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Judgment
Veeraswami, J.
(1) On an application from Sadaya Pillai Trust by its trustee, the Agricultural Income Tax Officer, Kumbakonam, by his order dated 31-8-1962,
exempted from tax, under Section4(b) of the Madras Agricultural Income Tax Act, 1955 the income from certain lands specified in the order as
being wholly held under trust for religious or charitable purposes. The Commissioner of Agricultural Income Tax, in exercise of his powers u/s 34
and by order dared 4-11-1965 set aside the exemption and directed that the income should be brought to tax in accordance with law. This is on
his view that, if any excess out of the income derived from the properties remained after the performance of the objects of the trust, such excess
income might be appropriated for himself by the turn trustee for the time being.
(2) In our opinion, the order of the Income Tax Officer granting exemption is correct. The relevant provision in the Act is clause (b) to Section 4.
That section defines ""total agricultural income"". But such income does not include under clause (b) ""any agricultural income derived from property
held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such
purposes, the income applied thereto"". This clause contemplates two categories of trust: (1) property held under trust wholly for religious or
charitable purposes and (2) property so held in part only for such purposes. The income from the first category, that will not form part of the total
agricultural income. But, under the second category, that will be so only that part of the income not applied for such purposes. The test is not
therefore, how the income is utilised but how the property is held. In other words, the question will be whether the dedication of the property is
entire or partial. If the intention of the Legislature was to bring to tax any income which is not applied for trust purposes, the wording of clause (b)
has not achieved that purpose and is not appropriate.
(3) The trust in this case was created by the terms of a family partition deed dated 12-1-1927. The terms are clear that the properties mentioned in
the schedule to the deed have been endowed permanently for certain purposes specified, and it was intended that the entirely of the income should
be devoted for that end. But the recitals went on to say that, if any particular year and during the management of any turn trustee, there was surplus
over expenditure, such surplus might be appropriated for himself by such turn trustee. That provision relating to the surplus does not in any way
affect or detract from the entirely of the properties having been endowed and held as trust. As held by the Supreme Court in Dasaratharami Reddi
v. Subba Rao, 1957 2 MLJ 175: AIR 1957 SC 797 where the dedication is complete, a trust in favour of public religious or charitable purpose is
created. The test is the extent of dedication, and for this purpose, the whole deed will have to be read, as was pointed out in M.S. Vadivelu
Mudaliar and Others Vs. N.S. Rajabada Mudaliar, Reading the document in its entirety and having regard to the substance and extent of
dedication, there is no doubt that this was a case of endowment of the entirety of the properties and the same was as a whole being held as trust.
The properties, therefore, fall within the first limb of Section 4.
(4) The petition is allowed with costs Counsel''s fee Rs.100.
(5) Petition allowed.