Skip to content


Commissioner of Wealth-tax Vs. Waqf K.B. Syed Ahmad HussaIn Rizvi - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberWealth-tax Reference No. 281 of 1974
Judge
Reported in[1979]116ITR344(All)
ActsWealth-tax Act, 1957 - Sections 21(1) and 21(4)
AppellantCommissioner of Wealth-tax
RespondentWaqf K.B. Syed Ahmad HussaIn Rizvi
Appellant AdvocateA. Gupta, Adv.
Respondent AdvocateR.R. Agarwal and ;Bharatji Agarwal, Advs.
Excerpt:
- - it also held that 10% of the income which was spent on object b(i) was not exempt while the remaining 10% which was to be spent on items b(ii) and (iii) was exempt because these objects were clearly charitable in nature......to by the assessee. ultimately, the matter went to the tribunal.3. on an interpretation of the waqf deed, the tribunal held that it provided for distribution of 80% of the income to the heirs of the waqif, the rest 20% was to be dealt with in accordance with para. 5(b) of the trust deed as follows :(i) maintenance and support of the waqif's relations and of orphans and widows of the waqif's family, who are not the heirs of the waqif. (ii) muslim widows, orphans, destitutes, helpless persons and travellers in general, and (iii) granting of scholarships for religious and worldly education and granting of aid to muslim institutions. 4. out of these three charitable purposes, 10% of the income was to be spent on object b(i). the rest 10% on objects b(ii) and (iii). the tribunal held.....
Judgment:

Satish Chandra, J.

1. The question of law referred by the Tribunal for our opinion relates to the assessment year 1968-69, the relevant valuation date for which was March 31, 1968.

2. Khan Bahadur Syed Ahmad Hussain Rizvi executed a deed of waqf-alal-aulad and for charitable purposes on January 31, 1940. It was aregistered document to which, two supplementary instruments were executed on November 30, 1947, and February 1, 1950. Till 1950, the waqif was the sole mutawalli. Thereafter, his wife became the mutawalli. The settlor died in 1955 and his wife in 1966. One Syed Hamid Hussain Aslam Rizvi was elected mutawalli thereafter. In the wealth-tax proceedings, the WTO sought to include the entire value of the waqf properties in the assessment of the waqf. This was objected to by the assessee. Ultimately, the matter went to the Tribunal.

3. On an interpretation of the waqf deed, the Tribunal held that it provided for distribution of 80% of the income to the heirs of the waqif, the rest 20% was to be dealt with in accordance with para. 5(b) of the trust deed as follows :

(i) Maintenance and support of the waqif's relations and of orphans and widows of the waqif's family, who are not the heirs of the waqif.

(ii) Muslim widows, orphans, destitutes, helpless persons and travellers in general, and

(iii) Granting of scholarships for religious and worldly education and granting of aid to Muslim institutions.

4. Out of these three charitable purposes, 10% of the income was to be spent on object b(i). The rest 10% on objects b(ii) and (iii). The Tribunal held that 80% share of the income which was to go to the beneficiaries in defined shares in accordance with the Mohammedan law was liable to assessment under Section 21(1) and not under Section 21(4) of the Act. It also held that 10% of the income which was spent on object b(i) was not exempt while the remaining 10% which was to be spent on items b(ii) and (iii) was exempt because these objects were clearly charitable in nature. On this view, the appeal filed by the assessee was partly allowed.

5. At the instance of the Commissioner, the Tribunal has referred the following questions of law for our opinion :

'(i) Whether, on the facts and in the circumstances of the case and on an interpretation of Clauses 5(b) and (c) and 7(c) of the waqf deed, 80% of the income of the waqf properties was assessable under Section 21(1) of the W.T. Act (ii) Whether, on the facts and in the circumstances of the case, 10% of the income of the waqf meant for spending in accordance with Clause 5(c) on the sacrifice of two goats each year and on making arrangement for a sabil on some public way was exempt from tax ?'

6. There is no doubt or controversy with regard to the interpretation of the waqf deed. Learned counsel for the revenue urged that it was clear from Clause 7(c) of the trust deed that the beneficiaries had a right of residence in some of the properties in accordance with the discretion of the trustees who were empowered to allocate portions of the building amongst them. Thus, the income of the trust was liable to fluctuations. The submission ismisconceived. A perusal of the waqf deed shows that it specifies threeproperties as residential houses. These houses could not yield incomebecause they were reserved for residential purposes. It was immaterial asto which one or more of the beneficiaries resided in it. It was said thatsome of the families had migrated to Pakistan. But that would not makeany difference. The trust deed specifically provided that 80% of the incomewill be divided between the beneficiaries of the waqf in accordance withthe Mohammedan law. It was thus clear that distribution of 80% of theincome was determinate and not fluctuating. The Tribunal was justified intaking that view. It was hence correct in holding that Section 21(1), and not Section 21(4), was applicable. This view has been upheld in CWT v. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust [1977] 108 ITR 555, 598(SC).

7. In respect of the second question, the position is that sacrifice of goat in the name of a prophet was undoubtedly of a charitable nature because the subject-matter of sacrifice was meant for the benefit of the members of the public. Similarly, the purpose of sacrificing another goat was to bestow peace on the soul of the waqif and the meat of this sacrifice was also to be distributed to the public. It was an object of charitable nature.

8. We, therefore, have no hesitation in answering both the questions in favour of the assessee and against the department. The assessee will be entitled to costs which are assessed at Rs. 200.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //