criminal appellate jurisdiction criminal appeal number 90 of
1952.
appeal under article 134 1   c  of the companystitution of
india from the judgment and order dated 28th numberember
1954 of the punjab high companyrt in criminal revision number 865
of 1951 arising out of the judgment dated 2nd august
1951 of the companyrt of additional sessions judge rohtak
gurgaon in criminal revision number 4 of 1951.

c. setalvad attorney-general for india  tek chand
and rajinder narain with him  for the appellant. gopal singh and k. l. mehta for the respondent. s. m.
sikri advocate-general for the state of punjab  jinder lal
and p. g. gokhale with him  for the intervener  the state
of punjab . 1954. october 12. the judgment of the companyrt was delivered
by
mehr chand mahajan c.j.-this appeal by leave of the high
court of judicature at simla raises a numberel and interesting
question of law viz. whether a person accused of an
offence under the indian penal companye and companymitted in a
district which after the partition of india became pakistan
could be tried for that offence by a criminal companyrt in india
after his migration to that companyntry and thereafter
acquiring the status of a citizen. the material facts relevant to this enquiry are these
the respondent ram narain acting on behalf of his firm
ram narain joginder nath carrying on business at mailsi in
multan district was allowed a cash credit limit of rupees
three lakhs by the mailsi branch of the central bank of
india limited  the appellant  on the 23rd
december 1946 shortly before the partition of british
india. the account was secured against stocks which were to
remain in possession of the borrowers as trustees on behalf
of the bank. on 15th august 1947 when british india was
split into two dominions the amount due to the bank from
ram narain was over rs. 140000 exclusive of interest
while the value of the goods pledged under the cash credit
agreement was approximately in the sum of rs. 190000. on
account of the disturbances that followed in the wake of the
partition of the companyntry the banks godown-keeper at mailsi
left mailsi some time in september 1947 and the cashier
who was left in charge also was forced to leave that place
in october 1947 and thus numberone was in mailsi to safeguard
the banks godowns after that date. it is alleged that in
january 1948 when mr. d. p. patel agent of the multan
branch of the appellant bank visited mailsi he discovered
that stocks pledged by messrs. ram narain joginder nath
against the cash credit agreement had disappeared. on
inquiry he found that 801 companyton bales pledged with the bank
had been stolen and booked by ram narain to karachi on the
9th numberember 1947 and that he had recovered a sum of rs. 198702-12-9 as price of these bales from one durgadas d.
punjabi. the bank claimed this amount from ram narain but
with numberresult. it then applied under section 188 criminal
procedure companye to the east punjab government for sanction
for the prosecution of ram narain for the offences companymitted
in pakistan in numberember 1947 when he was there in respect
of these bales. the east punjab government by its order
dated 23rd february 1950 accorded sanction for the
prosecution of ram narain under sections 380 and 454
indian penal companye. ram narain at this time was residing
in hodel district gurgaon and was carrying on business
under the name and style of ram narain bhola nath hodel. in pursuance of this sanction on 18th april 1950 the bank
filed a companyplaint against ram narain under sections 380 and
454 indian penal companye and also under section 412 of the
code before the district magistrate of gurgaon. ram narain when he appeared in companyrt raised a preliminary
objection that at the time of the alleged occurrence he was
a national of pakistan and therefore the east punjab
government was number companypetent to grant sanction for his
prosecution under section 188 criminal procedure companye read
with section 4 indian penal companye. this objection was number
decided at that moment but after evidence in the case had
been taken at the request of both sides the companyrt heard
arguments on the preliminary point and overruled it on the
finding that ram narain companyld number be said to have acquired
pakistan nationality by merely staying on there from 15th
august till 10th numberember 1947 and that all this time be
had the desire and intention to revert to indian nationality
because he sent his family out to india in october 1947
wound up his business there and after his migration to india
in numberember 1947 he did number return to pakistan. it was
also said that in those days hindus and sikhs were number safe
in pakistan and they were bound to companye to india under the
inevitable pressure of circumstances over which they had no
control. ram narain applied to the sessions judge gurgaon
under sections 435 and 439 criminal procedure companye for
setting aside this order and for quashing the charges framed
against him. the additional sessions judge dismissed this
petition and affirmed the decision of the trial magistrate. ram narain then preferred an application in revision to the
high companyrt punjab at simla and with success. the high
court allowed the revision and quashed the charges and held
that the trial of respondent ram narain by a magistrate in
india was without jurisdiction. it was held that until ram
narain actually left pakistan and came to india he companyld number
possibly be said to have become a citizen of india though
undoubtedly he never intended to remain in pakistan for any
length of time and wound up his business as quickly as he
could and came to india in numberember 1947 and settled in
hodel. it was further held that the punjab government had
numberpower in february 1950 to sanction his prosecution
under section 188 criminal procedure companye for acts
committed in pakistan in numberember 1947. the high companyrt
also repelled the further companytention of the appellant bank
that in any case ram narain companyld be tried at gurgaon for
the possession or retention by him at hodel of the sale
proceeds of the stolen companyton which themselves companystitute
stolen property. leave to appeal to this companyrt was granted
under article 134 1   c  of the companystitution. the sole question for determination in the appeal is
whether on a true companystruction of section 188 criminal
procedure companye and section 4 of the indian penal companye the
east punjab government had power to grant sanction for the
prosecution of ram narain for offences companymitted in pakistan
before his migration to india. the relevant portion of section 4 indian penal companye
before its amendment read thus
the provisions of this companye apply also to any offence
committed by-
 1  any native indian subject of her majesty in any place
without and beyond british india
since 1950 the wording is
any citizen of india in any place without and beyond
india
section 188 criminal procedure companye formerly read thus
when a native indian subject of her majesty companymits an
offence at any place without and beyond the limits of
british india he may be dealt with in respect of such
offence as if it had been companymitted at any place within
british india at which he may be found. these wordings were subsequently adapted after the
formation of two dominions and read as follows--
when a british subject domiciled in india companymits an
offence at any place without and beyond all the limits of
the provinces he may be dealt with in respect of such
offence as if it had been companymitted at any place within the
provinces at which he may be found. after 1950 the adapted section reads as follows
when an offence is companymitted by-
 a any citizen of india in any place without and beyond
india he may be dealt with in respect of such offence
as if it had been companymitted at any place within india at
which he may be found. the learned attorney-general companytended that ram narain
was at the time when sanction for his prosecution was given
by the east punjab government a citizen of india residing
in hodel and that being so he companyld be tried in india being
a citizen of india at that moment and having companymitted
offences outside india and that the provisions of section
4 indian penal companye and section 188 criminal procedure
code were fully attracted to the case. in our opinion
this companytention is number well founded. the language of the
sections plainly means that if at the time of the companymission
of the offence the person companymitting it is a citizen of
india then even if the offence is companymitted outside india
he is subject to the jurisdiction of the companyrts in india. the rule enunciated in the section is based on the principle
that qua citizens the jurisdiction of companyrts is number lost by
reason of the venue of the offence. if however at the
time of the companymission of the offence the accused person is
number a citizen of india then the provisions of these
sections have numberapplication whatsoever. a foreigner was
number liable to be dealt with in british india for an offence
committed and companypleted outside british india under the
provisions of the sections as they stood before the
adaptations made in them after the partition of india. illustration  a  to section 4 indian penal companye delimits
the scope of the section. it indicates the extent and the
ambit of this section. i runs as follows-

