Per R.V. Easwar, J.M. - These are two appeals challenging the assessments made on the assumption that the assessee are private religious trusts taxable under section 164 of the Income-tax Act.
2. Smt. Krishna Kejriwal, wife Nawalkishore Kejriwal, a Hindu house-wife residing at Alipore Park Road, Calcutta was desirous of creating two temples at her residence and of establishing deities by the name "SREE GANESHJI MAHARAJ" and "SREE SHANKAR BHAGWAN". Towards this end she dedicated a sum of Rs. 1,000 each in cash for the purpose of construction of the temples and for securing worship of the deities. In short, she effectuated a religious endowment. This was given effect to by two separate Deeds of endowment. The dedication in favour of the deity Shree Ganeshji Maharaj was made by means of Deed of Endowment dated 30-10-1989. The dedication in favour of Shree Shankar Bhagwan was made by a Deed of Endowment dated 19-6-1990. The terms and conditions of the endowment were substantially the same in both the endowments. The Debutter estates were christened Shree Ganeshji Maharaj Estate and Shree Shankar Bhagwan Estate. The lady constituted herself as the Shebait in respect of both the deities. She also provided for successive appointments of Shebait. By clause (5) of both the Deeds, it was provided that the Shebaits shall hold the properties dedicated for and on behalf of the deities and manage the same to the best advantage. By clause (6) it was provided that the income from the dedicated properties shall be applied towards the maintenance and repair of the temples, towards remuneration of the Shebaits and towards the expenditure in the daily worship of the deities and for festive and ceremonial occasions. The Shebaits were also empowered to incur expenditure for the pleasure of the deities. They were made accountable for the receipts and expenditure. They were also given the power to accept any gift or donation, contribution, etc. either in cash or in kind and to apply the whole or part of the income of the Debutter Estate or accumulate the same towards the corpus of the estate, in their discretion. They were given powers of sale, powers of borrowal, powers of investment etc. (various sub-clauses of clause (8)). By clause (11) the Shebaits were also given powers to frame rules for proper and regulated conduct of the meetings of the Purohits or Sub-Shebaits.
3. Returns were filed by the two estates showing total income of Rs. 503 in the case of Ganeshji Maharaj Estate and Rs. 1,839 in the case of Shankar Bhagwan Estate. In the course of the assessment proceedings the ITO observed from the Balance Sheets that Smt. Krishna Kejriwal had received gifts from various persons to the extent of Rs. 2,53,500 and Rs. 1,93,400 respectively. He further found that the xerox copies of the declarations in support of the above gifts had also been filed. He was prima facie of the view that these receipts were taxable under section 2(24)( iia) of the Act. The assessees claimed that the amounts were received towards the corpus of the endowments and, therefore, could not be taxed. The Assessing Officer accepted the fact that the declarations filed by the donors indicated that they have sent moneys through cheques as their contributions to the corpus of the endowments. However, he was of the view that the endowments were in the nature of private religious trusts. He further observed that the deities had not already been established in the household of Smt. Krishna Kejriwal. According to him, the desire of the lady was to erect a temple and, thereafter to instal the deities and upto the time the temples were not constructed, the deities did not exist and, therefore, there was no valid endowment.
4. In the aforesaid view of the matter, he brought to assessment the amounts of Rs. 2,33,500 and Rs. 1,93,400 as the income of Shree Ganeshji Maharaj Estate and Shree Shankar Bhagwan Estate respectively. The assessments were made taking the status of the assessee as private religious trusts, under section 164 of the Income-tax Act.
5. The assessees appealed and contended that they should be assessed in the status of individual, that the provisions of section 2(24)( iia) did not authorise the assessment of the corpus gifts and further that it was not necessary for a valid religious endowment under the Hindu Law that the deities should have come into existence at the time of the endowment. The CIT (Appeals), however, endorsed the view taken by the Assessing Officer and upheld the assessments.
