# The Commissioner of Income Tax, Kanpur v. Dr.(Miss) Chandra Kanta Rohatgi

- **Citation:** (2006) 1 ILRA 131
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2005-10-21
- **Case number:** I.T.R. No. 103 of 1987
- **Bench:** R.K. Agarwal, Prakash Krishna
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/the-commissioner-of-income-tax-kanpur-v-dr-miss-chandra-kanta-rohatgi-40813
- **Pages:** 10

## Headnote

Income Tax Act-S-12-A read with Indian
Registration Act-Section 17-Exumption
from Tax-assessee placed the copy of
trust deed-Registration certificate by
which public Trust created-plea not
accepted by I.T.O.-I.T. Commission held
although house property utilized by the
assessee as a founder and managing
Trustee legal ownership still vested with
assessee-so income from such property
has to be assessed u/s 22 of the Actpurpose
of
Trust-rendering
medical
Services to the poor and weaker Section
of Society-1.4.77 the assessee endowed
and
dedicated
the
house
property
declaration
deed
dated
07.04.1977whehter a Hindu can create religions and
charitable Trust Orally? Held- 'Yes' the
cession
of
ownership
of
assessee
complete-when it dedicated to general
publice for religions object-Registration
of deed immaterial can not be treated
the income of assessee.

Held: Para 12

When such dedication is complete a
public
trust
is
created
in
contradistinction to a partial dedication
which would only create a charity. A
dedication for public purposes and for
the benefit of the general public would
involve complete cessation of ownership
on the part of the founder and vesting of
the property for a religious object.
Although the dedication to charity need
not necessarily be by instrument or
grant, there must exist cogent and
satisfactory evidence of conduct of the
parties and user of the properties which
132 INDIAN LAW REPORTS ALLAHABAD SERIES [2006
show the extension of the private
secular character of the property and its
complete dedication to charity. It has
been further held that dedication would
mean complete relinquishment of the
right and ownership and proprietary.
Case law discussed:
AIR 1957 SC-133
AIR 1963 SC-1638
2003 (5) SCC-46
2005 (1) SCC-457

## Text

1 All] The Commissioner of Income Tax, Kanpur V. Dr.(Miss) Chandra Kanta Rohatgi
131
Appointments
of
Dependants
of
Government Servant Dying in Harness
Rules 1974. A perusal of the Rule 8
Shows, it refers to age and the procedure
for appointment to be relaxed, but no
relaxation is provided for minimum
qualification for the post. There is no
provision under these rules to relaxing
essential educational qualification and
training qualification. The respondent no.
6 as such could not be appointed as
Assistant Teacher in the institution and to
that extent I hold that the Para 3 of the
Government Order dated 31.1.1998 is
ultra, vires Rule 14 of U.P. Recognised
Basic Schools (Junior High Schools)
(Recruitment and conditions of Service of
Teachers) Rules 1978 as well as the
provisions of Section 14 of the National
Council of Teachers Education Act 1993.

18. The writ petition is consequently
allowed. The order of the District Basic
Education Officer, Agra dated 6.6.2002
and 4.9.2002 (Annexure 8 and 10 to the
writ petition) are set aside with no order
as to costs.
Petition Allowed.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 21.10.2005

BEFORE
THE HON'BLE R.K. AGARWAL, J.
THE HON'BLE PRAKASH KRISHNA, J.

I.T.R. No. 103 of 1987

The
Commissioner
of
Income
Tax
(Central) Kanpur

...Applicant
Versus
Dr.(Miss) ChandraKanta Rohatgi,Kanpur

...Respondents

Connected with
I.T.R. NUMBER 125 of 1990

The Commissioner of Income Tax Kanpur

...Applicant
Versus
Dr.(Miss) ChandraKanta Rohatgi, Kanpur

 ...Respondent

Counsel for the Applicant:
Sri Bharat Ji Agrawal
S.C.