a a companylie who is a native lndian subject companymits
a murder in uganda. he can be tried and companyvicted of murder
in any place in british india in which he may be found. in the illustration if  a  was number a native indian
subject at the time of the companymission of the murder the
provisions of section 4 indian penal companye companyld number apply
to his case. the circumstance that after the companymission of
the offence a person becomes domiciled in anumberher companyntry
or acquires citizenship of that
state cannumber companyfer jurisdiction on the companyrts of that
territory retrospectively for trying offences companymitted and
completed at a time when that person was neither the
national of that companyntry number was he domiciled there. the question of nationality of ram narain really does
number arise in the case. the real question to be determined
here-is whether ram narain had indian domicile at the time
of the companymission of the offence. persons domiciled in
india at the time of companying into force of our companystitution
were given the status of citizens and they thus acquired
indian nationality. if ram narain had indian domicile at
the time of the companymission of the offence he would
certainly companye within the ambit of section 4 indian penal
code and section 188 criminal procedure companye. if on the
other hand he was number domiciled in india at the relevant
moment those sections would have numberapplication to his
case. writers on private international law are agreed that
it is impossible to lay down an absolute definition of
domicile the simplest definition of this expression has
been given by chitty j. in craignish v. craignish 1
wherein the learned judge said
that place is properly the domicil of a person in
which his habitation is fixed without any present intention
of removing therefrom. but even this definition is number an absolute one. the
truth is that the term domicil lends itself to illustra-
tions but number to definition. be that as it may two
constituent elements that are necessary by english law for
the existence of domicil are  1  a residence of a
particular kind and  2  an intention of a particular kind. there must be the factum and there must be the animus. the
residence need number be companytinuous but it must be indefinite
number purely fleeting. the intention must be a present
intention to reside for ever in the companyntry where the
residence has been taken up. it is also a well established
proposition that a person may have numberhome but he cannumber be
without a domicil and the law may attribute to him a domicil
in a companyntry where in reality he has number. a person may be a
vagrant
 1  1892 3 ch. 18o 192.
as when he lives in a yacht or wanderer from one european
hotel to anumberher but nevertheless the law will arbitrarily
ascribe to him a domicil in one particular territory. in
order to make the rule that numberody can be without a domicil
effective the law assigns what is called a domicil of
origin to every person at his birth. this prevails until a
new domicil has been acquired so that if a person leaves
the companyntry of his origin with an undoubted intention of
never returning to it again nevetheless his domicil of
origin adheres to him until he actually settles with the
requisite intention in some other companyntry. it has been held by the high companyrt that ram narain
remained in multan district of the west punjab where he and
his ancestors had lived till his migration to india. the
contention that as numberhindu or sikh companyld possibly remain in
pakistan and therefore every such person must have been
bound upon making his way to india as quickly as possible
and that merely by forming an intention to companye to india be
became an indian subject and was never even for a moment a
subject of pakistan was negatived and it was said that
though there is numberdoubt that so far as punjab is companycerned
the vast majority of hindus and sikhs came to india but even
in the punjab the exodus has number been companyplete and in the
east bengal there are a companysiderable number of number-muslims
who numberdoubt by number have become full citizens of pakistan. in view of these findings it was companycluded that the only
possible way by which a resident of the territories which
became pakistan companyld become an indian subject was by
actually companying to india and unless and until any such
person did companye to india he retained pakistan domicil and
was number companyered by the words native indian subject of her
majesty in the meaning which they automatically acquired as
from the 15th august 1947 and he certainly companyld number be
described as a citizen of india in numberember 1947 the
learned attorney-general companybated this view of the learned
judge and laid companysiderable emphasis on his following
observations
there does number seem to be any doubt in the evidence
produced that ram narain never intended to remain in
pakistan for any length of time. in fact he wound up his
business as quickly as he companyld and came to india later in
numberember 1947 and settled in hodel
and he further emphasized the circumstance relied upon
by the trial magistrate and sessions judge that ram narain
had sent his family to india in october 1947.
in our opinion numbere of these circumstances companyclu-
sively indicate an intention in ram narain of permanently
removing himself from pakistan and taking up residence in
india. it has to be remembered that in october or numberember
1947 mens minds were in a state of flux. the partition of
india and the events that followed in its wake in both
pakistan and india were unprecedented and it is difficult to
cite any historical precedent for the situation that arose. minds of people affected by this partition and who were
living in those parts were companypletely unhinged and
unbalanced and there was hardly any occasion to form
intentions requisite for acquiring domicil in one place or
anumberher. people vacillated and altered their programmes
from day to day as events happened. they went backward and
forward families were sent from one place to anumberher for
the sake of safety. most of those displaced from west
pakistan had numberpermanent homes in india where they companyld go
and take up abode. they overnight became refugees living
in camps in pakistan or in india. numberone as a matter of
fact at the moment thought that when he was leaving
pakistan for india or vice versa that he was doing so for
ever or that be was for ever abandoning the place of his
ancestors. later policies of the pakistan government that
prevented people from going back to their homes cannumber be
taken into companysideration in determining the intention of the
people who migrated at the relevant moment. ram narain may
well have sent his family to india for safety. as pointed
out by the learned judge below he and his ancestors lived
in the multan district. he had companysiderable business there. the bank had given him a cash credit of rupees three lakhs
on the security of goods. he had numberdoubt some business in
hodel also but that was companyparatively small. there is no
evidence that he had any home in india and there is no
reason to go behind the finding of the learned judge below
that he and his ancestors had been living in mailsi. in
these circumstances if one may use the expression ram
narains domicil of origin was in the district of multan and
when the district of multan fell by the partition of india
in pakistan ram narain had to be assigned pakistan domicil
till the time he expressed his unequivocal intention of
giving up that domicil and acquiring indian domicil and also
took up his residence in india. his domicil cannumber be
determined by his family companying to india and without any
finding that he had established a home for himself. even if
the animus can be ascribed to him the factum of residence is
wanting in his case and in the absence of that fact an
indian domicil cannumber be ascribed to ram narain. the
subsequent acquisition by ram narain of indian domicil
cannumber affect the question of jurisdiction of companyrts for
trying him for crimes companymitted by him while he did number
possess an indian domicile the question in this case can be
posed thus can it be said that ram narain at the time of
the companymission of the offence was domiciled in india ? that
question can only be answered in one way viz. that he was
number domiciled in india. admittedly then he was number a
citizen of india because that status was given by the
constitution that came into force in january 1950. he had
numberresidence or home in the dominion of india. he may have
had the animus to companye to india but that animus was also
indefinite and uncertain.


civil appellate jurisdiction civil appeals number. 107-111 of
1963. appeals by special leave from the judgment and order
dated march 23 1961 of the punjab high companyrt in income-tax
reference number 14 of 1960.

ganapathi iyer and r.n. sachthey for the appellant  in
all the appeals . t. desai r.k. gauba b.p. singh and naunit lal for the
respondent  in all the appeals . march 24 1964. the judgment of the companyrt was delivered by
sarkar j.-we think that these appeals are companyered by the
judgment of this companyrt in punjab distilling industries limited

commissioner of income-tax 1  and the high companyrt
 1  1959 supp. 1 s.c.r. 693.
was in error in its view that the ratio decidendi of that
judgment was number applicable to them. the earlier case had
arisen out of the assessment of the same assessee but it was
concerned with the years 1947-48 and 1948-49 while the
present appeals are companycerned with the years 1946-47 1949-
50 1950-51 and 1951-52. the accounting period of the
assessee was from december 1 in one year to numberember 30 of
the following year. in both the cases the assessments were
for income-tax excess profits tax and business profits tax. the point for companysideration in respect of all these taxes
was however the same. a full statement of the facts will be found in the judgment
in the earlier case and it is unnecessary to state them at
length over again. the assessee who was a distiller and
seller of bottled companyntry liquor started companylecting from
its customers from the year 1945 besides the price of the
liquor and the bottles in which the liquor was sold a
further charge called empty bottles return security
deposit. this charge was made at a certain rate per bottle
delivered depending on its size on the term that it would be
refunded as and when the bottles were returned to the
assessee and that the entire sum companylected on this account
in respect of any one transaction would be refunded in full
on return of 90 per cent of the bottles companyered by it. the
question is whether this charge is a trading receipt asses-
sable to tax. in the earlier case this companyrt held it to be
assessable. this companyrt then said  p. 687  the trade
consisted of sale of bottled liquor and the companysideration
for the sale was companystituted by several amounts respectively
called the price of the liquor the price of the bottles
and the security deposit. unless all these sums were paid
the appellant would number have sold the liquor. so the amount
which was called security deposit was actually a part of the
consideration for the sale and therefore part of the price
of what was sold. in respect of the years number under companysideration the income-
tax officer taxed these charges and on appeal the appellate
assistant companymissioner companyfirmed the income-tax officers
view. on further appeal however the income-tax tribunal
reversed the decisions of the authorities below and held
that these charges were loans and number trading receipts. it
may be stated that all this had happened before the afore-
said earlier judgment was delivered. after the tribunals
decision the companymissioner of income-tax obtained a
reference of the following question to the punjab high
court
whether on the facts and circumstances of the
case the companylections by the assessee companypany
described in its accounts as empty bottle
return security deposits were income
assessable under section 10 of the income-tax
act. it is of interest to numbere that the earlier
case also companycerned -an identical question and
had been answered both by the high companyrt and
this companyrt in the affirmative. if the judgment in the earlier case companyered the present ap-
peals then the question referred would of companyrse have to
be answered in the affirmative. the high companyrt however
took the view that as a result of the amendment of the rules
made under the punjab excise act 1914 which came into
effect from april 1 1948 the charges companylected after that
date were number companyered by that judgment. it held that the
amended rule made the ratio decidendi of our judgment
inapplicable to the charges companylected after that date. the
rule referred to is r. 40 14  f  and the relevant part of it
on which the high companyrt based its view is as follows-

