JUDGMENT

This is a case stated by the Income-tax Appellate Tribunal under sub-section (1) of Section 66 of the Indian Income-tax Act.

Before discussing the question of law formulated by the Tribunal, it will be necessary to set out in some detail the circumstances in which it has arisen.

On the 30th January, 1928, Seth Lixminarayan Gadodia executed a deed of trust which was registered on the 2nd February, 1928. Its preamble runs as follows:—

"Whereas the said Seth Laxminarayan Gadodia intends to create a trust in respect of the sum of a lac of rupees and whereas the said sum of a lac of rupees was handed over to the Trustees hereinafter mentioned on Katak Sudi 1st Sambat 1984, and whereas the said trustees have utilised a part of the said one lac of rupees in the purchase of the Gadodia Swadeshi Stores hereinafter described as the 'Stores', and whereas it is necessary to provide rules and regulations for the governance of the said Trust"

That is followed by a paragraph detailing the purposes for which the trust is created and they are stated in the following terms:—

"Devoting the income derived from the said amount of a lac of rupees in the education of students reading in schools, colleges, and patasalas, and in opening schools, colleges or any class or classes in the existing college or colleges, school or schools, in any subject or subjects, in opening and helping libraries and in establishing and assisting boarding houses, and in other charitable and religious institutions and also towards the maintenance of one or more of the said institutions and for the support of the inmates of any orphanage or orphanages.

Then follow eighteen clauses mentioning the names of the trustees and laying down the regulations which would govern them in the discharge of the obligations. It is inter alia provided that" the trustees shall have the right of winding up the business of the said Stores which has been purchased out of a part of the funds of the trusts and on investing the sums realised therefrom in some other business or businesses according to their discretion and that "the trustees shall have full discretion in employing the funds of the trust in such trade or business or other investments and securities, etc., as they may deem proper" It is further laid down that the author of the trust "reserves to himself the right of augmenting the funds of the trust and doth further empower the trustees to augment the said fund from any source whatsoever by accepting help from outside if they think such acceptance is in the interest of the trust".

It is common ground that since the creation of this trust up to the assessment year 1938-39, the income, profits or gains derived therefrom were exempted from income-tax under the provision of Section 4(3)(i) of the Income-tax Act, 1922, which stated inter alia that the Act shall not apply to any income derived from property held under trust or other legal obligation wholly for religious or charitiable purposes. By Act VII of 1939, however, another clause was inserted after clause (i) and numbered (ia), which reads as follows: —

"Any income derived from business carried on on behalf of a religious or charitable institution when the income is applied solely to the purposes of the institution and—

On the score of this amendment, the Income-tax authorities in the assessment year 1939-40 held that the income profits or gains derived from this trust could not be excluded, first because income from business was not contemplated in Section 4(3)(i) and secondly if Section 4(3)(ia) was invoked, the conditions laid down therein were not satisfied. It may be stated that this decision of the Income-tax Officer was not challenged by the assessee beyond the stage of appeal to the Appellate Assistant Commissioner, who however maintained the order of the Income-tax Officer. A similar order was made in 1940-41 and the assessee accepted it without demur.

In the return furnished for the assessment year 1941-42 the assessee, in spite of an adverse decision during previous years, again claimed exemption for the income derived from the Stores as well as from interest on the spare funds of the trust lying in deposit with Seth Laxminarayan Gadodia, relying on Section 4(3)(ia) only and insisting that the requirements of law were fully satisfied. The Income-tax Officer once more repelled this contention stating that inasmuch as the income was derived by the assessee, a charitable trust, from a business which was not covered by Section 4(3)(ia), it was not exempt from tax. It may be observed here that the assessee in this order was described as Gadodia Charitable Trust, Kucha Natwan, Delhi.

Against this order an appeal was taken to the Appellate Assistant Commissioner by Seth Lixminarayan Gadodia signing for Gadodia Charitable Trust in the capacity of a trustee. The Assistant Commissioner agreed with the assessee's contention so far as the spare funds of the trust deposited with Seth Laxminarayan Gadodia were concerned, but he maintained the decision of the Income-tax -Officer relating to the income derived from the Stores or the reasons stated by the said Officer.

Being dissatisfied with the order of the Appellate Assistant Commissioner, the assessee took an appeal to the. Income-tax Appellate Tribunal, which came on for hearing before two members of the Tribunal on the 17th August 1942. They, however, referred the matter to a Full Bench of the Tribunal in view of the importance of the question involved. In this appeal the appellant described itself as the Charitable Gadodia Swadeshi Stores, Kucha Natwan, Delhi, and relied solely on clause (i) and not (ia) of sub-section (3) of Section 4. The Full Bench by its order dated the 16th March 1943 dismissed the appeal on grounds which may best be stated in its own language.