6. The primary question which arises in these appeals is whether the deities or the idols, namely, Shree Ganeshji Maharaj and Shree Shankar Bhagwan should have come into existence when the endowments were created. In the year 1909, a Full Bench of the Calcutta High Court comprising Sir Lawrance Jenkins, the Hon’ble Chief Justice and Hon’ble Justice Stephen, Hon’ble Justice Asutosh Mukherjee, Hon’ble Justice Coxe and Hon’ble Justice Chatterjee in the decision reported as Bhupatinath Smriti Thirtha v. Ramlal Moitra 10 Cal. Law Journal - 355 have held that the general rule which requires that for the validity of a gift, the relinquish- ment must be in favour of a sentient being does not apply to a bequest to trustees for the establishment of an image and the worship of a Hindu deity after the testator’s death. It was held that such a disposition is for religious purpose and was valid under the Hindu Law. The High Court after referring to the various texts of Hindu Law held that the fact that the idol or image was established and consecrated for the first time after the testator’s death did not invalidate the provisions in the will relating to the worship and maintenance of the deity. Stephen J. felt that it was a contradiction in terms to "talk of the creator accepting anything, in the legal sense of the word, from the creature and that it is inconceivable that the laws which were made for, if not by, men should be applicable to a deity." Justice Ashutosh Mukherjee held that the true Hindu conception of dedication for the establishment of the image of the deity and for the maintenance thereof is that the owner should divest himself of all rights in the property and notwithstanding that there is no acceptance of the dedication on the part of the deity, spiritual benefit and religious merit accrued to the founder from the dedication itself. After quoting from Yajnavalkya it was held by His Lordship that a direction given by a Hindu that an image of a deity should be established and that his property should be applied for the maintenance of the worship cannot be inoperative merely because the image was not established by himself. According to His Lordship, the conclusion therefore is irresistible that the general rule relating to gift that their validity depends on the existence of sentient-beings capable of accepting them has no application to the directions of a Hindu for the dedication of a property by an endowment for the establishment of images or deities and for the worship thereof. His Lordship also accepted, though the final decision is not based on this proposition, that the validity of the testamentary directions should be upheld inasmuch as the deity is always existent and it is always immaterial whether the image is established or not. By way of illustration we find it stated that a gift for the purpose of the worship of Goddess Kali is valid although at the time of the death of the testator there is no image of the Goddess in existence, the reason being that the Goddess Kali is ever-existent.
7. His Lordship Justice Chatterjee after referring to the various Hindu texts, summarised the position by saying that the Hindu does not worship the "idol" or the material body but worship the eternal spirit of the deity in a suggestive or convenient form, which is the image and therefore the non-existence of the image cannot invalidate the endowment. In Veluswami v. Dandapani [1946] 1 MLJ 354, Justice Patanjali Sastri (as His Lordship then was) observed that the various deities "are only personifications of what are believed to be the various attributes or the cosmic manifestations of the Supreme Being". In Mukherjee’s treatise on Hindu Law of Religious and Charitable Trusts (2nd Edn. page 147) it is observed that "a dedication to an idol is really a dedication to the deity who is ever present and ever-existent, the idol being no more than the visible image through which the deity is supposed specifically to manifest itself by reason of the ceremony of consecration."
8. The above principle has been extended to cases other than bequests made by will. In Chatarbhuj v. Chaturjit [1911] 33 All. 253 certain zamindari property was expressed to be given to an idol which was not in existence at the time of execution of the Deed. Possession of the property was handed over to a certain person as Pujari. It was held that the deed was valid and created a trust in favour of the idol, following the principle laid down in the Full Bench decision of the Calcutta High Court. The suit in that case was based, inter alia, on the ground that on the date of the endowment the image had not been duly consecrated and, therefore, there was no valid endowment under the Hindu Law. Their Lordships of the Allahabad High Court held that in principle there was no difference whatsoever between the case decided by the Full Bench of the Calcutta High Court and the case before them and held that a trust was clearly created for the worship of the idol which was to be consecrated and placed in a temple. In section 410 of Mulla’s Hindu Law (16th Edn. by S.T. Desai), the decision of the Full Bench of the Calcutta High Court has been referred to. In the case of S.N. Pachamuthu Nadar v. Tillaiyadi Pillayar Temple Charity AIR 1971 Mad. 253, a dedication to a temple which has yet to be built for a deity as indicated in the Deed of Trust and for performance of services in the temple was held valid, following the rule laid down by the Calcutta Full Bench. The only condition for the validity of the endowment in such cases is that the dedication must be to a particular deity. For example, a dedication to "The Thakurji in my Thakurdwara" without mentioning the particular Thakurji to whom the dedication is made, is void for uncertainly though such a stipulation was held not to invalidate the endowment by the Madras High Court in the case of Valuswami ( supra). The destruction or mutilation of a particular image does not affect the validity of the endowment which can be kept up by installing a new image. The religious endowment survives the mutilation or destruction of the image (please see V. Raghavachari v. Narayana Iyengar AIR 1973 Mad. 323 and Bijoychand v. Kalipada [1914] 41 Cal. 57.
9. In view of the above authorities, it has to be held in the present appeals that the endowments made by Smt. Krishna Kejriwal are valid notwithstanding that the temple and the images of Ganeshji Maharaj and Shankar Bhagwan have not been consecrated as on the dates of the endowment. The view taken by the Assessing Officer to the contrary cannot be accepted as it runs counter to the principle laid down in the authorities cited above.
10. The question as to the status of the present assessees should not present any difficulty since it has been held by the Supreme Court in the case of Yogendra Nath Naskar v. Cit, Calcutta [1969] 74 ITR 33 and in the case of Official Trustee of West Bengal v. CIT [1974] 93 ITR 348 that both under section 3 of the Income-tax Act, 1922 and under section 2(31) of the Income-tax Act, 1961, the word "individual" includes within its connota- tion all artificial juridical persons and that whereas under the 1922 Act, this position was implicit, under the 1961 Act it has been made explicit and beyond challenge. It was further held that the Hindu idol is a juristic entity capable of holding property. It can be taxed through its Shebaits who are entrusted with the possession and management of the property dedicated. The deity falls within the meaning of the word "individual" and can be treated as a unit of assessment. In view of this clear legal position, the Assessing Officer in the present appeals was wrong in treating the assessees as private religious trusts assessable under section 164 of the Act. We hold that the assessees have to be taxed as individual.
11. So far as section 2( 24)(iia) is concerned, this section has to be read in the context of the introduction of the present section 12. It is significant that section 2(24)( iia) was inserted with effect from 1-4-1973 simultaneously with the present section 12, both of which were introduced from the said date by the Finance Act, 1972. Section 12 makes it clear by the words appearing in parenthesis that contributions made with a specific direction that they shall form part of the corpus of the trust or institution shall not be considered as income of the trust. The Board’s Circular No. 108 dated 20-3-1973 is extracted at page 1277 of Vol. I of Sampat Iyengar’s Law of Income-tax, 9th Edn. in which the inter-relation between section 12 and section 2(24)(iia ) has been brought out. Gifts made with clear directions that they shall form part of the corpus of the religious endowment can never be considered as income. In the case of R.B. Shreeram Religious & Charitable Trust v. CIT [1988] 172 ITR 373/ 39 Taxman 28 it was held by the Bombay High Court that even ignoring the amendment to section 12, which means that even before the words appearing in parenthesis in the present section 12, it cannot be held that voluntary contributions specifically received towards the corpus of the trust may be brought to tax. The aforesaid decision was followed by the Bombay High Court in the case Commissioner Of Income-Tax. v. Trustees Of Kasturbai Scindia Commission Trust. [1991] 189 ITR 5/ 57 Taxman 38. The position after the amendment is a fortiori. In the present cases the Assessing Officer on evidence has accepted the fact that all the donations have been received towards the corpus of the endowments. In view of this clear finding, it is not possible to hold that they are to be assessed as income of the assessees. We, therefore, hold that the assessment of the corpus donations cannot be supported.
12. For the above reasons, we hold as under :
1.The religious endowments are not invalid on the ground that neither the temple nor the image had been consecrated at the time of creating the endowments.
2.The assessees have to be assessed in the status of "individual" since they are artificial juridical entities and
3.The voluntary contributions received by the assessees towards the corpus cannot be brought to tax.
13. In the result, the appeals are allowed.