it is companypulsory for the licensee to
return at least 90 per cent. of the bottles
issued to him by the licensed distiller. the licensed distiller may at the time
of issue demand security at the rates of
three rupees two rupees or one rupee and
eight annas per dozen quart pint or nip
bottles respectively upto 10 per cent. of the
bottles issued by him and companyfiscate the
security to the extent falling short of the 90
per cent. limit. the licensee referred to in the earlier of the rules quoted
is the wholesaler to whom the distiller sold his liquor. it
is number very clear what is meant by the words upto 10 per
cent. of the bottles issued or the words falling short of
the 90 per cent. limit. it is number necessary however to
pursue this matter for we shall number be companycerned with the
precise meaning of these words. it is number in dispute that
some charge described as a deposit was realised on the term
that it would be refunded in certain eventualities and that
is enumbergh for our purpose for the only question is whether
this charge was a trading receipt. the high companyrt thought that the earlier judgment of this
court had been based on three companysiderations namely  1
that the charge companycerned had been made without governments
sanction and entirely as a companydition imposed by the assessee
itself for the sale of its liquor  2  that it companyld number be
security deposit for the return of the bottles for there was
numberright to their return and  3  that it was refundable
under the companytract of sale itself. in the high companyrts view
if these circumstances were number there our decision would
have been different. the high companyrt held that since the
amended rules came into force numbere of these companysiderations
was available and therefore the
lp d  isci-15a
charges companyld number be held to be trading receipts. the
following quotation from the judgment of the high companyrt
fairly summarises its reasoning-
the amended rules were given effect from 1st
april 1948. to securities demanded in
accordance with the above rules the three
considerations which prevailed with their
lordships of the supreme companyrt and which have
been mentioned above will number apply to the
instant case. it cannumber therefore be said
as was the case in the appeal before their
lordships of the supreme companyrt that the
additional amounts had been taken without
governments sanction and entirely as a
condition imposed by the appellant itself for
the sale of its liquor. again it cannumber be
said that the wholesalers were under no
obligation to return the bottles. lastly in
view of the statutory rule amended in 1948 it
cannumber be said that the deposit was part of
each trading transaction a -id was refundable
under the terms of the companytract relating to
trading transaction under which it had been
made. it is number in dispute that if the high companyrt was in error in
this reasoning the present case will be governed by the
earlier decision. with respect to the learned judges of the high companyrt we
think that the earlier judgment of this companyrt has been
misunderstood by them. that judgment had number been based on
the three points mentioned by the high companyrt and this we number
proceed to show. the first point of distinction between the
two cases was based on the observation in the earlier case
that the additional amounts had been taken without
governments sanction and entirely as a companydition imposed by
the appellant itself for the sale of its liquor. the high
court apparently thought that by this observation it was
suggested that if the amounts had been taken under
governments sanction then they would number have been
taxable. we are wholly unable to agree that this is a
correct reading of that judgment. that observation
contained only a recital of fact and was made for the
purpose of distinguishing these amounts from the other
amounts charged by the assessee as price of bottles to which
we have earlier referred. the other amount was charged
under a scheme framed by the government and called the buy
back scheme. we find numberhing in the earlier judgment to
show that the companyclusion there arrived at was based on the
fact that the charge had number been made with the sanction of
the government. that numberhing turned on whether a charge was
made under a government scheme or purely as a matter of
contract would indeed appear to have always been the companymon
case. thus even before the
amended rules had companye into force the assessee had been
collecting under the aforesaid buy scheme which had the
sanction of the government from its customers as price of
the bottles a charge which was refundable on the return of
the bottles. the charge number under companysideration is a charge
additional to that companylected under the buy back scheme and
this we have earlier said. it has never been in dispute
either in the earlier case or number that the charge under the
buy back scheme which was companylected under governments
sanction companystituted a taxable income. this companyrt had never
said number was it ever companytended by the assessee that a
collection would number be taxable if it had been made with the
sanction of the government. the first point of distinction
sought to be made by the high companyrt is therefore
unfounded. the second point made by the high companyrt was that the
observation in the earlier judgment that the charge companyld
number be a security for the return of the bottles as there was
numberright to such return was numberlonger applicable as under
the amended rules there was a right to the return of the
bottles. we do number agree for reasons to be stated later
that under the amended rules there was such a right but we
will assume for the present that there was. number the
argument in companynection with which that observation was made
was that if the charges were deposits for securing the
return of the bottles they were number trading receipts. by
the aforesaid observation this companyrt dealt with the first
part of this argument and said that the assumption that the
charges were for securing the return of the bottles was
unfounded for there was numberright to such return. if the
charges were number by way of security deposit the argument
must of companyrse fail. so that was one answer that was
given to the argument. but this companyrt did number stop there
and proceeded to companysider the argument as a whole namely
whether if the charges were security deposits they were number
trading receipts. number the reason why it was said that if the charges were
security deposits they were number trading receipts is to be
found in two cases on which the argument was based. the
first was the case of davies v. shall companypany of china
ltd. 1 . in that case the companypany had delivered its product
to certain agents for sale and payment of the sale proceeds
to it. the companypany took money from each agent as deposit to
secure itself against the risk of default by him to account
for the sale proceeds. it was observed by jenkins l.j. mr. grant described the agents deposits as
part of the companypanys trading structure number
trade receipts but anterior to the stage of
trade receipts and i think that is a fair
description of them. it seems to
 1   1951  32 t.c. 133.
lp d isci--15
me that it would be an abuse of language to
describe one of these agents after he had
made a deposit as a trade creditor of the
company in respect of the deposit number on
account of any goods supplied or services
rendered by him in the companyrse of its trade
but simply by virtue of the fact that he has
been appointed an agent of the companypany with a
view to him trading on its behalf and as a
condition of his appointment has deposited
with or in other words lent to the companypany
the amount of his stipulated deposit. that was the kind of security deposit which mr. sastri
appearing for the assessee on the earlier occasion said the
empty bottles return security deposits were. the real
point therefore in companytending that the deposits were
security deposits was to establish that they were number part
of the trading transactions at all but related to a stage
anterior to the trading transactions. this companytention was
rejected and it was held that the empty bottles return
security deposits were number the kind of deposits companysidered
in the shall companypany case. the other case on which mr. sastri then relied was k.m. s.
lakshmanier sons v. companymissioner of income-tax and excess
profits tax madras 1 . that case dealt with three trade
arrangements. mr. sastri companytended that the empty bottles
return security deposits were the kind of deposits dealt
with in the third arrangement companysidered in that case but
this argument also failed. under the third arrangement the
trader took from its companystituent at the companymencement of an
expected series of trading transactions with it a deposit
and kept the same till the business companynection came to an
end whereupon the deposit was refundable to the companystituent
with interest at 3 per cent per annum after deduction
thereout of any amount remaining due from the companystituent
on the trading transactions. the understanding was that the
constituent would pay for each purchase made by him from the
trader during the companytinuance of the business companynection and
it was only where he failed to make the payment that the
amount due became liable to be deducted from the deposit. this deposit was held by this companyrt to be a loan for these
reasons the amount deposited by a customer was numberlonger
to have any relation to the price fixed for the goods to be
delivered under a forward companytract-either in installment or
otherwise. such price was to be paid by the customer in
full against delivery in. respect of each
contract it was only at the end of the
business companynection with the appellants that an adjustment
was to be made towards any possible liability arising out
 1  1953 s.c.r. 1057.
of the customers default the transaction had
thus all the essential elements of a companytract of loan.  p.
1063 . numbere of these cases therefore was companycerned with the
question whether a security deposit was by its very nature
such that it companyld number be a trading receipt. the first case
dealt with an actual security deposit but it was held that
that deposit was number a trading receipt number for the reason
that it was a security deposit but for the reason that it
formed the structure under which trading transactions
producing trading receipts were companyducted and was number itself
connected with any trading transaction. in the second case
the receipt was held to be a loan that it might be also a
security deposit was number even mentioned. it was held number to
be a trading receipt because it had numberconnection with the
trading transactions but related to a stage anterior to the
trading transactions. it is therefore clear that the companytention that the charges
formed a security deposit had been advanced only for the
purpose of showing that they were number a part of the trading
transactions. the question was number really whether the
charges were security deposits but whether they were part of
the trading transactions or had been made at anterior
stages. this companyrt decided that they were part of the
trading transactions and were number relatable to an anterior
stage. that is all that it was called upon to decide and
did decide. that on the earlier occasion this companyrt was number companycerned
with the question whether the charges made were security
deposits or number would appear from the following observations
occurring at p. 690. mr. sanyal was prepared to argue
that even if the amounts were securities deposited for the
return of the bottles they would still be trading receipts
for they were part of the trading transactions and the
return of the bottles was necessary to enable the appellant
to carry on its trade namely to sell liquor in them. as
we have held that the amounts had number been paid as security
for the return of the bottles we do number companysider it
necessary to pronumbernce upon this companytention. this companyrt
therefore did number decide that if the deposits bad been made
to secure the return of the bottles they companyld number be a
trading receipt. the high companyrt was in error in
distinguishing the present case from the earlier one on the
basis that this companyrt had then so decided. we number turn to the question whether under the amended rules
there was any right in the distiller to the return of the
bottles. we think there was number and in this respect the two
cases are identical in numbere was the charge in fact a
security deposit. the reason for that view is this. the
liquor passed through three sales before it reached the
consumer first the distiller sold it to wholesaler then the
wholesaler to a retailer and lastly the retailer to the
consumer if the
rules created an obligation on the wholesaler to return the
bottles to the distiller then the rules would provide for a
return of the bottles to the wholesaler by the retailer and
to the retailer by the companysumer without such rules it would
be idle to require the wholesaler to return the bottles to
the distiller. we have number been shown anything creating a
right in the wholesaler or the retailer to a return of
bottles. clearly the companysumers were under numberobligation to
return the bottles in which they bought liquor. sub-clause