"Having regard to the learned Advocate's argument that the business contemplated by clause (ia) is something different from that included in the connotation of the word "property" in clause (i) of sub-section (3) it becomes necessary to see what is the character of the word "property" in clause (i) of sub-section (3) and what is the character of the business that is contemplated by clause (ia). In the first place, that clause occurs in juxtaposition to clause (i) which deals with income from property held under trust. The two read together make the context fairly clear that clause (ia) too has reference to income from business carried on by a charitable institution with the aid of trust funds. It is, we think, difficult to imagine a business carried on by such an institution that is not a business of the kind just described. Reading the clause as a whole it is clear that it refers to the carrying out of the primary objects of a charitable institution, which can be none other than charitable objects, and also to carrying on of a business by the beneficiaries. The conclusion thus fairly follows that the business contemplated by clause (ia) is a trust business such as the one we have here. If this view is correct, and if at the same time it is to be held that the term "property" also includes in its import a trust business, we shall have in the result a curious position of two clauses of the same sub-section inconsistently dealing with the same subject matter one granting exemption to the income of a trust business without any qualifications or restrictions, and the other doing so under restrictions imposed by it. We think therefore, that there can be no escape from the conclusion that clause (ia) has the effect of excluding income from business from income from property held under trust dealt with by Section 4(3)(i). In our opinion, it has the effect of granting exemption for business income strictly under the conditions specified in it. Admittedly the business in this case is neither carried on by a charitable institution nor does it carry out the primary objects of the trust in carrying on the business. Thus this contention too fails"

The assessee, thereupon, required the Tribunal to refer the case to this Court under sub-section (1) of Section 66 of the Income-tax Act and propounded the following two questions of law:—

The Tribunal remarked that the first question was most inartistically worded and the second question was one of fact. But holding that a substantial question of law is involved in the case, it has referred to this Court the following question of law:—

"Is the income of Rs. 29,128 derived from business by the trustees of the Charitable Gadodia Swadeshi Stores exempt, in the circumstances of the case, from assessment to income-tax under Section 4 (3) (i) of the Income-tax Act?"

Tne contest really lies between clause (i) of sub-section (3) of Section 4 and clause (ia) of the same sub-section and the first matter to be settled in this connection is whether the term 'property' as used in clause (i) is so comprehensive as to cover even business. The answer to this question, in my view, should present no difficulty. 'Property' in general parlance covers both movable and immovable property and under the category of movable property, undoubtedly fall cash, deposits, securities and others such things. There is nothing in the clause itself to indicate that this word was being used here in any restricted sense. It is true that the word 'property' as used in Section 6 of the Income-tax Act interpreted in the light of Section 9 is confined to buildings or lands appurtenant thereto. But as that restricted meaning does only partially represent what the ordinary signification of the term 'property' is, unless the Legislature clearly expressed any intention to use this term in that restricted sense in clause (i), it would not be correct to interpret it in that manner. In fact, there is every reason to think that the term as used here was being used in the popular sense. It could not possibly be intended by the Legislature that, if, for example, a sum of money endowed to charity was deposited in a bank, instead of being invested in buildings, the interest accruing therefrom should not be exempt from income-tax. Similarly, interest on securities, though a separate head of income chargeable to income-tax under Section 6 as distinct from property, cannot but be considered to be within this clause. Now, a person may invest a sum that he proposes to endow to charity in business and provide that the income derived therefrom would be applied wholly and exclusively to charitable purposes. Will it be consistent with reason to urge that though cash or securities may be covered by the term 'property' as used in this clause, business is not? The Legislature was not so enamoured of buildings as to bring to bear a pressure on charitably disposed people to invest their money in them alone if they wanted to escape from the burden of income-tax. It is clear that even in the Income-tax Manual issued by authority of the Government of India before clause (ia) was introduced in 1939, it was explicitly observed that the word 'property' in clause (i) does not bear the restricted meaning that it bears in Section 9 of the Act, but includes securities or business or share in a business. It is no doubt true that in the Manual issued after the amendment made in 1939, while repeating these instructions, it was further added that "a business income of a charitable or religious trust is specifically exempted when the income is applied solely to the purposes of the institution and either

That the term 'property' does not necessarily bear a restricted meaning everywhere that it is used in this Act is further supported by a dictum of their Lordships of the Privy Council in Commissioner of Income-tax, Bombay v. Currimbhoy Ebrahim & Sons, Ltd. [1935] 3 ITR 395 ; ILR 60 Bom 172, where while dealing with Section 42 of the Income-tax Act, their Lordships at page ISO observed as follows:—

"The word 'property' when used in Section 6 to describe a head of income is not denned by the statute, but by Section 9 it is provided that under this head tax shall be payable in respect of the bona fide annual value of property consisting of any buildings or lands appertaining thereto. In their Lordships opinion the word 'property' as it occurs in sub-section (1) of Section 42 cannot be given so special a colour, but is used as an ordinary English word to be taken in its usual signification subject to the context provided by the rest of the subsection. There is nothing in the sub-section to exclude from its scope any of the six classes of income mentioned in Section 6 of the Act".

