumulative in character-supply of fodder to animals and cattle-and if supply of fodder to cattle is a good religious object, then the Court could not permit that particular object to fail and the trustees could be compelled to apply the trust income only to the supply of fodder to cattle and not to other animals. But I am prepared to go further. According to me, supply of fodder to cattle and animals is not only a good religious trust but it is also a good charitable trust.

21. In In re Wedgwood, Allen v. Wedgwood [1915] 1 Ch. 113 a testatrix by her will gave her residue upon trust to apply the same for the protection and benefit of animals, and the Court of Appeal in England held that it was a good and valid charitable trust. It is important to consider the grounds on which the learned Judges came to that conclusion. Lord Cozens-Hardy, Master of the Rolls, said this (p. 117) :

Apart from authorities which are binding upon us, I should be prepared to support the trust on the ground that it tends to promote public morality by checking the innate tendency to cruelty.

And Lord Justice Swinfen Eady said this (p. 122) :

A gift for the benefit and protection of animals tends to promote and encourage kindness towards them, to discourage cruelty, and to ameliorate the condition of the brute creation, and thus to stimulate humane and generous sentiments in man towards the lower animals, and by these means promote feelings of humanity and morality generally, repress brutality, and thus elevate the human race.

22. Mr. Setalvad has relied on a later decision of the Court of Appeal and has suggested that the authority of this decision has been considerably impaired. That is a decision reported in Grove-Grady, In re, Plowden v. Lawrence. [1929] 1 Ch. 557 The bequest of a testatrix who gave her residuary estate to her trustees to form a trust for the founding, establishing and maintaining of a charitable institution to "be called "The Beaumont Animals Benevolent Society" came up for consideration in that case. Mr. Justice Romer held that the bequest was a good charitable bequest. The Court of Appeal, Lord Hanworth, Master of the Rolls, and Lord Justice Russell, held to the contrary; Lord Justice Lawrence dissenting. So it will be noticed that out of the four learned Judges, who considered the case, two took one view and the other two took the other. The Master of the Rolls came to the conclusion mainly on the ground that the nature of the home to be founded was so much left to the discretion of the trustees that it was open to them to start it on an island to which human beings might have no access, and thus the question of the elevation of human character would not arise at all. It is perfectly true that the basis of holding a trust for the benefit of animals as a good charitable trust is that it falls within the fourth category of Lord Macnaghten's famous definition in Pemsel's case, [1891] A.C. 531 namely, that it is a trust beneficial to the community. Whatever the view may be in England as to protection of animals and as to feeding of animals, we must consider what the views are in our own country, and it is patent that Indians as a race are extremely kindly disposed towards animals who have been the object of charity at the hands of many munificent donors. When we consider English cases which lay down what is charity and what is not charity, the warning given by the Privy Council must always be borne in mind. In Trustees of Tribune Press v. Commissioner of Income-tax, Punjab the Privy Council cited with approval the quotation from the judgment of Sir Raymond West in Fatmabibi v. The Advocate General of Bombay (1881) I.L.R. 6 Bom. 42 (p. 50) :

But useful and beneficial in what sense ? The Courts have to pronounce whether any particular object of a bounty falls within the definition; but they must, in general, apply the standard of customary law and common opinion amongst the community to which the parties interested belong.

Now I have no hesitation in holding that in India and especially among the Hindus both the customary law and the common opinion in that community would certainly uphold the view that giving fodder to animals and cattle is a good charity.

23. The other object with which Mr. Setalvad finds a quarrel is object (8), which is

"such other purposes beneficial to the Hindu community and Indians in general not falling under preceding heads."

Now, as will be noticed, this is incorporating almost verbatim the fourth head of Lord Macnaghten's famous definition in Pemsel's case, to which I have already referred, and also Section 18 of the Transfer of Property Act, 1882, in exempting a transfer of property from the restrictions contained in sections 14, 16 and 17 of that act, refers to transfer in perpetuity for the benefit of the public in the advancement of religion, knowledge, commerce, health, safety, or any other object beneficial to mankind.

24. Mr. Setalvad has relied on a decision of a divisional bench of this Court in In re Tilak Jubilee Fund . It was decided by Sir John Beaumont, Chief Justice, and Mr. Justice Kania; and what is relied on is the observation of the learned Chief Justice at p. 32:

But I know of no authority for the proposition that a gift for such purposes as a particular individual or individuals may consider to be charitable is good.

Now in that case it was left solely to the discretion of the managing committee to decide on what objects the income should be spent. If, in this case, it was; left to the discretion of the trustees to determine what objects are beneficial to the Hindu community and Indians in general and what are not, I entirely agree that it would not be a good charitable gift; but it is not left to the discretion of the trustees. They have to spend money on objects which are beneficial to the Hindu community and Indians in general, and the Court would restrict the application of the income to such objects as would fall within the ambit of charity. Beneficial in this sense carries with it the implication that it must be an object which is recognized as charity.

25. Under the circumstances I agree with the learned Chief Justice that that portion of the income of Rs. 23,515 earned by the assessee as is attributable to the period after October 7, 1940, when the trust deed was executed is exempt from taxation under Section 4(3) (i) of the Indian Income-tax Act.