JUDGMENT Prakash Krishna, J.
1. The assessee respondent, a medical practioner, filed her return of Income for the assessment year 1978- 79 and 1979-80, In the return she did not include income from the property No. 16/72 Civil Lines, Kanpur. In reply to the show cause notice issued by the Income Tax Officer it was submitted by her that the said property with hospital has been irrevocably set apart and dedicated for public charitable purpose in favour of Chandra Kanta Jawahar Lal Public Charitable Trust, Kanpur on 1-4-1977. The assessee placed a copy of trust deed and other details along with the certificate under Section 12A of the Income Tax Act ( herein after referred to as the Act) before the Income Tax Officer, Kanpur in support of her case.
2. The Income Tax Officer rejected the aforesaid contention of the assessee on the ground that property No. 16/72 Civil Lines, Kanpur was not transferred to the trust by means of registered deed, as required under Section 17 of the Registration Act, meaning thereby the assessee continues to be owner of the said property. Such act of the assessee amounts to transfer within the meaning of Section 63(b) of the Act. It was brought to the notice of the Income Tax Officer that the said trust namely Chandra Kanta Jawahar Lal Public Charitable Trust, Kanpur, has been granted registration by the Commissioner of Income Tax, Kanpur under Section 12A of the Act. This plea was not accepted by the Income Tax Officer with the observation that whether income of the trust is exempt or not will be decided on merits of the case. In appeal, against the assessment order the plea of the assessee was partly accepted. The appellate authority namely C.I.T (A) took the view that there is no material on record to show that the trust was a benami of the assessee and that the assessee had charged any fee for personal services rendered by her to the trust. The Commissioner of Income Tax (A) was of the view that although | house property No. 16/72 Civil Line Kanpur was utilized by the trust but as the assessee was the founder and managing trustee therefore the legal ownership over the property still vested with the assessee and the income from this property had to be assessed under Section 22 of the Act at the hands of the assessee.
3. The assessee took up the matter before the Income tax Appellate Tribunal, in respect of inclusion of income from the aforesaid property in her hands. The Tribunal allowed the appeal of the assessee as it was of the view that no registered document was required to be executed by the assessee to create a religious endowment with respect to the property in question. The Tribunal found that the property was dedicated by the assessee by renouncing her right in favour of the trust for Public charitable trust on 1-4-1977 and, therefore, the trust became its owner from that date. The assessee confirmed her renunciation of the disputed property in favour of the trust by means of writing dated 7-4-1977. The Tribunal was of the view that the assessee ceased to be the owner of the property in question with effect from 1-4-1977 and the property has been vested with effect from that date in the trust for Public charitable purposes and as such its income is not liable to taxed at the hands of the assessee. According to the Tribunal the provision of Transfer of Property Act and the Registration Act would not apply to such dedication.
4. The Tribunal at the instance of the department has referred the following common questions of law under Section 256(1) of the Act:
1. WHETHER in law and on facts the Tribunal was justified in excluding the income from property at 16/72 Civil Lines, Kanpur from the hands of the assessee?
2. WHETHER transfer of an immovable property by any person without any consideration to a Trust which is hot regarded as Charitable Trust, is covered under the definition of dedication/ endowment?
3.WHETHER to complete such transfer as described in question No. 2 above, there is no need of an instrument duly registered as prescribed in Section 123 of the Transfer of Property Act as well as under Section 17 of the Indian Registration Act, 1908?
