JUDGMENT Prakash Krishna, J.
1. The assessee-respondent, a medical practitioner, filed her return of income for the assessment years 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 April 1, 1977. The assessee placed a copy of the trust deed and other details along with the certificate under Section 12A of the Income-tax Act, 1961 (hereinafter 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 a 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(d) 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 the merits of the case. In appeal, against the assessment order the plea of the assessee was partly accepted. The appellate authority, namely, the Commissioner of Income-tax (Appeals), 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 (Appeals) was of the view that although house property No. 16/72 Civil Line, Kanpur, was utilised by the trust 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 April 1, 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 April 7, 1977. The Tribunal was of the view that the assessee ceased to be the owner of the property in question with effect from April 1, 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 be taxed at the hands of the assessee. According to the Tribunal the provision of the 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 not 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 ?"
Heard learned Counsel for the parties and perused the record.
5. 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 April 18, 1976, and she settled Rs. 1,100 on the trust. Eight persons were appointed as trustees of the trust. The trust came into existence on account of the deed of declaration which was executed on April 18, 1976. The objects of the trust admittedly were charitable in nature. The Commissioner of Income-tax has recognised the said trust as charitable trust under Section 12A of the Act on September 28, 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 asses-see on April 1, 1977, she 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 sections of the society in particular and the public in general. Subsequently the assessee confirmed the endowment through a declaration dated April 7, 1977, which is an unregistered document in favour of the aforesaid trust. The said declaration has been reproduced 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 hereinbefore :
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 April 1, 1977, for the public charitable purposes of 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, title 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)
6. Besides, the above Tribunal has found that the properly in question has been mutated in the municipal records in favour of the trust. It has also come on record that a declaratory decree by the court of the Civil Judge, Kanpur, has been passed on September 10, 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 property in question cannot be treated as trust property in view of the fact that the declaration in writing dated April 7, 1977, which dedicated the property in question to the trust is unregistered. Elaborating the argument learned standing counsel submitted that in view of the provision of section 17 of the Registration Act as well as of the Trusts Act, the document compulsorily required registration under the aforesaid two statutes. The failure on the part of the assessee to execute a registered document in favour of the trust would amount that the assessee continues to be the 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 a registered deed dated April 18, 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 objects 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 any income-tax authority to treat the property in question as belonging to the assessee.
9. After hearing learned Counsel for the parties at length we are of the opinion that the main question which requires determination in the present references is whether it is necessary for a Hindu to execute a registered deed for creation of the religious and charitable endowment. In other words whether a Hindu can create religious and charitable endowment orally as it was done in this case on April 1, 1977, and the declaration was reduced in writing subsequently on April 7, 1977.
10. To begin with, we find that section 1 of the Trusts Act specifically excludes its applicability to public trusts or charitable endowments, etc. The apex court has pointed out the distinction in the case of Deoki Nandan v. Murlidhar, , between private and public trusts. In the private trust the beneficiaries are specific individuals but in a public trust they are the general public or a class thereof. In the private trust the beneficiaries or persons are ascertained or capable of being ascertained but in the public trust the beneficiaries constitute 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 sections of the society in particular and the public in general.
11. The Constitution Bench of the apex court in the case of Tilkayat Shri Govindlalji Maharaj v. State of Rajasthan, para. 68 of the report has held that dedication of private property to a charity 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 the temple of Shrinathji on the ground that no gift or trust deed had been executed by the settlor in that behalf.
12. The above view has been reiterated by the apex court on numerous occasions. Recently in the case of Kuldip Chand v. Advocate-General to Government of H.P. 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, he 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. The 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 extinction 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 . It was a case where a Hindu dedicated the property as "Dharmachatram", meaning "choultry" of South India where travellers or pilgrims can take shelter and can be 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 a 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 Trusts 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 edition, by A.C. Sen pp. 102-03. It has been further held that a religious endowment does not 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 as property belonging to no body."
14. In our view the controversy presently involved in these references is fully covered by the aforesaid judgment of the apex court specially in Thayarammal v. Kanakammal .