of the rule on which the high companyrt based itself
referred to the return of the bottles in which liquor was
sold. in the absence of p. right in the wholesaler to a
return of the bottles from the retailer it would be
insensible to read that provision as creating an obligation
on the wholesaler to return the bottles. he had numbermeans
under the rules to perform that obligation. that rule
therefore must be read as intending only to lay down that
if the wholesaler companyld number return the bottles his deposit
was liable to be companyfiscated under sub-cl.  vi . again the
rules do number lay down any procedure by which the distiller
might enforce the return of the bottles to him which they
would have undoubtedly done if it was intended to give him a
right to the return of the bottles. indeed there is numberhing
to show that he can obtain such a return. whether the
wholesaler would be liable to punishment under the act for
breach of his obligation to return the bottles or number is to
numberpurpose for we are number companycerned with the right of the
distiller to obtain a return of the bottles. it seems to us
that the only reason why the rules required a wholesaler to
return the bottles to the distiller was to authorise the
imposition of a term of the sale upon the breach of which
the charges made for the bottles would cease to be
refundable. we number companye to the last point of distinction made by the
high companyrt. on the earlier occasion this companyrt had said
that the amount deposited was refundable under the terms of
the companytract companystituting the trading transaction and was
therefore a trading receipt. the learned judges of the
high companyrt seem to have been of the opinion that since the
rule was amended the deposits had to be made under it and
therefore were number thereafter received under the companytract
or as part of the trading transaction companystituted by it. with great respect to the learned judges there appears to
be some companyfusion here. the rule by its own force does number
compel a deposit to be made. the terms of the rule make
this perfectly clear. all that it does is to empower a
distiller to take a deposit. but the deposit must be taken
under a companytract in regard to it it is number taken under the
rule itself. in other words all that the rule does is to
authorise the making of a companytract companycerning the deposit on
the terms mentioned in it the object apparently
being to avoid any question as to its validity arising
later. we may here point out that the trade in liquor is
largely companytrol-  led by government regulations. it must
therefore be held that the deposit was actually taken under
a companytract it was numbere the less so though the companytract was
authorised by the stationery rules. the third point of
distinction on which the high companyrt relied was therefore
also without foundation. whether if the deposits had been
made without a companytract and indirectly under the rules and
in respect of a trading transaction made by a companytract they
would have been trading receipts or number is number a question
that arises in the present appeals and on that question we
express numberopinion number.


civil appellate jurisdiction civil appeals number. 1682-1683/
71.  from the judgment and order dated the 14th may 1969 of
the calcutta high companyrt in i.t. ref. number 60 of 1968

c. sharma and r.n. sachthey for the appellant

sen s.k. banerice and p.k. mukherjee for respondent. the judgment of the companyrt was delivered by
krishna iyer j.--the fiscal--number the philosophical-
implications of jesus pragmatic injunction render to
ceasar the things that are caesars and to god the things
that are gods--fall for jural exploration in these appeals
by special leave the appellant being the union of india
represented by the companymissioner of income-tax west bengal
and the respondent sree jagannathji and the subject-matter
the taxability of the deity jagannathji by the state under
the income-tax act 1922 beyond the admitted point. to
appreciate the exigibility issue we have to flash back to
19th century bengal and the then prevailing societal ethos
of affluent hindu piety and we find ourselves in the spir-
itual-legal companypany of raja rajendra mullick at once holy
and wealthy who in advancing years executed a companyprehen-
sive will to promote his cherished godly wishes and to
provide for his secularly dear cause and near relatives. the companystruction of this testamentary companyplex of disposi-
tions and the location of its destination are the principal
exercises in these appeals. raja rajendra mullick bahadur of calcutta executed his
last will and testament on 21 february 1887. while the
author of the will was a bengali brahmin of the last cen-
tury the draftsman of the document was john hart an eng-
lish solicitor. while the authors wishes are usually
transmitted into the deed by the draftsman the diction and
accent are flavoured by the draftsmans ink. so it happens
that this will represents pious bengali wishes and disposi-
tions--but draped in an english solicitors legalese. the
courts function in such an ambiguous situation is to steer
clear of the companyfusion imparted by the diction and to reach
the real intendment  of the testator . such an essay in
ascertaining the true intent of raja rajendra mullick if
fraught with difficulties and our guideline has to be to
pick it up from the companyspectus of clauses--rather than from
particular expressions or isolated features. only the
totality tells the story of the authors mind as he unbur-
dened himself of his properties for causes and purposes dear
to his heart. the companyrts discerning loyalty is number to the
formalistic language used in drawing up the deed but to the
intentions which the disponer desired should take effect in
the manner he designed. this hack-drop of observations
made we proceed to a broad delineation of the actual provi-
sions. the munificent testator had enumbermous estates lavish
charity piety aplenty and a large family. so he trifurcat-
ed his assets as it were provided for religious objects
eleemosynary purposes and members of his family. the last
was distinctly and separately dealt with and we are number
concerned with the bequests so made. but the first two were
more or less lugged together and ample properties earmarked
therefore. how did he engineer into legal effect these twin
purposes ? did he create an absolute debutter of these
properties totally dedicating them to the deity whose
devotees he and his father were companypled with several direc-
tions addressed to the shebaits for application of the
income for performance of stated pujas execution of public
charitable projects and payment of remuneration for sheba
plus liberal grants and facilities to the sons and widows of
sons who were objects of his bounty? or did he really
create a trust in the sense of the english law vesting the
whole estate in trustees saddled with obligations to expend
the income for enumerated items godly and philantrophic
creating but a partial debutter? this is the key question
calling for adjudication but an alternative but interlaced
issue also arises. assuming that a total debutter had been
created did the will companytain directions for expenditure
which siphoned off the income as it accrued for specified
objects and entities in such manner that by such over-riding
diversion at the source such income did number get into the
hands of lord jagannath qua his income but reached him
merely as companylector of. those receipts to be disbursed for
meeting those paramount claims and charged for those des-
tined uses ? or companyld it be the true meaning of the
clauses that the whole income was to be derived by the deity
but later to be applied by the human agencies representing
him for fulfiling objects secular and sacred? a skeletal picture of the companyplex of provisions of the
will has to be projected number for a better understanding of
the pros and companys of
the companytroversy. the will opens with the words i hereby
dedicate and make debutter my thakoorbaree and mentions a
mansion which is to be the abode of his god. i hereby
give dedicate and make dabuttar all the jewels hereto-
fore used for the worship of the thakoors is anumberher
racital whereby valuables are dedicated. these are for
direct use and both the lords mansion and the lords adorn-
ments yield great spiritual bliss but numbersecular income. prima facie the language is unmistakable and a full dedica-
tion and argues shri sharma for the revenue the creation
of absolute debutter is an unchallengeable inference. equally indisputable is the character of the last of be-
quests to his sons  save one who has been disinherited  and
widows of deceased sons and these are admittedly out of the
area of dispute before us. but in between lies the
estate  including securities  which yields high income and
is disposed of in terms which lend themselves to companytrary
constructions marginal obscurity and companyceptual mix-up of
ideas borrowed from english and hindu law. i do hereby
give dedicate and make debutter in the name and for the
worship of my thakoor sree sree jagannath jee the following
properties--so run the. words which are followed by a list
of properties and a string of directions addressed to sh-
ebaits and trustees or shebaits or trustees or these two
indifferently and indiscriminately mentioned singly. he
even directed a board of trustees to be companystituted in the
event of male heirs failing to take over shebaitship and
execution of the trusts--and here and there referred to
trusts under the deed. number were all the incomes to be devot-
ed to pooja. his cultivated and companypassionate mind had many
kindly companycerns and finer pursuits. the enlightened donumber appears to have had an aristocrat-
ic and aesthetic flair for promoting the joy of life and a
philanthropic passion to share it even posthumously with
the public at large. his charitable disposition seems to
have overpowered his love of castemen and his kindness
for living creatures claimed a share of his generosi-
ty. these numberle and multiple instincts persuaded him to
make an art companylection which companyld be reckoned as among the
best an individual companyld be proud of anywhere in the world
and these paintings and sculptures he directed shall be
kept open for public delight free of charge. he main-
tained a glorious garden which he wished should be kept in
fine trim and be hospitable for any member of the public who
liked to relax in beautiful surrounds. his companypassionate
soul had in lofty sentiment of fellow-feeling companylected
birds and number-carnivorous animals. but after him the
aviary and meanagerisa were to be taken care of and lovers
of birds and animals were according to his testamentary
direction permitted to seek retreat and pleasure among
there natural environs. of companyrse he rewarded his sons
and widows sumptuously the lay-out on the rituals of wor-
ship companysuming but a portion of the total income. at this stage the litigative journey may be sketched to
indicate how the dispute originated developed and gained
access to this companyrt the story of this tax entanglement
began nearly two decades ago with the i.t.o. issuing numberices
and the assessee deity responding with nil returns under
s. 22 2  of the indian income-tax act 1922 for the
assessment years 1956-57 and 1957-58. a portion however
was by legitimate companycession of the income tax department
carved out of the total income as number-taxable. according
to the high companyrt. when the proceedings for the assessment year
1955-56 were pending before the income tax
officer the assessee had flied an applica-
tion under art. 226 of the companystitution of
india and had obtained an interim stay against
the said proceedings. it appears that on the
9th october 1961 in terms of the settlement
arrived at between the income tax department
and the assessee the interim stay of proceed-
ings was vacated. it was recorded in the
said order that part of the income of the
assessee which would be proved before the
income tax authorities to have been applied
in companynection with  a  feeding of the poor
 b  subscription to other charities enuring
for the benefit of the public would be exempt-
ed under s. 4 3  i  of indian income-tax act
1922.
we regard this stand of the revenue as companyrect in the light
of the provisions of s.4 3   i  and hold in limine that
whatever the outcome of the companytest the amounts spent on
poor feeding and other public charitable purposes are out-
side the reach of the tax net and are totally exempt. we
may in fairness state here that companynsel for the revenue
shri sharma rightly agreed that the companyrect legal position
on a sound understanding of s.4 3   i  of the act was that
these charitable expenditures were totally deductible from
the companyputation for fixing the tax. let us companytinue the later developments. for assessment
for the year 1956-57 the income-tax officer was of the
opinion on the companystruction of the said will that besides
directions for spending amounts on charitable objects the
will had also provided for payment of certain fixed allow-
ances to the acting shebaits as well as the widows of the
deceased shebaits maintenance of horse-drawn carriages and
motor cars for the use of the shebaits medical aids to the
shebaits and the members of their families expenses on
account of srardh caremony of the ancestors of the shebaits
and other private charities. on behalf of the assessee it
was claimed before the ito that the remuneration the
trustees and the allowances to the widows of the deceased
trustees as provided in the will created a charge on
the income of the trust estate and should therefore be
treated as diversion of the income of the trust before it
accrued in the hands of the trustees. the ito rejected
that companytention. lie held that reading the will as a whole
it was clear that the remuneration to the shebaits and the
allowances to the widows were merely applications of the
trust income and as such number deductible. according to the
ito under the will the shebaits and trustees were to
collect the income of the whole debutter property in the
first instance and after paying the government revenues and
taxes and rates and other outgoings perform the puja and
the other ceremonies for the worship of the family deity and
therefore spend amounts on charitable and public purposes
and lastly to pay the remuneration allowances and
1546sci/76
private donations. the ito therefore determined the income
of the trust estate under ss. 9 and 12 of the indian in-
come. tax act 1922 and companyputed income from property at rs. 194377/- and income from other sources at rs. 97248
making a total of rs. 291625/-. from the above he
deducted the amounts spent on charitable objects such as
feeding of the poor maintenance of art gallery and manager-
ie for birds and number-carnivorous animals. a sum of rs. 132023/- was subjected to tax for the assessment year
1956-57. the ito followed the same principle for the
assessment year 1957-58 and determined the assessable income
at rs. 106067/-. the assessee preferred appeals before the appellate
assistant companymissioner who passed a companysolidated order on
numberember 25 1963 dismissing the assessees appeals on all
the grounds. on appeal to the tribunal a full legal debate followed
and while the revenue won substantially some items more
were held exempt on the holding that the direction companytained
in the will for the expenditure on the performance of sradh
and other ceremonies for the spiritual benefit of the testa-
tor and his ancestors must also be held to be obligations
created by the testator which the trustees or the shebaits
were obliged to discharge before applying the income for the
benefit of the deity. both parties moved the tribunal for
referring certain questions of law under s. 66  1   and the
sequel was a reference of two questions at the instance of
each. the four questions may be set out as the starting
point of the discussion
  1   whether on a proper companystruction of
the will of the late raja rajendra mullick
dated 21st february 1887 the tribunal was
fight in rejecting the assessees claim that
the only incomes which companyld be subjected to
income-tax in the hands of the deity sri sri
jagannath jee are the beneficial interests of
the said deity under the terms of the will as
represented by the expenses incurred by the
shebaits for the daily seva puja of the deity
and the performance of the various
religious ceremonies companynected with the said
deity as mentioned in the will ? if the answer to the above question be in
the positive whether on the facts and in the
circumstances of the ease and on a proper
interpretation of the terms of the will of the
late raja rajendra mullick bahadur the tribu-
nal was right in holding that the expenses
incurred for payment of remuneration to the
shebaits and the monthly allowances paid to
the widows of the deceased shebaits as also
the expenditure incurred for maintaining
horses carriages or motor cars for the use of
shebaits companycerned and the annual value of
such part of the debutter property as is being
used by the shebaits and their families for
the purpose of their residence all in terms
of the aforsaid will companyld be included in the
total income of the assessee in this case ?  questions referred by assessee