Counsel for the Respondent:

Income Tax Act-S-12-A read with Indian
Registration Act-Section 17-Exumption
from Tax-assessee placed the copy of
trust deed-Registration certificate by
which public Trust created-plea not
accepted by I.T.O.-I.T. Commission held
although house property utilized by the
assessee as a founder and managing
Trustee legal ownership still vested with
assessee-so income from such property
has to be assessed u/s 22 of the Actpurpose
of
Trust-rendering
medical
Services to the poor and weaker Section
of Society-1.4.77 the assessee endowed
and
dedicated
the
house
property
declaration
deed
dated
07.04.1977whehter a Hindu can create religions and
charitable Trust Orally? Held- 'Yes' the
cession
of
ownership
of
assessee
complete-when it dedicated to general
publice for religions object-Registration
of deed immaterial can not be treated
the income of assessee.

Held: Para 12

When such dedication is complete a
public
trust
is
created
in
contradistinction to a partial dedication
which would only create a charity. A
dedication for public purposes and for
the benefit of the general public would
involve complete cessation of ownership
on the part of the founder and vesting of
the property for a religious object.
Although the dedication to charity need
not necessarily be by instrument or
grant, there must exist cogent and
satisfactory evidence of conduct of the
parties and user of the properties which
132 INDIAN LAW REPORTS ALLAHABAD SERIES [2006
show the extension of the private
secular character of the property and its
complete dedication to charity. It has
been further held that dedication would
mean complete relinquishment of the
right and ownership and proprietary.
Case law discussed:
AIR 1957 SC-133
AIR 1963 SC-1638
2003 (5) SCC-46
2005 (1) SCC-457

(Delivered by Hon. Prakash Krishna,J.)

1. The assessee respondent, a
medical practioner, filed her return of
Income for the assessment year 1978- 79
and 1979-80. In the return she did not
include
income
from
the
property
No.16/72 Civil Lines, Kanpur. In reply to
the show cause notice issued by the
Income Tax Officer it was submitted by
her that the said property with hospital
has been irrevocably set apart and
dedicated for public charitable purpose in
favour of Chandra Kanta Jawahar Lal
Public Charitable Trust, Kanpur on 1-41977. The assessee placed a copy of trust
deed and other details along with the
certificate under Section 12-A of the
Income Tax Act (herein after referred to
as the Act) before the Income Tax
Officer, Kanpur in support of her case.

2. The Income Tax Officer rejected
the aforesaid contention of the assessee on
the ground that property no.16/72 Civil
Lines, Kanpur was not transferred to the
trust by means of registered deed as
required
under
section
17
of
the
Registration Act, meaning thereby the
assessee continues to be owner of the said
property. Such act of the assessee
amounts to transfer within the meaning of
Section 63(b) of the Act. It was brought to
the notice of the Income Tax Officer that
the said trust namely Chandra Kanta
Jawahar Lal Public Charitable Trust,
Kanpur, has been granted registration by
the Commissioner of Income Tax, Kanpur
under section 12-A of the Act. This plea
was not accepted by the Income Tax
Officer with the observation that whether
income of the trust is exempt or not will
be decided on merits of the case. In
appeal, against the assessment order the
plea of the assessee was partly accepted.
The appellate authority namely C.I.T (A)
took the view that there is no material on
record to show that the trust was a benami
of the assessee and that the assessee had
charged any fee for personal services
rendered by her to the trust. The
Commissioner of Income Tax (A) was of
the view that although house property
no.16/72 Civil Line Kanpur was utilized
by the trust but as the assessee was the
founder and managing trustee , therefore
the legal ownership over the property still
vested with the assessee and the income
from this property had to be assessed
under section 22 of the Act at the hands of
the assessee

