l Appeals Nos 2129 to 2132 of 1968
Appeals from the judgment and order dated December 4  1964 of the Calcutta High Court in Tax Matters Nos 69 62 and 64 of 1963
AK Sen SK Hazare and PK Mukherjee for the appellants in all the appeals
B Sen section A L Narayana Rao and RN Sachthey for the respondent in all the appeals
The Judgment of the Court was delivered by Groper J
These appeals by certificate from a judgment of the Calcutta High Court involve a common but important question namely whether the right of an assessee to receive a specified share of the net income from an estate in respect of which Wekf alal aulad has been created is an asset assessable to Wealth Tax
By a deed dated November 19 1928 as modified by a deed of rectification dated July 5 1930 one Golam Hossain Kasim Ariff a muslim governed by the Hanafi School of the Mohammadan Law created a wakf in respect of his properties in Noormul Lohia Lane and Armenian Street in Calcutta
The settler appointed himself as the sole Mutwalli for the term of his life and provided that after his death his widow Aisha Bibi and his sons would act as Mutwallis jointly
The settler died on January 1 1937
He left behind his widow Aisha Bibi and three tons who are the appellants before this Court
The wakf created was of the nature of Wakf alal aulad for the benefit of the settler s wife 21 children and their descendants
The extent of the benefit conferred on them would appear from clause 5 of the deed of wakf as modified 5
After payment of all necessary out goings such as establishment charges collections charges revenue taxes costs of repairs law charges and other expenses for the upkeep and management of the said Wakf property the Mutwalli or Mutwallis shall apply the net income of the said Wakf property as follows viz a In payment to me during the term of my life of one fifth of the said net income by monthly instalments
b In payment to each of my sons during the respective terms of their lives one sixth of the said net income by monthly instalments
c In payment to my wife Aisha Bibi during the term of her life one tenth of the said net income by monthly instalments
The moneys payable as aforesaid to such of my sons as are minors shall until they attain the age of majority be respectively invested after defraying the expenses of their maintenance and education in proper securities or in landed property in Calcutta and such securities or property shall be made over to the said sons on their respectively attaining the age of majority
 The ultimate benefit in the case of complete intestacy of the descendants of the settlor was reserved for poor musalmans of Sunni community deserving help
The appellants who are the beneficiaries under the deed of wakf were paying income tax on the amount which was being received by them in terms of that deed from the Mutwalli
In the year 1957 the Wealth Tax Act 27 of 1957 hereinafter called the Act came into force
During the assessment years 1957 58 and 1958 59 the appellants were not only assessed to income tax in respect of the income received by them from the wakf estate but were also assessed to Wealth tax by the Wealth Tax Officer on the basis that they had a share in the wakf estate
The total value of the immovable property belonging to the wakf estate was valued at 20 times the annual municipal valuation and 16th of the value of the immoveable property along with other properties was taken to be the net wealth of each assessee
Appeals were taken to the Appellate Assistant Commissioner of Wealth Tax but these were dismissed
There were further appeals to the Income tax Appellate Tribunal where no dispute was raised as indeed it could not be raised with regard to the validity of the deed of wakf
22 It was held that the right of the sons of the wakf to receive a share of the rents and profits of the wakf property was property or an interest in property and as it was not limited in enjoyment to a period of six years it fell within the definition of the term assets as defined by section 2e of the Act
The contention of the appellants that the right of the beneficiaries under the deed of wakf was a mere right to an annuity as mentioned in section 2eiv and was therefore not an asset assessable to wealth tax was rejected
The third argument which had been raised before the Tribunal that the allowances under assessment were payable to the beneficiaries by way of maintenance were not transferable under section 6dd of the Transfer of Property Act and therefore they had no market value for inclusion in the net wealth was also refuted
It was pointed out that the right to maintenance was not one of the assets mentioned in section 5 which alone entitled an assessee to claim exemption in respect of certain assets
The Tribunal did not find it possible to hold on the facts of the case that the amounts in dispute were receivable by the beneficiaries as maintenance under the terms of the wakf
As regards the quantum of valuation a direction was made that the value of the assessee s life interest may be capitalised on the basis of the valuation table set out in Park s Principles and Practice of Valuations taking the rent security at 6
On applications for referring the question of law the following common question was referred to the High Court under section 27 of the Act Whether on the facts and circumstances stated the right of the assessee to receive a specified share of the net income from the Wakf Estate is an asset the capitalised value of which is assessable to Wealth tax The High Court negatived the contentions of the appellants that the right to receive a definite share of the net income from wakf property did not fall within the meaning of the word assets as defined by section 2e of the Act or that it was a mere right to an annuity which under the Mohammedan Law could not be commuted into a lumpsum
It was held that the fight of each assessee was to receive an aliquot share of the net income of the properties which were made the subject matter of the wakf and there was a clear distinction between an aliquot share of income and an annuity
The High Court was of the view that even if the asset of the nature under consideration was non transferable and could not be sold in the open market it could not be said that such an asset had no value
For the purpose of the Act the Wealth Tax Officer must proceed to value it as if it was an asset which was saleable in the market and that would depend on actuarial valuation