5. Heard learned counsel for the parties and perused the record.
6. It appears from the record that the assessee founded a Public Charitable trust in the name of Chandra Kanta Jawahar Lal Public Charitable Trust, Kanpur by means of a registered deed on 18-4-1976 and she settled Rs. 1100/- on the trust. Eight persons were appointed as trustees of the trust. The trust came into existence on account of deed of declaration which was executed on 18-4-1976. The objects of the trust admittedly were charitable in nature. The Commissioner of Income tax has recognized the said trust as charitable trust under Section 12 of the Act on 28-9-1979. It was also granted a certificate on the same date under Section 80G of the Act by the Commissioner of Income Tax. The Trust maintained regular books of account, which are duly audited, According to the assessee she on 1-4-1977 endowed and dedicated the aforesaid property situate at 16/72 Civil Lines, Kanpur together with the hospital and Nursing home including all buildings, land and the right therein or appurtenant therein for the Public charitable purposes of rendering medical services and relief to the poor and weaker section of the society in particular and the public in general. Subsequently the assessee confirmed tine endowment through a declaration dated 7-4-1977, which is an unregistered document in favour of the aforesaid trust. The said j declaration has been reproduced in verbatim by the Tribunal in its order and, therefore, it is not necessary to reproduce again except the last portion of the said document.:
"And whereas in order to avoid any difficulty, disputes or misunderstanding in future, it is expedient to confirm the facts stated herein before;
Now, therefore 'it is hereby declared that the hospital and nursing home situated at 16/72, Civil Lines, Kanpur including all other buildings, lands ' and rights therein or appurtenant thereto ( as described in the Plan annexed hereto) have been irrevocably set apart, endowed and dedicated by me on 1-4-1977 for the public charitable purposes or providing medical services and relief to the poor and weaker sections of the society in particular, and the public in general, and I have no right, title or interest therein except as Trustee of the aforesaid trust: and for all intents [and purposes, the said trust has all the rights, me and interest to hold run and manage the said hospital and nursing home for the purposes aforesaid as part of the corpus of the Trust for the aforesaid public charitable purposes."
(underlining by us) Besides the above the Tribunal has found that the property in question has been mutated in the Municipal record in favour of the trust. It has also come on record that a declaratory decree by the Court of Civil Judge, Kanpur has been passed on 10-9-1985 in a Suit viz Manzoor Alam v. Dr Miss Chandrakanta Rohatgi, Kanpur. The Civil Court has granted a declaration under the aforesaid decree that the aforesaid property is in the ownership; of the said trust.
7. The objection by the Revenue is that the properly in question cannot be treated as trust property in view of the fact that the declaration in writing dated 7-4-1977 dedicated the property in question to the trust is unregistered. Elaborating the argument the learned Standing Counsel submitted that in view of provision of Section 17 of the Registration Act as well as of the Trust Act, the document compulsory required registration under the aforesaid two Statutes. The failure on the part of assessee to execute a registered document in favour of the trust would amount that the assessee continues to be legal owner of the property in question and in this view of the matter the Income Tax officer was fully justified in adding the income from the said property in the hands of the assessee.
8. In contra, learned Counsel for the assessee submitted that the trust was already created by means of registered deed dated 18-4-1976. The creation of the said trust is not in dispute It is also not in dispute that the said trust was created for charitable purposes and admittedly its object are charitable in nature. In view of the order passed by the Commissioner of Income Tax under section 12A of the Act treating the said trust as charitable trust, it is no longer open to the any Income Tax authority to treat the property in question as belonging to the assessee.
9. After hearing the learned counsel for the parties at length we are of the opinion-that the main question which required determination in the present references is whether it is necessary for a Hindu to execute a registered deed for creation of the religions and charitable endowment. In other words whether a Hindu can create religious and Charitable endowment orally as it was done in this case on 1-4-1977 and the declaration was reduced in writing subsequently on 7-4-1977.
10. To begin with, we find that Section 1 of the Trust Act specifically excluded its applicability to the Public trust or Charitable endowment etc. The Apex Court has pointed out distinction in the case of Deoki Nandan v. Murlidhar between private and public trust. In the private trust the beneficiaries are specific individuals but in Public trust they are general public or Class thereof. In the private trust the beneficiary or person are ascertained or capable of being ascertained but in the public trust the beneficiaries constituted a body which is incapable of ascertainment. The religious endowment must be held to be private or public according to the beneficiaries therein specific person or any general public or section thereof. In the case in hand it is not the case of the department that the trust, namely Chandra Kanta Jawahar Lal Public Charitable Trust Kanpur is not a public trust. The said trust has been created for public charity purposes of rendering medical service and relief to the poor and weaker section of the society in particular arid the public in general.