3. The assessee took up the matter
before
the
Income
Tax
Appellate
Tribunal, in respect of inclusion of
income from the aforesaid property in her
hands. The Tribunal allowed the appeal of
the assessee as it was of the view that no
registered document was required to be
executed by the assessee to create a
religious endowment with respect to the
property in question. The Tribunal found
that the property was dedicated by the
assessee by renouncing her right in favour
of the trust for Public charitable trust on
1-4-1977 and, therefore, the trust became
its owner from that date. The assessee
confirmed
her
renunciation
of
the
disputed property in favour of the trust by
means of writing dated 7-4-1977. The
1 All] The Commissioner of Income Tax, Kanpur V. Dr.(Miss) Chandra Kanta Rohatgi
133
Tribunal was of the view that the assessee
ceased to be the owner of the property in
question with effect from 1-4-1977 and
the property has been vested with effect
from that date in the trust for Public
charitable purposes and as such its income
is not liable to taxed at the hands of the
assessee. According to the Tribunal the
provision of Transfer of Property Act and
the Registration Act would not apply to
such dedication.

4. The Tribunal at the instance of the
department has referred the following
common questions of law under section
256(1) of the Act:

1. WHETHER in law and on facts the
Tribunal was justified in excluding the
income from property at 16/72 Civil
Lines, Kanpur from the hands of the
assessee?
2. WHETHER transfer of an immovable
property by any person without any
consideration to a Trust which is not
regarded as Charitable Trust, is covered
under
the
definition
of
dedication/
endowment?

3.WHETHER to complete such transfer
as described in question no.2 above, there
is no need of an instrument duly
registered as prescribed in section 123 of
the Transfer of Property Act as well as
under
section
17
of
the
Indian
Registration Act, 1908?

5. Heard learned counsel for the
parties and perused the record.

It appears from the record that the
assessee founded a Public Charitable trust
in the name of Chandra Kanta Jawahar
Lal Public Charitable Trust, Kanpur by
means of a registered deed on 18-4-1976
and she settled Rs.1100/- on the trust.
Eight persons were appointed as trustees
of the trust. The trust came into existence
on account of deed of declaration which
was executed on 18-4-1976. The objects
of the trust admittedly were charitable in
nature. The Commissioner of Income tax
has recognized the said trust as charitable
trust under section 12-Aof the Act on 289-1979. It was also granted a certificate
on the same date under section 80-G of
the Act by the Commissioner of Income
Tax. The Trust maintained regular books
of account, which are duly audited.
According to the assessee she on 1-41977
endowed
and
dedicated
the
aforesaid property situate at 16/72 Civil
Lines, Kanpur together with the hospital
and Nursing home including all buildings,
land and the right therein or appurtenant
therein for the Public charitable purposes
of rendering medical services and relief to
the poor and weaker section of the society
in particular and the public in general.
Subsequently the assessee confirmed the
endowment through a declaration dated 74-1977,
which
is
an
unregistered
document in favour of the aforesaid trust.
The said declaration has been reproduced
in verbatim by the Tribunal in its order
and, therefore, it is not necessary to
reproduce again except the last portion of
the said document.:

"And whereas in order to avoid any
difficulty, disputes or misunderstanding in
future, it is expedient to confirm the facts
stated herein before;

Now, therefore it is hereby declared that
the hospital and nursing home situated at
16/72 ,Civil Lines, Kanpur including all
other buildings, lands and rights therein or
appurtenant thereto (as described in the
Plan
annexed
hereto)
have
been
134 INDIAN LAW REPORTS ALLAHABAD SERIES [2006
irrevocably , set apart, endowed and
dedicated by me on 1-4-1977 for the
public charitable purposes or providing
medical services and relief to the poor and
weaker
sections
of
the
society
in
particular, and the public in general, and I
have no right, title or interest therein
except as Trustee of the aforesaid trust;
and for all intents and purposes, the said
trust has all the rights, title and interest to
hold ,run and manage the said hospital
and nursing home for the purposes
aforesaid as part of the corpus of the Trust
for
the
aforesaid
public
charitable
purposes." (underlining by us)

6. Besides the above the Tribunal
has found that the property in question
has been mutated in the Municipal record
in favour of the trust. It has also come on
record that a declaratory decree by the
Court of Civil Judge, Kanpur has been
passed on 10-9-1985 in a Suit viz.
Manzoor
Alam
Vs.
Dr
Miss
Chandrakanta Rohatgi, Kanpur. The
Civil Court has granted a declaration
under the aforesaid decree that the
aforesaid property is in the ownership of
the said trust.