In In re The Trustees of the Tribune [1935] 3 ITR 246; ILR 16 Lah, 829 both Jai Lal and Skemp, JJ., while differing on another matter, agreed in interpreting the term 'property' as used in this clause in a wide sense. The Full Bench, too, to which the case was referred by the learned Judges did not express any doubt on this matter; nor did their Lordships of the Privy Council to whom the case ultimately went on appeal and whose decision is reported in ILR 20 Lah 475. In all these judgments it was taken for granted that the maintenance of a newspaper, as well as the running a press, was covered by the term 'property' as used in clause (i).

We have now to consider whether any change has been effected in the connotation of this term by the insertion of clause (ia) in sub-section (3). The Full Bench of the Tribunal, as remarked above, was of the view that in the face of clause (ia), it would look incongruous to include business in the word property as used in clause (i), inasmuch as the latter is not subject to any restrictions while the former is. The difference in the two clauses is no doubt patent, but is it reasonable to assume that merely because business has been specifically mentioned in clause (ia), the scope of clause (i) has been so limited as to exclude it even if it is otherwise included in the term 'property' ? Clause (i) evidently deals with property held under trust for religious or charitable purposes while clause (ia) refers to business carried on on behalf of a religious or charitable institution. If it were possible to hold that there could be no religious or charitable institution which was not held under trust, or, in other words, if it could be predicated that every religious or charitable institution must necessarily be held under trust, the observations made by the Full Bench may carry force. But an institution may be religious or charitable and may still not be held under trust. Take for example institutions like the Arya Samaj, the Anjuman-i-Himayat-i-Islam, the Brahmo Samaj, the Dev Samaj and even trading institutions like the All India Spinners 'Association dealt with in All India Spinners' Association, In re [1911] 9 ITR 484 ; ILR 1941 Bom. 572 . It will be impossible to deny that all such institutions are either religious or charitable, but it is a matter of common knowledge that they are not held under trust.

Clause (ia) as it stands cannot in any way derogate or subtract anything from clause (i). It rather adds to the list of exceptions and provides immunity for a certain kind of business which in the view of the Legislature had not already been provided for. A new clause inserted by the Legislature cannot be presumed to be inconsistent with or repugnant to a foregoing; clause in the same sub-section unless it is so expressly provider!. Viewed in its proper perspective, therefore, clause (ia) can be taken to apply only to such business as is carried on on behalf of religious or charitable institutions which were not held under trust and not to such business as was itself held under trust or was conducted by or on behalf of such charitable or religious institutions as were held under trust. If it was intended to narrow down the scope of clause (1) so as to withdraw the exemption enjoyed by a business held in trust or conducted by or on behalf of a religious or charitable trust, the new clause should have been added as a proviso to the old clause. It would then have mentioned that the scope of the original clause was being restricted to that extent. But this not being the case here, it cannot reasonably be urged that something that was already included in clause (i) has been removed by the insertion of an additional clause.

It is apparent from the difference in the wording employed in clause ( i) and clause (ia) respectively that the matter dealt with in these clauses is not identical. While clause (i) relates to "property held under trust or other legal obligation wholly for religious or charitable purposes", clause (ia) deals with a business conducted by a religious or charitable institution, without any reference to trust whatever. If it was intended to include in clause (ia), all such institutions as were contemplated in clause (i), it was not difficult to use the same language in both these clauses. This use of different expressions, presumably intentionally, would unmistakably point to the conclusion that these expressions were not being used in the same sense. As stated in Maxwell on the Interpretation of Statutes, Eighth Edition, at page 276, "It has been justly remarked that, when precision is required, no safer rule can be followed than always to call the same thing by the same name".

It may be argued that the term 'religious or charitable institution' is wide enough to cover even such institutions as are held under trust. But even if this be so, in so far as clause (i) deals with special kind of such institutions and clause (ia) is general in its import, the former will not be affected by the latter unless there was a clear indication to the contrary. "A general later law does not abrogate an earlier special one by mere implication. In other words, where general words in a later Act are capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, that earlier and special legislation is not to be held indirectly repealed, altered or derogated from merely by force of such general words without any indication of a particular intention to do so.

