THE GURU ESTATE THROUGH DWARKADAS GURU AND OTHERS vs. THE COMMISSIONER OF INCOME-TAX BIHAR AND ORISSA

CIVIL APPEAL No. 248/1962Supreme Court1962 INSC 29519 October 1962Bench: 3 JudgesAuthor: J.L. KAPUR, M. HIDAYATULLAH, J.C. SHAH S.C.R. SUPREME COURT REPORTS9 pages
AI SummaryDismissed

What were the facts?

The assessee, a joint Hindu family, acted as Pandas (priests) assisting pilgrims at the Jagannath temple in Puri. They collected money known as 'Annadan' from pilgrims under 'Annadan Patras'. The assessees claimed exemption from income tax under sections 4(3)(i) and (ii) of the Indian Income-tax Act, 1922, asserting that Annadan was received for the exclusive purpose of 'Bhog' (food offering) in the temple, thus constituting income from a trust or a religious institution. The income-tax authorities rejected this claim, holding the amounts liable to tax. The Appellate Tribunal found that Annadan was not used exclusively for Bhog, that it was earned in the conduct of the assessees' business as Pandas, and that no trust was intended or created. The High Court, on reference, assumed a religious trust was created but deemed it a private one, thus not exempting the income.

What did the Supreme Court hold?

The Supreme Court held that the amounts received by the assessees under the Annadan Patras were not exempt from tax under Sections 4(3)(i) and (ii) of the Indian Income-tax Act, 1922. The primary reasoning was that, based on the Tribunal's findings, the amounts were not applicable exclusively to religious or charitable purposes. The Court further held that the High Court erred by ignoring the Tribunal's finding that no trust was intended or created by the pilgrims. The High Court's assumption of a private religious trust was considered an overreach of its advisory jurisdiction under Section 66(2). The Tribunal's function is to determine facts, and the High Court should advise on the law applicable to those facts. The Court emphasized that the Tribunal found the receipts to be income from the business of pilgrim traffic, and no trust was intended or created. Therefore, the appeals failed and were dismissed.

What were the issues?

1. Whether the amounts received by the assessees as Annadan are exempt from income tax under Section 4(3)(i) of the Indian Income-tax Act, 1922, as income derived from property held under a trust for religious or charitable purposes. 2. Whether the amounts received by the assessees as Annadan are exempt from income tax under Section 4(3)(ii) of the Indian Income-tax Act, 1922, as income of a religious institution derived from voluntary contributions applicable exclusively to religious purposes. Assessee's Contentions: The assessees contended that the Annadan offerings were received on the condition of utilizing them for the Bhog in the Jagannath temple, and therefore, they were income derived from property held under a trust. Alternatively, they argued that it was income of a religious institution derived from voluntary contributions applicable solely to religious purposes. They relied on the Annadan Patras signed by pilgrims. Revenue's Contentions: The revenue contended that the amounts were liable to tax. The Income-tax Officer held that there was no valid trust, no authority to enforce the obligation for religious/charitable spending, and the assessees were not shebaits. The Appellate Tribunal found that the money was not used exclusively for Bhog and was earned in the conduct of their business as Pandas, with no trust intended or created.

Which sections of the Income-tax Act were involved?

Section 4(3)(i),Section 4(3)(ii),Section 66(2)

AI-generated summary — verify with the full judgment below

1 S.C.R. SUPREME COURT REPORTS 667 THE GURU ESTATE THROUGH DWARKADAS GURU AND OTHERS v. THE CO.MMISSIONER OF INCOME-TAX BIHAR AND ORISSA (J. L. KAPUR, M. HrnAYATULLAH and J.C. SHAH, JJ.)

Income Tax-Income from trust-Exemptiou from taxa- tion-Applicability of the rule-'' Exclusively to purposes religioU8 or charitable"-High Court's juri iction in references-Binding on Tribunal's findings on facts-Indian Income-tax Act, 1922 (11of1922), ss. 4 (3) (i) and (ii), 66 (2).

The assessees were members of a joint Hindu family who carried on the vocation of Pandas or priests who assisted devotees in performing· worship and ceremonies connected with the pilgrimage to the temple of Jagannath at Puri. They collected from the pilgrims amounts of money known as Annadan under writings called A nnadan Patras signed by the pilgrims. The assessees claimed that the offerings of Annadan were exempt from Income-tax under ss. 4 (3) (i) and (ii) of the Indian Income-tax Act, 1922. because they were received by them on condition of utilising the same for the Bhog (food offering) in the temple of Jagannath and were, therefore, income derived from property held under a trust and, in a

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