7. The objection by the Revenue is
that the property in question cannot be
treated as trust property in view of the fact
that the declaration in writing dated 7-41977 dedicated the property in question to
the trust is unregistered. Elaborating the
argument the learned Standing Counsel
submitted that in view of provision of
Section 17 of the Registration Act as well
as of the Trust Act, the document
compulsory required registration under
the aforesaid two Statutes. The failure on
the part of assessee to execute a registered
document in favour of the trust would
amount that the assessee continues to be
legal owner of the property in question
and in this view of the matter the Income
Tax Officer was fully justified in adding
the income from the said property in the
hands of the assessee.

8. In contra, learned Counsel for the
assessee submitted that the trust was
already created by means of registered
deed dated 18-4-1976. The creation of the
said trust is not in dispute. It is also not in
dispute that the said trust was created for
charitable purposes and admittedly its
object are charitable in nature. In view of
the order passed by the Commissioner of
Income Tax under section 12-A of the Act
treating the said trust as charitable trust, it
is no longer open to the any Income Tax
authority to treat the property in question
as belonging to the assessee.

9. After hearing the learned counsel
for the parties at length we are of the
opinion that the main question which
required determination in the present
references is whether it is necessary for a
Hindu to execute a registered deed for
creation of the religious and charitable
endowment. In other words whether a
Hindu can create religious and Charitable
endowment orally as it was done in this
case on 1-4-1977 and the declaration was
reduced in writing subsequently on 7-41977.

10. To begin with, we find that
Section 1 of the Trust Act specifically
excluded its applicability to the Public
trust or Charitable endowment etc. The
Apex Court has pointed out distinction in
the
case
of
Deoki
Nandan
Vs.
Murlidhar A.I.R. 1957 SC 133 between
private and public trust. In the private
trust
the
beneficiaries
are
specific
individuals but in Public trust they are
1 All] The Commissioner of Income Tax, Kanpur V. Dr.(Miss) Chandra Kanta Rohatgi
135
general public or Class thereof. In the
private trust the beneficiary or person are
ascertained
or
capable
of
being
ascertained but in the public trust the
beneficiaries constituted a body which is
incapable of ascertainment. The religious
endowment must be held to be private or
public according to the beneficiaries
therein specific person or any general
public or section thereof. In the case in
hand it is not the case of the department
that the trust namely Chandra Kanta
Jawahar Lal Public Charitable Trust,
Kanpur is not a public trust. The said trust
has been created for public charity
purposes of rendering medical service and
relief to the poor and weaker section of
the society in particular and the public in
general.

11. The Constitution Bench of the
Apex Court in the case of Sri Govindlalji
Vs. State of Rajasthan A.I.R.1963 SC
1638 in Para 68 of the report has held that
dedication of private property to a charity
need not be made by a writing; it can be
made orally or even can be inferred from
its conduct. It has disapproved the view of
the High Court in not giving effect to a
transfer of property dedicated to temple of
Shrinathji on the ground that no gift or
trust deed had been executed by the settler
in that behalf.