11. The Constitution Bench of the Apex Court in the case of Sri Govindlalji v. State of Rajasthan in Para 68 of the report has held that dedication of private property a chanty need not be made by a writing; it can be made orally or even can be inferred from its conduct. It has disapproved the view of the High Court in not giving effect to a transfer of property dedicated to temple of Shrinathji on the ground that no gift or trust deed had been executed by the settler in that behalf.
12. The above view has been reiterated by Apex Court on numerous occasions. Recently in the case of Kuldip Chand and Anr. v. Advocate General to Government of H.P. and Ors. it has been held by the Apex Court that a Hindu is entitled to dedicate his property for religious and charitable purposes and for this even no instrument in writing is necessary. A Hindu however, in the event wishes to establish a charitable institution must express his purpose and endow it. Such purpose; must clearly be specified. For the purposes of creating an endowment what is necessary is a clear and unequivocal manifestation of intention to create a trust and vesting thereof in the donor and another as trustees. Subject of endowment however must be certain. Dedication of property either may be complete or partial. When such dedication is complete a public trust is created in contradistinction to a partial dedication which would only create a charity. A dedication for public purposes and for the benefit of the general public would involve complete cessation of ownership on the part of the founder and vesting of the property for a religious object. Although the dedication to charity need not necessarily be by instrument or grant, there must exist cogent and satisfactory evidence of conduct of the parties and user of the properties which show the extension of the private secular character of the property and its complete dedication to charity. It has been further held that dedication would mean complete, relinquishment of the right and ownership and proprietary.
13. Very recently the Apex Court again examined the aforesaid issue in the case of Thayarammal v. Kanakammal and Ors. . It was a case where a Hindu dedicated the property 35 " Dharmachatram, meaning " Choultry" of South India where Travellers or pilgrims can take shelter and can tie provided with refreshment. The said dedication was inscribed on a stone which was fixed in the property itself. The Stone inscription is of the year 1805. The Supreme Court on the basis of contents of the stone inscription came to the conclusion that the owner has dedicated property for use as "Dharmachatram", meaning resting place of pilgrims visiting "Thyagaraja Temple" and it has observed as follows:
"Such dedication in the strict legal sense is neither a gift nor a "trust" as understood in the Transfer of Property Act which requires an acceptance by the donee of the property donated nor is it a "trust". The Indian Trust Act as is clear by its preamble and contents is applicable only to private trusts and not to public trust. A dedication by a Hindu for religious or charitable purposes is neither a "gift" nor a "trust" in the strict legal sense (See B.K. Mukherjea on Hindu Law of Religious and Charitable Trusts, 5th Edi by A.C. Sen 102- 03) It has been further held that a religious endowment does riot create title in respect of the property dedicated in anybody's favour. A property dedicated for religious or charitable purpose for which the owner of the property or the donor has indicated no administrator or manager becomes res nullius which explains ass property belonging to. no body."
14. In our view the controversy presently involved in these references is fully covered by the aforesaid judgment of Apex Court specially in Thayarammal v. Kanakammal (Supra).
15. In view of the aforesaid authoritative pronouncements it does not lie in the mouth of Revenue to contend that for creation of religious and charitable endowment a registered deed is sine qua non. It has been established beyond doubt that such an endowment for public charitable purposes can be created orally. What is required is that there should be sufficient evidence to establish complete relinquishment by the settler. A dedication of property by Hindu renouncing his/ her entire right, title or interest in the property for religious haritable purposes for the benefit of public at large or for part of it is sufficient to create such endowment. Reverting to the fact of the present case we find that the Tribunal has recorded a finding that the assessee dedicated the property in question to the trust on 1 4-1977, Subsequently on 7-4-1977 she executed a deed of declaration to avoid any future dispute or conflict in the matter. The dedication Of the property by the assessee on 1-4-1977 has not been seriously disputed by the department. The only objection to such dedication is with" regard to non- registration of the deed of declaration dated 7-4-1977. We are of the view that the dedication of the property on 1-4-1977 is fully established on record. It is supported by clinching material. The trustee of the trust accepted the said dedication by passing a resolution and giving thanks to the asscesee for such dedication. It has been followed by action such as the property in question has been mutated in the municipal record in favour of the trust. It has been further followed by declaration granted by the Civil Court through a decree in a suit in which the assessee was impleaded as a defendant. In view of the surrounding facts and circumstances of the case the dedication of the property in question by the assessee cannot be disputed and was rightly not disputed by the department.