Having already given its attention to the particular subject and provided for it, the Legislature is reasonably presumed not to intend to alter that special provision by a subsequent general enactment unless that intention be manifested in explicit language": (Maxwell, p. 156). Generalia specialibus non derogant is too well known a maxim of law to require any further comment.

But assuming that the institutions mentioned in clause (ia ) were intended to be the same as are dealt with in clause (i), in the arrangement that exists there will be an apparent inconsistency in the two clauses and even in this state of affairs it will not be possible to ignore clause (i) altogether.

In a case cited in Craies on Statute Law, Fourth Edition, at page 200 Romilly, M.R., is reported to have said, "if the Court finds a positive inconsistency and repugnancy, it may be difficult to deal with it, but, so far as it can, it must give effect to the whole of the Act of Parliament", and this will be all the more necessary here where we are dealing with a fiscal enactment. If an assessee can claim exemption on the plain wording of clause (i), we cannot deprive him of its benefit merely because clause (ia) also covers his case. It is well known that in: the case of statutes that impose pecuniary burden, if a resonable doubt exists, the construction most beneficial to the subject must be adopted (Maxwell, page 251).

Counsel for the Income-tax Department has referred to in In re Lachman Das Narain of Cawnpore [1925] ILR 47 All 68; 1 ITC. 378 and Commissioner of Income-tax v. Thevara Patasala [1926] ILR 49 Mad. 833; AIR 1926 Mad. 949 in support of his contention that even prior to the amendment such business was not necessarily exempt from income-tax. Both these authorities, however, are clearly distinguishable. In the Allahabad case, the business was run by a trading partnership and not by a religious or charitable institution and in the Madras case, the business for which exemption was claimed was not contemplated at all by the deed of trust and as such was a forbidden investment. Even otherwise the Madras judgment has been animadverted upon by Jai Lal, J., in In re The Trustees of the Tribune [1935] 3 ITR 246 ; ILR 16 Lah. 829 as it was mainly based on English decisions, and if I may say so with all respect, I am in entire agreement with his observations.

While here I may point out that it is not generally safe to apply English decisions to every case arising under the Indian Income-tax Act, especially when the provision of law under discussion is drafted on a different basis and is couched in a different language. This warning has been administered by their Lordships of the Privy Council on several occasions. In Shaw Wallace and Co. v. Commissioner of Income-tax, Bengal [1932] ILR 59 Cal. 1343; 59 LA. 206, their Lordships at pages 1349-50 observed as follows:—

"Again their Lordships would discard altogether the case law which has been so painfully evolved in the construction of the English Income-tax Statute —both the cases upon which the High Court relied and the flood of other decisions which has been let loose in this Board. The Indian Act is not in pari materia: it is less elaborate in many ways, subject to fewer refinements, and in arrangement and language it differs greatly from the provisions with which the Courts in this country have had to deal. Under such conditions their Lordships think that little can be gained by attempting to reason from one to the other"

A similar warning was repeated in Bejoy Singh Dudhuria v. Commissioner of Income-tax, Calcutta [1933] 1 ITR 135 ; AIR 1933 PC 145, Gopal Saran Narain Singh v. Commissioner of Income-tax, Bihar & Orissa [1935] 3 ITR 237; AIR 1935 PC 143, and Kamakshya Narain Singh v. Commissioner of Income-tax, BiharOrissa [1943] 11 ITR 513; ILR 22 Pat. 713. In the last case at page 749, it is said: "The Indian Income-tax Act of 1922, which is a consolidating Act, is both in its general frame work and its particular provisions different from the English Income Tax Acts, so that decisions upon the English Acts are in general of no assistance in construing the Indian Act". It was no doubt added that on some fundamental concepts, reference may be to some extent usefully made to English decisions. But that observation does not come into operation in the present case where we are dealing not with a fundamental principle but with particular exemptions and we not are referred to any section in the English Acts which is entirely framed like sub-section (3) of Section 4, or to any clause which is couched in the same language as clause (i) of sub-section (3).

Viewed in the light of the above discussion, whether the business known as the Charitable Gadodia Swadeshi Stores is in itself held under trust as urged by the assessee or is an entity apart from the trust and is being carried on on behalf of the Gadodia Charitable Trust as contended by the Department, it is evidently covered by clause (i) of sub-section (3). I would accordingly answer the question propounded by the Income-tax Appellate Tribunal in the affirmative and allow the assessee full costs of these proceedings.

Before concluding I may add that if the Legislature intends that no business whether held under trust or carried on behalf of a religious or charitable institution held under trust should any longer enjoy exemption from income-tax, it should amend the existing law in a suitable manner. Mere instructions which are apparently inconsistent with the statute will fail to achieve this object.

Sale, J.—I agree.

Din Mohammad, J.