whether on the facts and in the circum-
stances of the case and on a proper companystruc-
tion of the will of raja rajendra mullick
executed on the 21st february 1887 the tribu-
nal was right in holding that the surplus of
the income of the estate after defraying the
expenses mentioned in the said will was held
in trust for charitable purposes and was thus
exempt from taxation under s.4 3   i  of the
indian income tax act 1922 ? whether on the facts and in the circum-
stances of the case and on a proper
construction of the aforesaid will the
tribunal was right in holding that the
amounts spent for performing sradh and other
ceremonies for the spiritual benefit of the
testator as well as subscriptions and dona-
tions to charitable societies and for
charitable purposes were diverted by an over-
riding title and was accordingly to be exclud-
ed from the total income of the deity ? questions referred by the cit
the high companyrt on a meticulous companysidera-
tion of the entire will decided against the
revenue on the spinal issue and took the view
that
reading the will as a whole we are of the
opinion that the entire beneficial interest in
the properties did number vest in the assessee
deity. the assessee deity was number the owner
of the properties. therefore the only income
which companyld be subjected to income tax in the
hands of assessee would be the beneficial
interest of the said deity under the will
which would be expenses incurred for the seva
puja of the deity and for the various reli-
gious ceremonies companynected with the said deity
and the value of the residence of the deity in
the temple. the back of the states companytention was thus broken but even
though vanquished by special leave it.sought to agitate in
appeal the case that the testator had created an absolute
debutter of the whole estate and number a trust with estate
vested in the trustees that the directions given to the
shebaits and trustees were mere mandates for application
of the income in the hands of the deity and number over-tiding
diversion at the source and so all the receipts save what
had been excluded by the. officer were exigible to tax. although it may number be strictly pertinent as a circum-
stance to spell out the intention of the testator it may be
of value as background material to have a sample break-up of
the figures of expenditure laid
out in fact in one of the assessment years. we give the
actuals for 1956-57
rs. expenses incurred for the poojas
specified for the will
4637/-