The question was consequently answered in the affirmative and in favour of the revenue
23 The definition of the word assets as given in section 2 e of the Act to the extent it is material is in the following terms e assets includes property of every description movable or immovable but does not include iv a right to any annuity in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant v any interest in property where the interest is available to an assessee for a period not exceeding six years  Net wealth is defined by section 2m
Section 3 is the charging valuation date of every individual etc
Section 4 gives the financial year a tax in respect of the net wealth on the corresponding valuation date of every individual etc
Section 4 gives the assets which have to be included in computing the net wealth
Section 5 gives those assets which are exempt from and are not to be included in the net wealth of the assessee
Section 7 1 provides that value of any asset other than cash shall be estimated to be the price which in the opinion of the Wealth Tax Officer it would fetch if sold in the open market on the valuation date
It is to be essentially decided whether the right to receive an aliquot share of the net income of the properties which were made the subject matter of the wakf would be covered by the definition of assets within the meaning of section 2e of the Act
There can be no difficulty if such a right can be regarded to be property giving that word the widest meaning as is contemplated by the language employed in the aforesaid clause
The principal argument of Mr AK Sen for the appellants is that the right to receive a share of the income under a deed creating wakf alal aulad can by no stretch of reasoning be regarded to fall within the meaning of the word property even in its wide and extended sense
He has referred to the incidents of such a right with particular reference to the Mohammedan Law relating to wakf
That law owes its origin to a rule laid down by the Prophet of Islam and means the tying up of property in the ownership of God the Almighty and the devotion of the profits for the benefit of human beings
 Once it is declared that a particular property is wakf the right of the wakf is extinguished and the ownership is transferred to the Mutawalli vide Vidya Varuthi vs Balusami Ayyar1
Wakfs could be divided into two classes i public and ii private
A private wakf is one for the benefit of the 1 481A 302 atp
24 settlor s family and his descendants
It is called Wakf alal aulad
Before the enactment of the  a wakf exclusively for the benefit of the settlor s family children and descendants in perpetuity was invalid
It was however valid if the property was given in substance to charitable uses
Section 3 of the aforesaid Act declared it lawful for a person professing the Mussalman faith to create a wakf which in all other respects was in accordance with the provisions of the Mussalman law for the following among other purposes  a for the maintenance and support wholly or partially of his family children or descendants and b where the person creating a wakf is a Hanafi Mussalman also for his own maintenance and support during his lifetime or for the payment of his debts out of the rents and profits of the property dedicated Provided that the ultimate benefit in such cases expressly or impliedly reserved for the poor or for any other purpose recognised by the Mussalman law as a religious pious or charitable purpose of a permanent character As mentioned before the moment a wakf is created all rights of property pass out of the Wakif and vest in the Almighty
Therefore the Mutawalli has no right in the property belonging to the wakf
He is not a trustee in the technical sense his position being merely that of a superintendent or a manager
A Mutawalli has no power without the permission of the court to mortgage sell or exchange wakf property or any part thereof unless he is expressly empowered by the deed of wakf to do so sections 202 and 207 Mulla s Principles of Mahomedan Law 16th Edn In Abdul Karim Adenwalla vs Rahimabai1 a distinction was made between a settlor belonging to the Hanafi sect reserving for his own maintenance and support during his lifetime the income of the trust property and has reserving for his absolute use income of the whole of the property during his lifetime
It was pointed out that a Hanafi Mussalman was not permitted to follow the latter course and it was only when he reserved the income for his maintenance and support that the provisions of the would not be offended There would be a difference in law between these two provisions if a settlor reserved to himself income for his own maintenance and support that would not be transferable as property under the Transfer of Property Act nor would it be attachable under the provisions of the Civil Procedure Code
If he however reserved for himself a life interest section 6 of the Transfer of Property Act 1 25 and section 60 of the Code with regard to the non transferability and non liability to an attachment would nor be attracted
The crux of the matter according to Mr Sen is that the aliquot share of income under the deeds executed in the present case was reserved for the maintenance and support of the wakf and other beneficiaries during their lifetime
It is pointed out that if the provisions contained in cl
5  of the deed of wakf were not to be read in that manner
the deed would be rendered void a result which has to be avoided by the courts
It is thus contended that the right in question is a right to future maintenance measured by the aliquot part of the income and it is neither partible nor alienable and is one which is wholly personal to the beneficiary
It lacks the basic attributes of property
Now property is a term of the widest import and subject to any limitation which the context may require it signifies every possible interest which a person can clearly hold or enjoy
The meaning of the word property has come up for examination before this Court in a number of cases
Reference may be made to one of them in which the question arose whether Mahantship or Shebaitship which combines elements of office and property would fall within the ambit of the word property as used in Article 191f of the Constitution
It was observed in the Commissioner Hindu Religious Endowments Madras vs Shri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt1 that there was no reason why that word should not be given a liberal and  wide connotation and should not be extended to those well recognised types of interests which had the insignia or characeristics of proprietary right