16. Now we will consider the cases relied upon by the learned Standing Counsel in support of his submission. The earliest case relied upon by the learned Standing Counsel is Commissioner of Income Tax v. Syed Saddique Imam and Ors. . 'This is a Full Bench judgment of Patna High Court. The issue before the Full Bench was with regard to the taxability of income from the house property. The said house was transferred by a Mohamdan to his wife in lieu of dower debt. The issue was whether such transaction amount, sale or gift. The transfer was not made by registered deed. The Court held that the income from such property is assessable in the hands of transferor. The said case was decided under Mohamdan Law and it was held that a gift in lieu of dower debt is not "hiba-bil-iwaz" but is to be by a registered instrument as required under Section 54 of the Transfer of Property Act, if immovable property transferred is valued more than at Rs. 100/-. We find hardly any application of the ratio laid down therein in the facts of the case in hands.
17. Similarly another case relied upon by the learned Standing Counsel in Radha Printers v. Commissioner of Income Tax, Kerala and Ors. has hardly any application to the present case as in that case the question of development rebate granted to the firm was involved. Certain Assets of the firm were transferred by the partner to a trust land all partners were beneficiaries of the trust. The beneficiaries also; included some minor who was admitted to the partnership for benefits It was held by the Court that there was transfer of assets and liability of the firm to the trustee as the going concern and the fact that one of the trustee was founder did not make any difference. The High Court held that transfer by the firm constitute transfer of the assets and liability of the firm to the trust within the meaning of Section 34(3)(b) read with Section 155(5) of the Act.
18. The next case, which according to the Standing Counsel is the sheet anchor of his argument is Commissioner of Income Tax v. Poddar Cement Pvt. Ltd. and Ors., . Strong reliance was placed by the learned Standing Counsel on the aforesaid judgment of Supreme, Court and it was contended that the assessee continues to be the owner of the property in question within meaning of Section 22 of the Act and, as such, income of the property is liable to be taxed in her hands. The said contention of the learned Standing Counsel is misconceived and is liable to be rejected for the reasons more than one In that case the Apex Court was called upon to interpret the. meaning of word "; owner" in the context of Section 22 of the Act. In this connection the Apex Court has held that since the focal point of tax under Section 22 is to tax income from the house property the real intention is to tax income of house property at the hands of such person who is beneficiary or the person who is receiving income from such property. The Apex Court has considered the concept of ownership as given by different jurists in their jurisprudence. The decision has taken into account the "Dias on Jurisprudence wherein the concept of ownership has been dealt with in the following manner:
" The position therefore seems to be that the idea of ownership of land is essentially not of the "better right" to be in possession and to obtain it where as with chattels the concept is a more, absolute one. Actual possession implies a right to retain it until the contrary is proved and to that extent a possessor is presumed t owner.
Again at page 404 the learned Author says "Special attention should also be drawn to the distinction between " legal" ownership recognized at common law, and " equitable" ownership recognized at' equity. This occurs principally when there is a trust, which is purely the result of the peculiar historical development of English Law. A trust implies the existence of two kinds of concurrent ownership, that of the trustee at law and that of the beneficiary at equity."
19. After reproducing the above passage Supreme Court added the word of caution to the following effect:
"We are not concerned in this case with any case of trust either under the equitable principles or under the law as engrafted in the Indian Trusts Act. Because the beneficiary might himself be a trustee of his interest for a third person, in which case his equitable ownership is as devoid of advantage to him as the legal ownership is to the trustee. So, when described in terms of ownership, the distinction between legal and -iquitable ownership lies in the historical factors that govern their creation and function; in terms of advantage the distinction is between the bare right, whether legal or equitable and the beneficial right" (vide PP 404-405 of Dias on Jurisprudence 4th Edn"
Through the above passage it has been clarified by Supreme Court that by assigning appropriate meaning to the word ownership under Section 22 of the Act it has excluded, the case of trust either in the equitable principles or under law as engrafted in the Indian Trust Act. Thus we are of the considered opinion that the aforesaid judgment cannot be relied upon by the Revenue in the cases relating to trust.