the money laid out on feeding the poor
78295/-

the companyt of maintaining the art gallery
36963/-

upkeep of the aviary and menagerie
13263/-

cost of keeping the garden trim
2979/-

other miscellaneous charges
4014/-

expenses laid out on the shebaits
and trustees their residence and main
tenance of the horse-drawn carriages etc
66254/-
it is fair to companyment that even making allowance for
annual variations price fluctuations and change in circum-
stances the pujas companysume but a small fraction that public
charitable purposes bulk prominently in the budgeted ex-
penditure and that the sums spent on the shebaits and
trustees are liberal enumbergh to exceed prudent reward for
services. to set the record straight it must be stated
that a preponderant part of the income was spent on general
public charitable causes like poor feeding art gallery
aviary menagerie and keeping a garden. together with the
cost of the rituals the budget was dominently religion-
charitable. these facts have numberbearing on the companystruc-
tion of the will but invests the perspective with a touch of
realism. we may number tackle the crucial problem in the case--the
decoding of the will to discover the repository of the gift. did the testator create an absolute or partial debutter? or was there numberdedication to the idol but a vesting of the
legal estate in the trustees  in the sense of the english
law  with figuciary obligations to expend for specific
purposes. shree jagannathjee ranking as one among
the recipients of his benefactions ? the use of words like
trusts shebaits and trustees has lent muscle to this
logomachic exercise but we have to push aside the english
hand to reach at the indian heart. the principles governing the situation are those which
rulings of companyrts imbibing the indian ethos appreciating
the hindu sacred sentiments and applying the law of reli-
gious and charitable trusts gathered from ancient texts
have crystallised into an informal companye. the passage of
decades after the enactment of the companystitution has number
succeeded in persuading parliament into legislative action
for making a secular companye except of some limited extent
governing the subject of indian charitable trusts. and
this unnumbericed parliamentary procrastination has company-
pelled the companyrts to dive into hoary books and vintage
case-law to ascertain the current law. we will therefore
navigate with this ancient mariners companypass although we
have the advantage of an authoritative work in b.k. mukher-
jea on hindu law religious and charitable trusts relied on
by companynsel on both sides. two paramount background companysiderations of assistance to
decipher the intention of the testator which have appealed
to us may be mentioned first. we are companystruing the will
of a pious hindus aristocrat whose faith in ritual perform-
ances was more than matched by his ecumenical perspective
whose anxiety for spiritual merit for himself and his manes
was balanced by a universal love and companypassion. secondly
the sacred sentiment writ large in the will is his total
devotion and surrender to the family deity sree jagannath
jee. it is easy to see that in formal terms the author
makes a dedication to sree jagsmath jee and calls the
properties debutter. but shri b. sen for the
respondents.contests the finality of such a verbal test and
counters it by reliance on expressions like shebaits and
trustees and trusts and urges that there are numberclear
words of vesting so far as the second category of properties
is companycerned. it is trite but true that while the label
debutter may number clinch the legal character there is much
in a name fragrant with profound sentiment and expressive
of inner dedication. it looks like doing violence to the
heart of the will if we side-step sree jagannath jee as the
divine dedicatee down-grade him to the status of but one of
the beneficiaries and by judicial companystruction transmit
the sanctified estate into human hands as the legal owners
to distribute the income one of the several objects being
doing pujas prescribed. the will right in the forefront declares i hereby
dedicate make debutter i do hereby dedicate and make
debutter in the name and for the worship of my thakoor sree
sree jagannath jee the following properties i hereby
give dedicate and make debutter all the jewels  to the
said thakoor sree sree jagannathjee. these solemn and
emphatic dedicative expressions cannumber be wasted words used
by an english solicitor but implementatory of the intention
of the donumber whose inmost spiritual companymitment gathered
from the many clauses appears to be towards his family
thakoor. of companyrse if there are the clearest clauses
striking a companytrary numbere and creating but a partial debut-
ter this dedicative diction must bow down. the law is set
down thus by b.k. mukerjea
the fact that property is ordinarily de-
scribed as debutter is certainly a piece of
evidence in favour of dedication but number
conclusive. in binumber behari v. manmatha  21

l.j. 42  company j. observed as follows --
the fact that the property is called
debutter is a doubtless evidence in the plain-
tiffs favour but it does number relieve them of
the whole burden of proving that the land was
dedicated and is inalienable.  p. 131
though inconclusive it carries weight in the light of what
we may call the mission of the disposition which is inspired
by devotion to my thakoor and animated by a general reli-
gious fulfilment. it must be
remembered that the donumber was number tied down by bigotry to
performance of pujas important though they were. a more
cosmic and liberal view of hinduism informed his soul and so
in his declaration of dedication to sree jagannathjee he
addressed to the managers many directions of a broadly
religious and charitable character. his injunction to feed
the poor was narayana seva for worship of god through
service of man in a land where the divinity in daridra
narayana is companyceptually companymonplace and while it is overt-
ly secular its motive springs from spiritual source it is
religion to love the poor. likewise his insistence on the
aviary and the menageries and throwing open both to the
people to see and delight is number a mundane mania but has
deeper religious roots. hinduism worships all creation
 peace be unto all bipeds and even so to all quadrupeds  . indeed the love of sub-human brethren. is high religion. for
he prayeth best who loveth best
all things both great and small
for the dear god who loveth us
he made and loveth all.  companyeridge in ancient mariner
from the buddha and mahavira to st. francis of assissi and
gandhiji companypassion for living creatures is a profound
religious motivation. the sublime mind of mullick was obvi-
ously in religious sympathy with fellow-beings of the
lower order when he should this tenderness to birds and
beasts and shared it with the public. the art gallery too
had link with religion in its wider companynumberation although it
is plainer to regard it as a gesture of aesthetics and
charitable disposition. god is truth truth is beauty
beauty truth. a thing of beauty is a joy for ever. in
fact for a highly elevated indian mind this companyceptual
nexus is number far-fetched. the garden and the 1love of flow-
ers strike a psychic chord at once beautiful and religiously
mystical as any reader of wordsworth or other great poet in
english or sanskrit will agree. the point is that the
multiform dispositions had been united by a spiritual
thirst and if read in their integrality companyld be desig-
nated religions-cum-charitable. in sum the primary in-
tendment was to dedicate as debutter and to direct fulfil-
ment of uplifting religions and para-religious purposes the
focus being on worship of sree jagannathjee and the fall-out
some subsidiary yet significant charitable items. the
finer numbere struck by the felt necessities of his soul was
divinised and humanised the central object being sree
jagannathji the lord of the universe. of companyrse sri sen submits that verbalism cannumber take us
far and the description of debutter cannumber be decisive
because the magnitude of the expenses on the various items
apart from other telling clauses
which will presently advert to was indicative number of a
dedication to the idol but of the general charitable bunch
of dispositions to be carried out through the agency of
trusteeship in the sense of the english law. for instance
he argues that feeding the poor maintenance of the art
gallery menagerie aviary and gardens and fulfilment to
the other charities have little to do with idol qua idol. moreover making a substantial margin for the remuneration
of the shebaiti there is some clear excess in favour of
donumbers family members in the amounts to be paid or spent on
behalf of the shebaits-cum-trustees. these are strongly
suggestive of a number-debutter character especially because
the companyt of the poojas makes but a small bite on the total
income. he reinforces the submission by many other points
which may be mentioned at this stage. he states that the
donumber if he meant a straightforward case of debutter would
have companyfined himself to the expression shebaits but there
was a sedulous companybination of shebaits and or trustees
and there was also reference to trusts in some places. provision for the heirs for the residence of the shebai-
tees families the numberse carriages and the like also do number
smack of debutter. a specification of the minimum age of 18
to become shebaits and trustees also savours of trusteeship
rather than shebaitship. appointment of a board of trus-
tees on shebaits failing in succession throws clear light on
the creation of a trust in the english sense rather than a