12. The above view has been
reiterated by Apex Court on numerous
occasions. Recently in the case of Kuldip
Chand and another Vs. Advocate
General to Government of H.P. and
others (2003) 5 SCC 46 it has been held
by the Apex Court that a Hindu is entitled
to dedicate his property for religious and
charitable purposes and for this even no
instrument in writing is necessary. A
Hindu however, in the event wishes to
establish a charitable institution must
express his purpose and endow it. Such
purpose must clearly be specified. For the
purposes of creating an endowment, what
is necessary is a clear and unequivocal
manifestation of intention to create a trust
and vesting thereof in the donor and
another as trustees. Subject of endowment
however must be certain. Dedication of
property either may be complete or
partial. When such dedication is complete
a
public
trust
is
created
in
contradistinction to a partial dedication
which would only create a charity. A
dedication for public purposes and for the
benefit of the general public would
involve complete cessation of ownership
on the part of the founder and vesting of
the property for a religious object.
Although the dedication to charity need
not necessarily be by instrument or grant,
there must exist cogent and satisfactory
evidence of conduct of the parties and
user of the properties which show the
extension of the private secular character
of
the
property
and
its
complete
dedication to charity. It has been further
held that dedication would mean complete
relinquishment of the right and ownership
and proprietary.

13. Very recently the Apex Court
again examined the aforesaid issue in the
case of Thayarammal Vs. Kanakammal
and others (2005) 1 SCC 457. It was a
case where a Hindu dedicated the
property as " Dharmachatram, meaning "
Choultry" of South India where Travellers
or pilgrims can take shelter and can be
provided with refreshment. The said
dedication was inscribed on a stone which
was fixed in the property itself. The stone
inscription is of the year 1805. The
Supreme Court on the basis of contents of
the
stone
inscription
came
to
the
136 INDIAN LAW REPORTS ALLAHABAD SERIES [2006
conclusion that the owner has dedicated
property for use as "Dharmachatram",
meaning resting place of pilgrims visiting
"Thyagaraja Temple" and it has observed
as follows:

"Such dedication in the strict legal
sense is neither a gift nor a "trust" as
understood in the Transfer of Property
Act which requires an acceptance by the
donee of the property donated nor is it a
"trust". The Indian Trust Act as is clear
by its preamble and contents is applicable
only to private trusts and not to public
trust. A dedication by a Hindu for
religious or charitable purposes is neither
a "gift" nor a "trust" in the strict legal
sense (See B.K.Mukherjea on Hindu Law
of Religious and Charitable Trusts, 5th
Edi by A.C.Sen 102- 03) It has been
further held that a religious endowment
does not create title in respect of the
property dedicated in anybody's favour. A
property
dedicated
for
religious
or
charitable purpose for which the owner of
the property or the donor has indicated no
administrator or manager becomes res
nullius which explains ass property
belonging to no body."

14. In our view the controversy
presently involved in these references is
fully covered by the aforesaid judgment
of Apex Court specially in Thayarammal
Vs. Kanakammal (Supra).

15. In view of the aforesaid
authoritative pronouncements it does not
lie in the mouth of Revenue to contend
that
for
creation
of
religious
and
charitable endowment a registered deed is
sine qua non. It has been established
beyond doubt that such an endowment for
public charitable purposes can be created
orally. What is required is that there
should be sufficient evidence to establish
complete relinquishment by the settler. A
dedication
of
property
by
Hindu
renouncing his/ her entire right, title or
interest in the property for religious
charitable purposes for the benefit of
public at large or for part of it is sufficient
to create such endowment. Reverting to
the fact of the present case we find that
the Tribunal has recorded a finding that
the assessee dedicated the property in
question to the trust on 1-4-1977.
Subsequently on 7-4-1977 she executed a
deed of declaration to avoid any future
dispute or conflict in the matter. The
dedication of the property by the assessee
on 1-4-1977 has not been seriously
disputed by the department. The only
objection to such dedication is with regard
to non- registration of the deed of
declaration dated 7-4-1977. We are of the
view that the dedication of the property
on 1-4-1977 is fully established on record.
It is supported by clinching material. The
trustee of the trust accepted the said
dedication by passing a resolution and
giving thanks to the assessee for such
dedication. It has been followed by action
such as the property in question has been
mutated in the municipal record in favour
of the trust. It has been further followed
by declaration granted by the Civil Court
through a decree in a suit in which the
assessee was impleaded as a defendant.
 In view of the surrounding facts and
circumstances of the case the dedication
of the property in question by the assessee
cannot be disputed and was rightly not
disputed by the department.

