(1) This application under section 66(2) of the Indian Income-Tax Act must, in my opinion, be dismissed on the sort ground that no question of law arises which would justify this Court in requiring the Tribunal to state a case.
(2) Prior to the year 1948 the firm known as Hamdard Dawakhana was owned in partnership by Hapi-Abdul Hamid, his younger brother Mohammad Sayeed and their mother Mst. Rabia Begum in the shares of seven annas, seven annas and two annas respectively.
(3) On the 1st January 1948 the three partners declared in the presence of a number of respectable witnesses that three-fourths of each individual shares in the profits of the partnership would be dedicated to a waqf and on the 28th August 1948 they executed a formal deed of waqf by virtue of which one-eighth of the net profits of the business was to be set apart as a reserve fund and of the balance 25 per cent was to go to the three waqfis in the proportion of their original profit sharing ration, namely 7: 7: 2. The balance of the net profits termed 'quami income' was to be set apart for being spent for charitable purposes. This deal was to operate retrospectively from the 1st January 1948. On the 6th March 1949 Haji Mohammad Sayeed was declared an evacuee with effect from January 1948.
(4) In the assessment for the year 1949-50 the partners claimed an exemption under the provisions of section 4(3)(i) of the Income-Tax Act, but the Income-Tax Officer rejected this claim as he was of the opinion that no valid declaration of waqf was made on the 1st January 1948, that although a regular deed of waqf was drawn up on the 28 August 1948 Mohammad Sayeed who was one of the expectants of the document was not competent to execute the deed as his property had vested in the Custodian, and that as the waqf created by Haji Mohammad Sayeed in respect of his share in the assets of the partnership was void, the trust created by the other two waqifs in the same instrument was also void.
In this view of the case the Income-Tax Officer assessed the entire income in the hands of the firm as income of the partnership. The order of the Income-Tax Officer was upheld by the Appellate Assistant Commissioner. On further appeal the appellate Tribunal held that the income during the period 1st January 1948 to the 28th August 1948 had admittedly been earned with the assets belonging to the business or organisation styled as Hamdard Dawakhana, and that the income of that period was not qualified for exemption under section 4(3)(i) of the Income-Tax Act.
It held further that although Mohammad Sayeed had become an evacuee before August 1948 and was not legally competent to transfer his share in the assets of the intended endowment, the other two partners were fully entitled to execute the deed in regard to their own shares and consequently that the proportionate income from those shares was exempt under section 4(3)(i) of the Income-Tax Act.
(5) The Department was dissatisfied with the order of the Tribunal as it was of the opinion that the effect of the invalidity of the dedication of Mohammad Sayeed's share was to diminish the share in the income payable by the mutwalli of Abdul Hamid and his mother and also to confer a right on Mohammad Sayeed (which in the context meant the Custodian of Evacuee Property) to a share in the income over and above the share which had belonged to him and that therefore the scheme as originally intended completely broke down and that the waqf deed was invalid as a whole. The Commissioner of Income-Tax accordingly required the Tribunal to refer to this Court under section 66(1) of the Income-Tax Act the following question, namely:
'Whether the waqf deed dated the 28th August 1948 which as held by the Tribunal was inoperative so far as the intended waqif Mohammad Sayeed was concerned, was in the circumstances of the case and on a true construction thereof operative as to the other expectants?'
The Tribunal dismissed this application and the Commissioner has accordingly presented an application to this Court under the provisions of sub-section (2) of section 66 of the Income-Tax Act.
(6) The learned counsel for the assessee raises two preliminary objection, both in regard to limitation, one in respect of the application under sub-section (1) of section 66 and the other in respect of the application under sub-section (2) of the said section. It appears that the appellate order of the Tribunal was pronounced in the presence of the counsel for the parties on the 5th April 1955. A copy of this order was served on the departmental representative on the 21st April 1955 and on the Commissioner on the 25th April 1955. The petition under sub-section (1) was presented on the 22nd June 1955. It is contended that the said petition was barred by time as it was presented after the expiry of more than sixty days from the date on which the order was pronounced to the counsel for the parties or from the date on which the order was served on the departmental representative.