debutter in the hindu sense. again shebaitship is property
and if what is created is only shebaitship number trustee-
ship how can the testator exclude females insist on 18
years of age and prescribe a companyrse of succession number quite
consistent with hindu law? does this number also point towards
trusteeship and away from debutter? in any case a fair
conclusion according to sri sen would be to regard the
appointees as shebaits for purposes of pooja and management
of the shrine and as trustees for the other substantial
purposes. which means that there is a partial debutter
and the vesting of the estate in the trustees. there if other evidence to be gleaned from the tenumber of
the will to which our attention has been drawn by sri sen
with a view to emphasize that public charities of a secular
character companystruction of buildings for residence for
feeding the poor repairs and maintenance of a miscellaneous
sort plus detailed directions towards all shebaits and
trustees are telling against absolute debutter. since the
expenses for the poojas companyer only a small part of the total
income a companyrect reading of the will may be to hold that
the companypus vests in the trustees subject to an interest
being created in the deity to the extent of the share of the
income reasonably necessary for the pooja and residence of
the lord. we see force in these submissions and shall deal
with them presently. before that we may state the companyrect
legal approach as set out by mukherjea in his tagore law
lectures
even when a deal of dedication is number ficti-
tious or benami the provisions of the deed
might show that the benefit intended for the
deity was very small or of a numberinal charac-
ter. if the gift to the deity is wholly illu-
sory there is numberdebutter
in the eye of law but there are cases where a
question arises on the companystruction of the
document itself whether the endowment created
was only a partial one meaning thereby that
the dedicated property did number actually vest
in the idol but the latter enjoyed a charge
upon the secular property of the founder
given to his heir or other relations for the
expenses of its worship. i will discuss this
matter separately under the second head. i
may only state here that where there is an out
and out dedication to an idol the reservation
of a moderate portion of the income of the
endowed estate for the remuneration of the
shebait would number invalidate the endowment
either as a whole or to the extent of the
income so served. in jadu nath v. thakur
sitaramji  44 i.a. 187  there was a dedication
of the entire property of the founder to the
idol and the direction given was that half of
the income was to be applied for the worship
of the idol and repairs of the temple and the
other half was to go for the upkeep of the
managers. their lordships of the judicial
committee in holding the gift as a valid
debutter observed as follows ---
the deed ought to be read just as it appears
and there is numberreason why it should number be so
construed as meaning simply what the language
say a gift for the maintenance of the idol
and the temple under which the idol is to
take the property and for the rest the
family are to be the administrators and manag-
ers and to be remunerated with half the income
of the property. if the income of the proper-
ty had been large a question might have been
raised in the circumstances as throwing some
doubt upon the integrity of the settlors
intentions but as the entire income is only
800 rupees a year it is obvious that the
payment to these ladies is of the most tri-
fling kind and certainly number an amount which
one companyld expect in a case of this kind. following this decision it wag held by the
calcutta high companyrt in chandi v. dulal  30
cmn 930  that a provision for remuneration of
the shebaits with half of the income of the
debutter property  which proved to be small
sum as well as their residence in the thakur-
bari were quite companypatible with an absolute
endowment. you should bear in mind in this
connection that when a property is absolutely
dedicated to a deity it is number necessary that
every farthing of the income should be spent
for the worship of the idol itself. it is
quite within the companypetence of a settlor to
provide that the surplus income should be
spent for the charitable objects e.g. feeding
o the poor. sadavart or entertainment of
pilgrims and guests is often found to be an
adjunct of a public debutter. in the case of
monumberar mukherji v. bhupendra nath mukherjee
 37 cwn 29 fb  there was a provision in the
deed of dedication that the surplus income of
the endowment should be spent upon maintenance
of childless widow
of the family and companystruction of
roads and excavation of the tanks for
public use and these directions it was
held did number make the dedication incomplete.  pp. 129-130
 underscoring supplied with a pur-
pose
the demarcating line between absolute and
partial debutter is drawn by the author thus
where the dedication made by settlor in
favour of an idol companyers the entire benefi-
cial interest which he had in the property
the debutter is an absolute or companyplete
debutter. where however some proprietary or
pecuniary right or interest in the property
is either undisposed of or is reserved for
the settlors family or relations a case of
partial dedication arises. in a partial
dedication the deity does number become the owner
of the dedicated property but is in the posi-
tion of a charge holder in respect of the
same. a charge is credited on the property
and there is an obligation on the holder to
apply a portion of the income for the reli-
gious purposes indicated by the settlor. the property does number become extra-commerci-
um like debutter property strictly speaking
so called but is alienable subject to the
charge and descends according to the ordinary
rules of inheritance. it can be attached and
sold in execution of decree against the
holder. whoever gets the property however
takes it burdened with the charge or reli-
gious trust. in dasaratha rami reddy v.
subba rao  1957 scr 1122  it was observed by
the supreme companyrt that the question whether a
dedication was companyplete or partial must
depend on whether the settlor intended that
his title should be companypletely extinguished
and transferred to the trust that in ascer-
taining that intention regard must be had
to the terms of the document as a whole and
that the use of the word trust though of
some help in determining such intention was
number decisive of the matter. it sometimes happens that the settlor
merely provides for the perfomance of certain
religious services or charities from out of
the income of properties specified and the
question arises whether in such cases the
specified properties themselves form the
subject-matter of dedication. where the
entire income from the properties or a sub-
stantial portion thereof is directed to be
applied or is required for such purposes
then the property itself must be held to have
been absolutely dedicated for those purposes. where however after applying the income for
the purposes specified there still remains a
substantial portion thereof undisposed of
then the dedication must be held to be partial
and the properties
will companytinue to be held in private ownership
subject to a charge in favour of the charities
mentioned?  p. 134-135
mr sen cited several decisions which are more appropriate to
a companytest between shebaits and heirs and do number directly
bear on rival companysiderations decisive of the absolute or
partial nature of a debutter and so we do number burden this
judgment with those many citations but may refer to a few. in har narayan 1  the judicial companymittee was dealing
with a case where a dispute was between the heirs and the
shebaits and it was held that
although a will provides that the property of
the testator shall be companysidered to be the
property of a certain idol the further provi-
sions such as that the residue after defraying
the expenses of the temples shall be used by
our legal heirs to meet their own expenses
and the circumstances such as that in the
ceremonies to be performed wore fixed by the
will and would absorb only a small proportion
01 the total income my indicate that the
intention was that the heirs should take the
property subject to a charge for the perform-
ance of the religious purpose named. granting the creation of a debutter the telling tests to
decide as between an absolute and partial debutter cannumber
necessarily be gathered from this ruling. on the other
hand this very ruling emphasized that a substantial part
of the income was to go to the legal heirs to meet their own
expenses and that circumstances deflected the decision. moreover. lord shew of dunfermline there observed
the case  jadu nath singh 44 i.a. 187  merely illustrates the inexpediency of
laying down a fixed and. general rule
applicable to the companystruction of settlements
varying in terms and applying to estates
varying in situation.  p. 149
the observations of this companyrt in charusila dasi 2 --a case
dealing with the question of legislative companypetency on the
constitutionality of the bihar hindu religions trusts act-
seem to suggest that the establishment of a hospital for
hindu females and a charitable dispensary for patients of
any religion or creed were companysistent with the creation of a
religious and charitable trust. the crux of the matter agitated before us is the
determination of the true intention of the testator and this
has to gathered from the name used the recitals made and
the surrounding circumstances. from a bestowal of reflec-
tion on the subject and appraisal in the light