16. Now we will consider the cases
relied upon by the learned Standing
Counsel in support of his submission .The
earliest case relied upon by the learned
Standing Counsel is Commissioner of
1 All] The Commissioner of Income Tax, Kanpur V. Dr.(Miss) Chandra Kanta Rohatgi
137
Income Tax Vs. Syed Saddique Imam
and others (1978) 111 I.T.R.475. This is
a Full Bench judgment of Patna High
Court. The issue before the Full Bench
was with regard to the taxability of
income from the house property. The said
house was transferred by a Mohamdan to
his wife in lieu of dower debt. The issue
was whether such transaction amount,
sale or gift. The transfer was not made by
registered deed. The Court held that the
income from such property is assessable
in the hands of transferor. The said case
was decided under Mohamdan Law and it
was held that a gift in lieu of dower debt
is not "hiba- bil- iwaz" but is to be by a
registered instrument as required under
section 54 of the Transfer of Property Act,
if immovable property transferred is
valued more than at Rs.100/-. We find
hardly any application of the ratio laid
down therein in the facts of the case in
hands.

17. Similarly another case relied
upon by the learned Standing Counsel in
Radha Printers Vs. Commissioner of
Income Tax, Kerala and others (1981)
132 I.T.R.300 has hardly any application
to the present case as in that case the
question of development rebate granted to
the firm ,was involved. Certain assets of
the firm were transferred by the partner to
a trust and all partners were beneficiaries
of the trust. The beneficiaries also
included some minor who was admitted to
the partnership for benefits. It was held by
the Court that there was transfer of assets
and liability of the firm to the trustee ,as
the going concern and the fact that one of
the trustee was founder did not make any
difference. The High Court held that
transfer by the firm constitute transfer of
the assets and liability of the firm to the
trust within the meaning of Section 34
(3)(b) read with Section 155 (5) of the
Act.

18. The next case, which according
to the Standing Counsel is the sheet
anchor of his argument is Commissioner
of Income Tax Vs. Poddar Cement
Pvt.Ltd.
and
others,
(1997)
226
I.T.R.625 (SC). Strong reliance was
placed by the learned Standing Counsel
on the aforesaid judgment of Supreme
Court and it was contended that the
assessee continues to be the owner of the
property in question within meaning of
Section 22 of the Act and, as such,
income of the property is liable to be
taxed in her hands. The said contention of
the
learned
Standing
Counsel
is
misconceived and is liable to be rejected
for the reasons more than one. In that case
the Apex Court was called upon to
interpret the meaning of word "owner" in
the context of Section- 22 of the Act. In
this connection the Apex Court has held
that since the focal point of tax under
Section 22 is to tax income from the
house property, the real intention is to tax
income of house property at the hands of
such person who is beneficiary or the
person who is receiving income from such
property.

19The Apex Court has considered
the concept of ownership as given by
different jurists in their jurisprudence. The
decision has taken into account the "Dias
on Jurisprudence wherein the concept of
ownership has been dealt with in the
following manner:
"The position therefore seems to be
that the idea of ownership of land is
essentially not of the "better right" to be
in possession and to obtain it where as
with chattels the concept is a more,
absolute one. Actual possession implies a
138 INDIAN LAW REPORTS ALLAHABAD SERIES [2006
right to retain it until the contrary is
proved and to that extent a possessor is
presumed to owner.

Again at page 404 the learned Author
says

"Special attention should also be
drawn to the distinction between "legal"
ownership recognized at common law and
"equitable"
ownership
recognized
at
equity. This occurs principally when there
is a trust, which is purely the result of the
peculiar historical development of English
Law. A trust implies the existence of two
kinds of concurrent ownership, that of the
trustee at law and that of the beneficiary
at equity."