20. Lastly the learned Standing Counsel submitted that such dedication or renunciation of property by the assessee amounts to gift and is, therefore, it has to be compulsory registered under Section 122 of the Transfer of Property Act, failing which there is: no transfer. Reliance has been placed upon the judgment of Supreme Court in the case of Commissioner of Income tax v. Sirehmal Nawalakha . The Apex Court while interpreting Section 4 of the Gift Tax Act, 1958 has held that there can be no doubt that certain transaction may not be regarded as gift for met purposes of Transfer of Property Act but would fall within the ambit of expression "gift"" by virtue of Section- 4 of the Gift Tax Act. In this case the assessee who was the owner of immovable property by declaration sought to give gift of certain out houses attached to a building to his wife. The declaration which was made was not registered. The said gift was not treated as valid gift by the department but was so held by the High Court. Reversing the judgment of High Court the Apex Court observed that what is important is that there is to be valid transfer of property and whether the transfer amounts to gift or no: would bring; into the question of applicability of provisions of Gift Tax Act. Meaning thereby it was held by Supreme Court that immovable property can be gifted only in accordance with Section 122 of the Transfer of Property Act. The ratio laid down in the aforesaid case is distinguishable in as much as in the case in hand the question of validity of gift is not at all involved. As held by Apex Court in the case of Kuldeep Chandra and Anr. v. Advocate General of State of Himachal Pradesh (supra) and Thayarammal v. Kanakammal and Ors. (supra) dedication of property by a Hindu to public religious and charitable endowment is neither a gift 35 understood in the Transfer of Property Act nor is a trust, the argument of the learned Standing Counsel is liable to be rejected.
21. We fail to understand for what purpose the teamed Standing Counsel has relied upon the judgment of Supreme Court in the case of MANiC/0416/2005Annai Nuthu Thevar (dead) by L.Rs v. Aiagamma and Ors. The reliance placed on the said judgment is wholly misplaced one.
22. It may not be out of place to notice a very recent decision of the Apex Court, State of Rajasthan and Ors. v. Basant Nahata wherein it has been held that the 'Registration Act only strikes at the documents and not at the transactions. The whole aim of the Registration Act is to govern documents and not the transaction embodied therein, whereby only the notice of the public is drawn. It has quoted a passage from M.E. Moola Sons Ltd. v. Official Assignee, A.I.R. 1936 P.C. 230. The Privy Council while commenting on Sections 17 and 49 of the aforesaid Act, has stated:;
" It is to be observed upon a comparison of these different sections that while the Registration Act only requires certain documents to be registered on pain of the consequences entailed by Section 49. T.P. Act, by section 54 enacts that (with a limited exception) the sale of immovable property can be made only by registered instrument The provisions of the Registration Act by themselves would not operate to render invalid a mere oral sale. On the other hand the somewhat wide phrase "any interest...to or in immovable property" which occurs in Clause (b) Section 17(1) Registration Act, does not occur in Section 54 of the other Statute."
23. It may be placed on record that the assesee expired during the' pendency of the above references on 5 6-2003 and an application was filed by Sandeep Rohatgi on the basis of registered Will dated 3-2-1998 executed in his favour who claimed inheritance of the assets of the assessee after her death and sought for and was granted permission to contest the proceeding.
24. I.T.R. No. 103 of 1987 relating to the assessment year 1978- 79 and I.T.R. No. 125 of 1990 for the assessment year 1979-80, since the facts were identical, were heard together and are being disposed of by common judgment.
25. The up shot of the above discussion is that the Tribunal was justified on the facts and circumstances of the case to exclude the income from the property situate at 16/72 Civil Lines, Kanpur from the hand of the assessee; there was no need to execute registered instrument for dedication of the aforesaid property for Public Religious and Charitable trust. We answer all the three questions, referred to us, in affirmative i.e. in favour of the assessee and against the Revenue.