Itr/116/1996 Of Koladi Govindankutty Menon v. Commr. Of Agrl. Incometax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR FRIDAY, THE 4TH APRIL 2008 / 15TH CHAITHRA 1930 ITR.No. 116 of 1996 --------------------------- (ORDER NO. H6-12426/93/TX DT. 21/05/93 OF THE COMMISSIONER OF AGRICULTURAL INCOME TAX, THIRUVANANTHAPURAM) .................. APPLICANT: ------------------ SRI. KOLADI GOVINDANKUTTY MENON,ADVOCATE, PONNANI. BY ADV. SRI.P.BALACHANDRAN (SR.). RESPONDENTS: ----------------------- THE COMMISSIONER OF AGRICULTURAL INCOME TAX,THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER SRI. E.P. GOVINDAN. THIS TAX REFERENCE HAVING BEEN FINALLY HEARD ON 04/04/2008, ALONG WITH ITR NOS. 117/1996, 118/1996 119/1996, 120/1996, 121/1996, 122/1996, 123/1996 & 124/1996 THE COURT ON THE SAME DAY PASSED THE FOLLOWING: C.N. Ramachandran Nair &T.R. Ramachandran Nair, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 4th day of April, 2008. JUDGMENT C.N. Ramachandran Nair, J. We have heard Shri P. Balachandran, learned Senior Counselappearing for the impleaded legal heirs of the original applicant and thelearned Govt. Pleader. 2. The question referred is whether the Commissioner was justified insetting aside the order of the appellate authority directing assessment ofincome from 'K' Schedule property shown in the family partition deed ofthe applicant's family in the joint names of the family members as tenants incommon, is correct or not. For the assessment years 1972 -73 to 1982-83except for the years 1976-77 and 1977-78 the applicant was the seniormember of the family and in that capacity he was managing the commonfamily property set apart under the partition deed, for religious andcharitable purposes, particularly to meet the cost of Navami celebrations ofGuruvayur temple traditionally conducted by the applicant's father. Thecontention of the assessee is that the assessee, during the relevant time wasonly the manager of the property in his capacity as the senior family ITR 116/96 etc. member and the entire income from the property was ear-marked for religious purposes, particularly the Navami celebrations of Guruvayurtemple traditionally sponsored by the family every year. The first appellateauthority held that there is no justification for assessment of income fromthe property set apart by the family in the hands of the senior member of thefamily, as he is not the individual owner of the property or the beneficiary ofthe income therefrom. Since the property belong to all family memberstogether and the assessee, during the relevant time, was only the manager ofthe property, the first appellate authority held that income from the propertyhas to be assessed in the status of tenants in common. The DeputyCommissioner, exercising the revisional power of the Commissioner,ordered assessment of the income from the common property as assessee'sindividual income, for the simple reason that the other family membershave not got any financial benefits, but got probably only spiritual benefits. 3. Learned Senior Counsel for the assessee rightly pointed out thatthe Commissioner, while finding that the other family members have not gotany financial benefits, have not held that the assessee has got any financialbenefits from the property as well. The trust constituted by the partitiondeed specifically earmarks the property for the purposes set out therein. Nofamily member is entitled to take any income from the property and under ITR 116/96 etc. 3. Learned Senior Counsel for the assessee rightly pointed out thatthe Commissioner, while finding that the other family members have not gotany financial benefits, have not held that the assessee has got any financialbenefits from the property as well. The trust constituted by the partitiondeed specifically earmarks the property for the purposes set out therein. Nofamily member is entitled to take any income from the property and under ITR 116/96 etc. the trust deed created by the family partition, the entire income from 'K'schedule property is to be utilised for the religious functions including thetemple festival stated therein. Provision is made to carry over the surplusincome for the succeeding years. In the absence of any provision in thetrust deed enabling the senior member to appropriate any income from theproperty, the order of the Commissioner is not justified. In fact, if theassessee had applied for exemption from payment of tax for the incomefrom 'K' schedule probably, he would have got the same because thepurpose is only religious and charitable. However, so long as the assesseehas not proved that the property held under the trust is a public charitableone, the assessee was not entitled to exemption. However, since theproperty belongs to all the family members together, the income therefromis to be assessed under the status of tenants in common. In the absence ofany provision for distribution of income among the members of the family,probably shares have to be allotted equally among all the members. We are,therefore, of the view that the order of the first appellate authority directingassessment of the income from 'K' schedule property under the statustenants in common, is the only permissible assessment of the income fromthe property and there is no justification to assess the income from 'K'schedule property as income of the eldest member of the family who had ITR 116/96 etc. only right of management and appropriation of income for the purpose forwhich it was earmarked which is charitable and religious. 4. In view of the above finding, we answer the question referred infavour of the assessee and against the Revenue and consequently, set asidethe order of the Commissioner. Consequential orders will be passed by theassessing officer. The Reference Cases are disposed of as above. (C.N. Ramachandran Nair, Judge.) (T.R. Ramachandran Nair, Judge.) kav/