20. After reproducing the above
passage Supreme Court added the word of
caution to the following effect:

"We are not concerned in this case
with any case of trust either under the
equitable principles or under the law as
engrafted in the Indian Trusts Act.
Because the beneficiary might himself be
a trustee of his interest for a third person,
in which case his equitable ownership is
as devoid of advantage to him as the legal
ownership is to the trustee. So, when
described in terms of ownership, the
distinction between legal and equitable
ownership lies in the historical factors that
govern their creation and function; in
terms of advantage the distinction is
between the bare right, whether legal or
equitable, and the beneficial right" (vide
PP 404 -405 of Dias on Jurisprudence ,4th
Edn"

Through the above passage it has been
clarified by Supreme Court that by
assigning appropriate meaning to the
word ownership under section 22 of the
Act it has excluded the case of trust either
in the equitable principles or under law as
engrafted in the Indian Trust Act. Thus
we are of the considered opinion that the
aforesaid judgment cannot be relied upon
by the Revenue in the cases relating to
trust.

21. Lastly the learned Standing
Counsel submitted that such dedication or
renunciation of property by the assessee
amounts to gift and is, therefore, it has to
be compulsory registered under section
122 of the Transfer of Property Act,
failing which there is no transfer.
Reliance has been placed upon the
judgment of Supreme Court in the case of
Commissioner
of
Income
tax
Vs.
Sirehmal
Nawalakha
(2001)
251
I.T.R.108.
The
Apex
Court
while
interpreting Section-4 of the Gift Tax Act,
1958 has held that there can be no doubt
that certain transaction may not be
regarded as gift for the purposes of
Transfer of Property Act but would fall
within the ambit of expression "gift" by
virtue of Section- 4 of the Gift Tax Act. In
this case the assessee who was the owner
of immovable property by declaration
sought to give gift of certain out houses
attached to a building to his wife. The
declaration which was made was not
registered .The said gift was not treated as
valid gift by the department but was so
held by the High Court. Reversing the
judgment of High Court the Apex Court
observed that what is important is that
there is to be valid transfer of property
and whether the transfer amounts to gift
or not would bring into the question of
applicability of provisions of Gift Tax
Act. Meaning thereby it was held by
Supreme Court that immovable property
can be gifted only in accordance with
1 All] The Commissioner of Income Tax, Kanpur V. Dr.(Miss) Chandra Kanta Rohatgi
139
Section 122 of the Transfer of Property
Act. The ratio laid down in the aforesaid
case is distinguishable in as much as in
the case in hand the question of validity of
gift is not at all involved. As held by
Apex Court in the case of Kuldeep
Chandra and another Vs. Advocate
General of State of Himachal Pradesh
(supra)
and
Thayarammal
Vs.
Kanakammal
and
others
(supra)
dedication of property by a Hindu to
public
religious
and
charitable
endowment is neither a gift as understood
in the Transfer of Property Act nor is a
trust, the argument of the learned
Standing Counsel is liable to be rejected.

We fail to understand for what
purpose the learned Standing Counsel has
relied upon the judgment of Supreme
Court in the case of (2005) 6 SCC 202
Annai Nuthu Thevar (dead) by L.Rs
Vs. Alagammal and others. The reliance
placed on the said judgment is wholly
misplaced one.

22. It may not be out of place to
notice a very recent decision of the Apex
Court, State of Rajasthan and others
Vs. Basant Nahata J.T. 2005 (8) SC 171
wherein it has been held that the
Registration Act only strikes at the
documents and not at the transactions.
The whole aim of the Registration Act is
to govern documents and not the
transaction embodied therein, whereby
only the notice of the public is drawn. It
has quoted a passage from M.E. Moola
Sons
Ltd.
Vs.
Official
Assignee,
A.I.R.1936 P.C.230. The Privy Council
while commenting on Sections 17 and 49
of the aforesaid Act, has stated:

"It is to be observed upon a
comparison of these different sections that
while the Registration Act only requires
certain documents to be registered on pain
of the consequences entailed by section
49. T.P.Act, by section 54 enacts that
(with a limited exception) the sale of
immovable property can be made only by
registered instrument. The provisions of
the Registration Act by themselves would
not operate to render invalid a mere oral
sale. On the other hand the somewhat
wide phrase "any interest...to or in
immovable property" which occurs in
Clause (b). Section 17(1), Registration
Act, does not occur in Section 54 of the
other Statute."

