Law:

Section:

Section 2(24) of the Income-tax Act, 1961, read with section 70(1) of the Bihar Hindu Religious Trusts Act, 1950 - Income - Definition of - Whether where contribution to trust framed under 1950 Act was made with a specific direction that it would form part of corpus of trust, said contribution could not be treated as income and, therefore, no fee was leviable on it under section 70(1) of 1950 Act - Held, yes FACTS One 'MJ' donated a sum to the respondent No. 2 trust with a specific direction that the said sum would form part of the corpus of the trust. The appellant Board held that the said amount being income of the trust, had also to be taken into consideration of the purpose of assessment of trust in terms of section 70(1) of the 1950 Act. On appeal, the District Judge, held that the said amount did not come within the purview of 'income' of the trust in question and as such no fee was leviable. On writ : HELD From section 70(1) of the 1950 Act, it was evident that the fee is not leviable on the trust fund but is leviable on the net income. In the instant case, the sum was donated with a clear direction that the same would form part of the corpus of the trust. Evidently, the trustees were not empowered to treat the said sum in any manner other than for the purpose of corpus of the trust. The very fact that even under the 1961 Act, a contribution with specific direction that it shall form part of corpus of the trust does not come within the purview of the definition of income is clearly demonstrative of the fact that such donation cannot come within the purview of the definition of income even for the purpose of the 1950 Act. Section 70 of the 1950 Act imposes a fiscal liability upon the trust. It is now a well settled canon of interpretation of statutes that, in case of any doubt, a fiscal statute should be construed in favour of the assessee. From the above provision, it was absolutely clear that the sum in question could not be treated as income of a trust. Therefore, no fee was leviable under the Act on the said sum. Note : The decision is in favour of the assessee. CASE REFERRED TO Barclays Bank Ltd. v. Quistclose Investments Ltd. [1968] 3 All ER 3 WLR…

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