(7) A similar objection has been taken in regard to the application under sub-section (2). The order of the Tribunal dismissing the application under sub-section (1) was pronounced to the parties on the 14th September, the notice of the refusal was served on the Commissioner on 23rd September 1955 and the application under sub-section (2) was presented on the 16th March 1956. It is contended that both these applications were barred by time as the period of limitation in each case commenced from the date on which the order was pronounced by the Tribunal or at any rate on the date on which a copy thereof was served on the Departmental representative.
Lala Har Kishen Das v. Commr. Of Income Tax, Punjab has been cited in support of this contention. In this case a Division Bench of the Lahore High Court held that there is a service of notice within the meaning of section 66 if the order or decision was announced in Court in the presence of the assessee or his representative. With all respect to the very learned judges who were responsible for the above decision, I greatly regret that I am unable to concur in the view taken by them.
The legislature directs that an application under sub-section (1) of section 66 must be presented within sixty days and that an application under sub-section (2) must be presented within six months from the date on which the assessee or the Commissioner as the case may be is served with the notice of the refusal. When a statute requires a notice to be given, it empowers the appropriate authority to give it orally or in writing as the authority may think fit, but when it requires a notice to be served, as in the present case, it contemplates a notice in writing.
R. v. Shurmer (1886) 17 QBD 323; Murch v. Loosemore (1906) 1 Ch 692; Hughes v. The Coed Talon Colliery Co. Ltd. 1909 1 KB 957. A statutory requirement that notice be served without further specific direction implies a written notice served personally on party designated. In this view of the law it seems to me that the objection which have been taken by the assessee on the ground of limitation are wholly devoid of force.
(8) In regard to the so-called question of law which is said to arise out of the order of the Tribunal it was argued before the Tribunal that the intention of the parties was to create a waqf only in case each one of the three participants was legally able to do so. As one of these three persons were not capable of making an intended transfer the waqf as a whole must necessarily final. The attention of the Court was invited to a decision of the Madras High Court in a case, Sivasami Chetti v. Savugan Chetti, reported as 25 Mad 389.
The Tribunal held that the said decision was distinguishable for in that case certain persons laid agreed to take on joint and several liabilities and the consequence of one of the parties failing to join was to shift the burden of the failing party to the remaining parties without a right of contribution from the party failing to join. In the present case, however, the three partners agreed to do something pious and for religious purposes.
The fact that one of them had not the requisite capacity to convey a title or to accomplish the object which he had in view did not mean that the burden of piety of the other two had in any manner increased or if it had considerably increased the intention and willingness of being more pious cannot be attributed. In this view of the case the Tribunal were unable to accept the contention put forward on behalf of the Commissioner.
(9) There can be no doubt in regard to the correctness of the view taken by the Tribunal. The object of construing an instrument creating a trust is to ascertain the intention and the purpose of the settlor and to effectuate that purpose in so far as it is consistent with the rules of law. The invalidity of a part of the trust does not invalidate the remained where, as in the present case, the valid portion is independent and severable from the invalid portion. I am aware of no provision of law which prevents a partner from creating a waqf in respect of his own share.
(10) The Tribunal has held that the deed by which the trust was created was a genuine document, that it was intended to be acted upon, that it was actually acted upon that the waqf was in fact created. I am satisfied that these findings are findings of fact and that no question of law arises out of the order of the Tribunal. Even if any question of law does incidentally arise I am of the opinion that it is not important enough to justify this Court in requiring the Tribunal to state the case.
(11) For these reasons I would uphold the order of the Tribunal and dismiss the petition with costs which I assess at Rs. 150/-.
Bishan Narain, J.
(12) I agree.
(13) Petition dismissed.