23. It may be placed on record that
the assessee expired during the pendency
of the above references on 5-6-2003 and
an application was filed by Sandeep
Rohatgi on the basis of registered Will
dated 3-2-1998 executed in his favour
who claimed inheritance of the assets of
the assessee after her death and sought for
and was granted permission to contest the
proceeding.

24. I.T.R.No.103 of 1987 relating to
the assessment year 1978- 79 and
I.T.R.No.125 of 1990 for the assessment
year 1979-80, since the facts were
identical, were heard together and are
being disposed of by common judgment.

25. The up shot of the above
discussion is that the Tribunal was
justified on the facts and circumstances of
the case to exclude the income from the
property situate at 16/72 Civil Lines,
Kanpur from the hand of the assessee;
there was no need to execute registered
instrument for dedication of the aforesaid
property
for
Public
Religious
and
Charitable trust . We answer all the three
questions, referred to us, in affirmative
140 INDIAN LAW REPORTS ALLAHABAD SERIES [2006
i.e. in favour of the assessee and against
the Revenue.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 08.07.2005

BEFORE
THE HON'BLE R.K. AGARWAL, J.
THE HON'BLE RAJES KUMAR, J.

Income Tax Reference No. 127 of 1993

The
Commissioner
of
Income
Tax
(Central), Kanpur

...Applicant
Versus
M/s Pateshwari Electrical & Associated
Industries (P.) Ltd., Gonda ..Respondent

Counsel for the Applicant:
Sri Shambhu Chopra
S.C.

Counsel for the Respondent:

Income Tax Act 1961-Section 256 (2)-
Income from leasing of Balrampur lodge
to S.B.I.-receipts from workshop, cold
storage Motor garage, Raj Oil pump of
Development Division whether should be
taxed under head of business income or
the income from other sources?-heldshould
be
taxed
as
income
from
business-accordingly the question no. 1,
2 and 3 answered affirmative.

Held: Para 15

So far as question no. 3 is concerned,
Tribunal has given reasoning for coming
to the conclusion that the rent from cold
storage, motor garage, Raj Oil Mill and
approval charges may be taxed under
head income from business and not
under head income from other sources.
We do not find any error in the view of
the Tribunal.
Case law discussed:
51 ITR 353
20 ITR 451
147 ITR 692
83 ITR 700
249 ITR 47
263 ITR 143
247 ITR 516

(Delivered by Hon'ble R.K. Agrawal, J.)

1. At the instance of Commissioner
of Income Tax, Tribunal has referred
three questions 1,2,3 and at the instance
of assessee Tribunal has referred the
following question, which is marked as
question no. 4 under section 256 (2) of the
Income Tax Act, 1961, (hereinafter
referred to as "the Act") for opinion of
this Court relating to the assessment year
1987-88 and 88-89:

"1. Whether on the facts and in the
circumstances of the case, the Hon'ble
Tribunal was correct in holding that
income from leasing of Balrampur
Lodge to S.B.I., was assessable as
business income and not as income from
house property?
2.
Whether on the facts and in the
circumstances of the case, the Hon'ble
I.T.A.T., was correct in holding that
expenses incurred on Nainital Property
be allowed as business expenses ignoring
the fact that these expenses were not at
all related to business activity?
3.
Whether on the facts and in the
circumstances of the case, the Hon'ble
Tribunal was correct in holding that
treatment of receipts from workshop,
cold storage, motor garage, Raj Oil
Pump and supervision charges, of
Development Division should be taxed
under the head Income from business
and not under the head income from
other sources?
4.
Whether the Tribunal was justified
in law in holding that the Bank interest
on Fixed Deposits representing the
particular amount received from U.P.