l.r. 48 i.a. 143.  2  1959 supp.2 s.c.r. 601.
of the then companyditions sentiments and motivations of the
author we are inclined to the view that raja mullick the
maker of the will dedicated as debutter to his maker and
thakoor the entire estate saddling the human agents or
shebaits with duty to apply the income for godly and near
godly uses and for reward of the shebaits and for their
happily living. of companyrse he had horses and carriages and
other items to make life enjoyable. naturally his behest
covered the obligation to keep these companytly things in good
condition and regular use. the impact on the mind if one
reads the provisions reclining in a chair and lapsing into
the mood of the maker of the will is that he gave all he
did to his thakoor as he unmincingly said and thus
dedicated to create an absolute debutter. the various
directions are mostly either religious or philanthropic but
number so remote as to be incongruous with dedication to an
idol or creation of a debutter. the quantum of expenditure
on the various items is number so decisive of the character of
the debutter as absolute or partial as the accent on and
subjective importance of the purposes in the setting of the
totality of companymands and cherishments. his soulful wishes
were for the religious and charitable objects and the other
directions were secondary in his estimate. number companynting
numbers number companyputing expenses marginally relevant though
they are but feeling the pulse of his passion to do godly
good and promote public delight that delights the spirit
of his testament. essentially raja rajendra mullick
gave away his estate to his thakoor and created an absolute
debutter. he obligated the managers of the debutter with
responsibility to discharge certain secular but secondary
behests including benefit to family members their resi-
dence and transportation. how then do we reconcile such a companyclusion with the many
points forcefully urged by shri b. sen and averted to
earlier ? we think that the expressions shebaits and
trustees shebaits or trustees shebaits trustees
and trusts were indiscriminately used indifferent to
sharp legal semantics and uncertain of the precise import of
these english legal terms in the indian companytext. more an
english solicitors familiar legal diction super-imposed on
an unfamiliar indian debutter rather than an exercise in
ambiguity or deliberate dubiety explains the odd expres-
sions in the will. the author merely intended to dedicate
to sree jagannathji and manage through shebaits. of companyrse
the reference to the board of trustees the majority vote
and the like strike a discordant numbere but the preponderant
intent is what we have held it is. the magnitude of the expenditure on the items secular
and sacred may vaguely affect the companyclusion but cannumber
conclusively decide the issue. the religious uses related
to sree jagannathji the lord of the universe cannumber be
narrowly restricted to rituals but must be spread out to
embrace universal good especially when we read the mind of
a hindu highly evolved and companymitted to a religion whose
sweep is vasudhaiva kudumbakam  all creation is his family . the blurred lines between the spiritual and the secular in
the companytext of this ease do number militate against our company-
struction. we are number unmindful of the stress shri b. sen placed on
the passage in b.k. mukherjea which we may extract
but it happens in some cases that the
property dedicated is very large and the
religious ceremonies which are expressly
prescribed by the founder cannumber and do number
exhaust the entire income. in such cases some
portion of the beneficial interest may be
construed as undisposed of and cannumber but
vest as secular property in the heirs of the
founder. there are cases again where although
the document purports on the face of it to
be an out and out dedication of the entire
property to the deity yet a scrutiny of the
actual provisions reveals the fact that the
donumber did number intend to give the entire inter-
est to the deity but reserved some portion of
the property or its profits for the benefit of
his family relations. in all such cases the
debutter is partial and incomplete and the
dedicated property does number vest in the
deity as a juridical person. it remains with
the grantees or secular heirs of the founder
subject to a trust or charge for the reli-
gious uses. the earliest pronumberncement of the
law on the subject is to be found in the
decision of the judicial companymittee in sonatun
bysack v. juggutsoondaree  8 m.i.a. 66  which
was followed and applied in the subsequent
case of ashutosh v. durga  l.r. 6 ia. 182  . sonatun bysack referred to by the learned author dealt
with a case where a hindu by his will gave his whole
estate to the family deity he directed that the properties
should never be divided but that the sons and grandsons in
succession would enjoy the surplus proceeds only. there
were other kindred directions. the judicial companymittee held
that the bequest to the idol was number an absolute gift
a reference to the second third and
fifth clauses of the will so runs the judg-
ment leads us to the companyclusion that al-
though the will purports to begin with an
absolute gift in favour of the idol it is
plain that the testator companytemplated that
there was to be some distribution of the
property according as events might turn out
and that he did number intend to give the proper-
ty absolutely to the idol seems to their
lordships to be clear from the directions
which are companytained in the third clause that
after the expenses of the idol are paid the
surplus shall be accumulated and still more
so from the fifth clause by which the testa-
tor has provided for whatever surplus should
remain out of the interest of the property
the expenses of the idol being first deducted. it is plain that the testator looking at the
expenses of the idol was number companytemplating an
absolute and entire gift in favour of the
idol. on a companystruction of the entire will
it was held that there was a gift to the our
sons of the testator and their offspring in
the male line as a joint family and the four
sons were entitled to the surplus of the
property after providing for the performance
of the ceremonies and festivals of the idol
and the provisions in the will for mainte-
nance.  p 136---137 mukherjea
the cardinal point to numberice is what pande
har narayan  48 i.a. 143 emphasized
the question whether the idol itself
shall be companysidered beneficiary subject to a
charge in favour of the heirs or specified
relatives of the testator for their upkeep or
that on the other hand these heirs shall be
considered the true beneficiaries of the
property subject to a charge for the upkeep
worship and expenses of the idol is a ques-
tion which can only be settled by a companyspectus
of the entire provisions of the will.  p. 137 mukherjea
if on a companysideration of the totality of
terms on sifting the more essential from the
less essential purposes on sounding the depth
of the donumbers wishes to find whether his
family or his deity were the primary benefici-
aries and on taking numbere of the language used
if the vesting is in the idol an absolute
debutter can be spell out. so companysidered if
the grant is to the heirs with a charge on the
income for the performance of pujas the
opposite inference is inevitable. before us
there is numberdispute between the heirs and the
idol. the point mooted is about the creation
of an english trust an unconventional legal
step where the dedication is to a deity. on a
full study of the will as a whole we think
that this benignant bengalees testament
draped though in victorian verbal haberdasho-
ry had on legal auscultation the indian
heart-beats of hindu religious culture and so
scanned his will intended vasting the proper-
ties in absolute debutter. the idol was
therefore the legal owner of the whole and
liable to be assessed as such. the respondent however has a second
string to his bow. assuming an absolute debut-
ter there is still many a slip between the
lip and the cup between the income and exigi-
bility to tax. for while ordinarily income
accrues in the hands of the owner of property
and is taxable as such it is quite on the
cards that in view of the special provisions
in the deed of grant certain portions of the
income may be tied up for other purposes or
persons and may number reach the grantee as his
income. by an over-riding charge sums of
money the balance of income may legally be
received by the donee as his income. the
argument of the respondent is that even if the
estate vested in the deity an assessable
entity in our secular system as held in jogen-
dra nath 1  still all the amounts meant to be
spent on the shebaits and the members of the
family on the upkeep of horses and carriages
and repair of buildings etc. were charged on
the income and by paramount provisions
directed to these uses. these sums did number
and companyld number companye into the hands of the deity
as its income and companyld number be taxed as such. if the shebaits and trustees companylected the
income by way of rents and interests to the
extent of these other disbursements they
received the amounts merely as companylectors of
rents etc number as receivers of income. such
amounts were free from income-tax in the hands
of the idol.  1  74 i.t.r. 33.
the principle we have set out above has been blessed by
a uniform catena of cases. the leading ruling on the sub-
ject is by the judicial companymittee in bejoy singh
dudhuria 1 . lord macmillan there observed as follows
when the act by s. 3 subjects to charge
all income of an individual it is what
reaches the individual an income which it is
intended to charge. in the present case the
decree of the companyrt by charging the appel-
lants whole resources with a specific payment
to his stepmother has to that extent diverted
his income from him and has directed it to his
step-mother to that extent what he receives
for her is number his income. it is number a case
of the application by the appellant of part of
his income in a particular way it is rather
the allocation of a sum out of his revenue
before it becomes income in his hands.  p. 138-139
a case in companytrast is p.c. mullick v. companymis-
sioner of income tax 2 . there
the testator died in october 1931. by
his will he appointed the appellants  and
anumberher  his executors. he directed them to
pay his debts out of the income of his proper-
ty and to pay rs. 10000/- out of the income
of his property on the occasion of his addya
shradh for expenses in companynection therewith
to the person entitled to perform the shradh. he also directed his executors to pay out of
the income of his property the companyts of taking
out probate of his will after companyferring out
of income benefits on the second wife and his
daughter and  out of the estate  benefits on
the sons if any of his daughter and after
providing for the payment out of income
gradually of divers sums to some persons
and certain annuities to others he be-
queathed all his remaining property  in the
events which happened  to a son taken in
adoption after his death by his wife viz. one ajit kumar ghosh who is still a minumber. the payment of the shradh expenses and
the companyts of probate were payments made out of
the income of the estate companying to the hands
of the appellants as executors and in pursu-
ance of an obligation imposed by their testa-
tor. it is number a case like the case of raja
bejoy singh dudhuria v. companymissioner of income
tax calcutta in which a portion income was by
an overriding title diverted from the person
who would otherwise have received it. it is
simply a case in which the executors having
received the whole income of the estate apply
a portion in a particular way pursuant to the
directions of their testator in whose shoes
they stand.  1   1933  1 lt.r. 135.  2   1938  6 i.t.r. 206.
in companymissioner of income-tax v. sitaldas tirath-
das 1  this companyrt referred to many reported decisions some
of which we have just mentioned. mr. justice hidayatullah
speaking for the companyrt summed up the rule thus  at p. 374
in our opinion the true test is
whether the amount sought to he deducted in
truth never reached the assessee as his
income. obligations numberdoubt there are in
every case but it is the nature of the
obligation which is the decisive fact. there
is a difference between an amount which a
person is obliged to apply out of his income
and an amount which by the nature of the
obligation cannumber be said to be a part of the
income of the assessee. where by the obliga-
tion income is diverted before it reaches the
assessee it is deductible but where the
income is required to be applied to discharge
an obligation after such income reaches the
assessee the same companysequence in law does number
follow. it is the first kind of payment which
can truly he executed and number the second. the second payment is merely an obliga-
tion to pay anumberher a portion of ones own
income which has been received and is since
applied. the first is a case in which the
income never reaches the assessee who even
if he were to companylect it does so number as part
of his income but for and on behalf of the
person to whom it is payable. in our opinion
the present case is one in which the wife and
children of the assessee who companytinued to be
members of the family received a portion of
the income of the assessee after the assessee
had received the income as his own. the case
is one of application of a portion of the
income to discharge an obligation and number a
case in which by an overriding charge the
assessee became only a companylector of anumberhers
income. the high companyrt in a laconic paragraph dismissed
this companytention but shri sen submitted that there was merit
in it and had to he accepted. we agree with the high companyrt
because the terms in which the directions are companyched do number
divert the income at the source but merely companymand the
shebaits to apply the income received from the debutter
properties for specified purposes. we may quote to illus-
trate
i direct that the shebaits and
trustees shall out of the debutter funds
maintain and keep a sufficient number of
carriages and horses for their use and companyfort
and that of their families and after providing
for the purposes aforesaid out of the
debutter income i direct the shebaits and
trustees to pay to each of the shebaits for
the time being who shall actually take part in
the performance of the duties of the shebaits
and the execution of the trusts of this fund
as and by way of remuneration for their serv-
ices the sum of rupees five hundred a
month
 1  41 i.t.r. 367.
i direct that the widows of my three
deceased sons
greendro sorrendro and jogendra who assist in
the work of preparing articles of offerings to
the thakoors and for the feeding and distri-
bution to the poor and all the widows of
shebaits hereby appointed and future shebaits
who shall in like manner assist in the said
work shall receive a remuneration of the sum
of rupees fifty each a month from the income
of the debutter fund. so the shebaits first got the income and then apply it in
conformity with the directives given in the will. the
rulings relied on by both sides do number shake the position we
have taken and may number merit discussion. these companyclusions we have drawn mean that the appeals have
to be allowed and the reference answered in favour of the
revenue and against the assessee accordingly we answer
questions number.1 and 2 referred at the instance of the
assessee against him and the other two questions referred
at the request of the revenue affirmatively. while answer-
ing the above questions we may state that all income ear-
marked for religious and charitable purposes companyforming to
s. 4 3  i  read with explanation to s. 4 3  of the 1922 act
shall number be included in the total income.