15. In view of the aforesaid authoritative pronouncements it does not lie in the mouth of the Revenue to contend that for creation of a religious and charitable endowment a registered deed is a 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 settlor. A dedication of property by a Hindu renouncing his/her entire right, title or interest in the property for religious charitable purposes for the benefit of public at large or for part of it is sufficient to create such endowment. Reverting to the facts 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 April 1, 1977. Subsequently, on April 7, 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 April 1, 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 April 7, 1977. We are of the view that the dedication of the property on April 1, 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 assessee for such dedication. It has been followed by action such as the property in question has been mutated in the municipal records in favour of the trust. It has been further followed by a 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 by upon by learned standing counsel in support of his submission. The earliest case relied upon by learned standing counsel is CIT v. Syed Saddique Imam . This is a Full Bench judgment of the Patna High Court. The issue before the Full Bench was with regard to the taxability of income from house property. The said house was transferred by a Mohammedan to his wife in lieu of dower debt. The issue was whether such transaction amounts to 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 the transferor. The said case was decided under the Mohamedan law and it was held that a gift in lieu of dower debt is not "hiba-bill-iwaz" but is to be by a registered instrument as required under section 54 of the Transfer of Property Act, if the 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 hand.
17. Similarly, another case relied upon by learned standing counsel in Radhas Printers v. CIT 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 and all partners were beneficiaries of the trust. The beneficiaries also included some minors who were admitted to the partnership for benefits. It was held by the court that there was a transfer of assets and liabilities of the firm to the trustee, as a going concern and the fact that one of the trustees was the founder did not make any difference. The High Court held that transfer by the firm constituted a transfer of the assets and liabilities 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 standing counsel is the sheet anchor of his argument is CIT v. Podar Cement Pvt. Ltd. . Strong reliance was placed by learned standing counsel on the aforesaid judgment of the Supreme Court and it was contended that the assessee continues to be the owner of the property in question Within the 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 learned standing counsel is misconceived and is liable to be rejected for 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 in the hands of such person who is the 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 Dias on Jurisprudence, at page 400 wherein the concept of ownership has been dealt with in the following manner (page 641) :
"The position, therefore, seems to be that the idea of ownership of land is essentially one of the "better right" to be in possession and to obtain it, whereas 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 to be owner.' Again at page 404 the learned author says :
'Special attention should also be drawn to the distinction between "legal" ownership recognised at common law and "equitable" ownership recognised 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 ownerships, that of the trustee at law and that of the beneficiary at equity'."
After reproducing the above passage the Supreme Court added a word of caution to the following effect (page 641) :
"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 equitable 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 pages 404-405 of Dias on Jurisprudence, 4th edition).
19. Through the above passage it has been clarified by the 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 Trusts Act. Thus we are of the considered opinion that the aforesaid judgment cannot be relied upon by the Revenue in cases relating to trust.
20. Lastly, learned standing counsel submitted that such dedication or renunciation of property by the assessee amounts to a gift and, therefore, it has to be compulsorily registered under section 122 of the Transfer of Property Act, failing which there is no transfer. Reliance has been placed upon the judgment of the Supreme Court in the case of CIT 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 a gift for the purposes of the Transfer of Property Act but would fall within the ambit of the expression "gift" by virtue of section 4 of the Gift-tax Act. In this case the assessee who was the owner of the immovable property by a declaration sought to give a 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 a valid gift by the Department but was so held by the High Court. Reversing the judgment of the High Court the apex court observed that what is important is that there is to be a valid transfer of property and whether the transfer amounts to a gift or not would bring into question the applicability of the provisions of the Gift-tax Act. Meaning thereby it was held by the 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 inasmuch as in the case in hand the question of validity of a gift is not at all involved. As held by the apex court in the case of Kuldip Chand v. Advocate-General to Government of H.P. and Thayarammal v. Kanakammal dedication of property by a Hindu to public religious and charitable endowment is neither a gift as understood in the Transfer of Property Act nor is a trust, the argument of learned standing counsel is liable to be rejected.
21. We fail to understand for what purpose learned standing counsel has relied upon the judgment of the Supreme Court in the case of Annaimuthu Thevar (Decd.) v. Alagammal . 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 in State of Rajasthan v. Basant Nahata 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. Moolla Sons Ltd. (In liquidation) v. Official Assignee, AIR 1936 PC 230, 232. 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 ; the 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 wider 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 assessee expired during the pendency of the above references on June 5, 2003, and an application was filed by Sandeep Rohatgi on the basis of registered will dated February 3, 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 a common judgment.
25. The upshot 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 hands 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 the affirmative, i.e., in favour of the assessee and against the Revenue.