Law: Income Tax Act, 1961

Section: 10(1)

Law: Income Tax Act, 1922

Section: 4(3)(viii)

Section 10(1) of the Income-tax Act, 1961 [Corresponding to section 4(3)(viii) of the Indian Income-tax Act, 1922] - Agricultural income - Assessment year 1950-51 - Assessee executed a deed of trust settling certain properties including agriculture lands in trust for maintenance of certain temples - Under covenant in trust deed, he received 15 per cent of net income from trust as remuneration for management of trust - Assessee had no beneficial interest in lands which were subject-matter of trust nor was he given a right to receive and appropriate to himself income of properties or a part thereof in lieu of any beneficial interest in that income - Whether both source and character of income in question was altered when a part of income of trust was appropriated by assessee under covenant in deed of trust as remuneration for services rendered and therefore, remuneration not being received as rent or revenue of agricultural lands under a title, legal or beneficial in property from which income was received, it was not income exempt under section 4(3)(viii) of 1922 Act - Held, yes FACTS The assessee executed a deed of trust settling certain lands and the rents of lands for the maintenance of certain temples. He as a legal trustee received 15 per cent of net income of the trust as remuneration. The ITO sought to tax the income received by the assessee from the trust as well as remuneration received as shebait on the ground that same was not an agriculture income. In the view of the ITO, the trust was not a public religious trust and the income derived from properties not used for agriculture was not exempt from liability to pay tax in the hands of the assessee. On appeal, the AAC held that the income coming to the hands of the assessee from the trust properties was not taxable as private income of the assessee, but the remuneration computed at the rate of 15 per cent on the net income of the trust properties in the year in question not being agricultural income in the assessee's hands was liable to be taxed. On appeal to the Tribunal, the order passed by the AAC in so far as it related to remuneration received by the assessee was affirmed. On reference, the High…

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