Although Mahantship was not heritable like the ordinary property it was still held that the Mahant was entitled to claim protection of article 191 f of the Constitution
It is stated in the Halsbury s Laws of England Vol
32 3rd Edn
page 534 that an annuity which is a certain sum of money payable yearly either as a personal obligation of the grantor or out of property not consisting exclusively of land can be an item of property separate and distinct from the beneficial interests therein and from the funds and other property producing it is property capable of passing on a death and can be separately valued for the purpose of estate duty
The only direct case on the point under consideration is a decision of the Bombay High Court in Commissioner of Wealth Fax Bombay City vs Purshottam N Amersey and Another2
There the deed of settlement provided that the trustees shall apply he net income from the fund for the support maintenance and advancement in life and otherwise for the benefit of the settlor and is wife etc
It was held that the definition of assets in section 2e and that of net wealth in section 2m were comprehensive provi 1   1019
2 CI70 3 26 sions and all assets were included in the net wealth by the very definition
Therefore when section 3 imposed the charge of wealth tax on the net wealth it necessarily included in it every description of property of the assessee movable and immovable barring the exceptions stated in section 2 e and other provisions of the Act
We are in entire concurrence with that view
There is no reason or justification to give any restricted meaning to the word asset as defined by section 2e of the Act when the language employed shows that it was intended to include property of every description
On a proper construction of the relevant clauses in the wakf deed we are not satisfied that the aliquot share of the income provided for the beneficiaries was meant merely for their maintenance and support
But even on the assumption that it was so intended or to preserve the validity of the deeds it should be so construed the right to the share of the income would certainly be an asset within the meaning of section 2e and would be liable to be included in the net wealth of the assessee
Mr Sen has laid emphasis on the language of section 7 1  of the Act and has contended that the right to a share in the income is not capable of any valuation and the price which it would fetch if sold in the open market could not possibly be ascertained
Such an argument was fully examined in the Bombay case1 in which the High Court referred to the provisions of the English statutes which were in pari materia as also decisions given by the English Courts including the one by the House of Lord  Commissioner of Inland Revenue vs Crossman 2
It has beet rightly observed by the High Court that when the statute uses the words if sold in the open market it does not contemplate actual sale or the actual state of the market but only enjoins that I should be assumed that there is an open market and the property can be sold in such a market and on that basis the value has to be found out
It is a hypothetical case which is contemplated and the Tax Officer must assume that there is an open market it which the asset can be sold
A faint attempt was made to invoke the exception contained in section 2e by suggesting that the right to receive a share of the income was a mere right to an annuity where the terms and conditions relating thereto precluded the commutation of any portion into a lump sum grant
The High Court in the judgment under appeal dwelt at length on the true meaning and import of the expression annuity and negatived that suggestion
The burden of the argument was and is that the word annuity should be given its popular and dictionary meaning and not the signification which it has assumed as a legal term owing to judicial inter pretation
Such a contention has only to be stated to be rejected 1 71 ITR180
2 1937 AC 26
27 because it is well settled that where the legislature uses a legal term which has received judicial interpretation the courts must assume that the term has been used in the sense in which it has been judicially interpreted
For the reasons given above the appeals fail and are dismissed with costs
One hearing fee YP Appeals dismissed


Summary:
A hanafi Muslim created a wakf alal aulad and appointed himself as the sole Mutwalli and provided that after his death his widow and sons would act as Mutawallis jointly
The wakf was for the benefit of the settler s wife children and their descendants and they were each to be paid a specified share of the net monthly income of the property
The ultimate benefit in the case of complete intestacy of the descendants of the settler was reserved for poor musalmans of sunni community deserving help On the question whether the right of the assessee who were the beneficiaries under the deed of wakf to receive a specified share of the net income from the estate was an asset assessable to weath tax this Court HELD i The right in question was assessable to wealth tax
i Property is a term of widest import and subject to any limitation which the context may require it signifies every possible interest which a person can clearly hold or enjoy
25 C D The definition of assets in section 2e and that of net wealth in section 2m of the Wealth Act were comprehensive provisions and all assets were included in the net wealth by the very definition
Therefore when section 3 imposed the charge of wealth tax on the net wealth it necessarily included in it every description of property of the assessee movable and immovable barring the exceptions stated in section 2e and other provisions of the Act
There is no reason or justification to give any restricted meaning to the word assets as defined by section 2e of the Act when the language employed shows that it was intended to include property of every description
25 H 26 A B On a proper construction of the relevant clauses in the wakf deed it must be held that the aliquot share of the income provided for the beneficiaries was not meant merely for their maintenance and support
But even on the assumption that it was so intended or to preserve the validity of the deeds it should be so construed the right to the share of the income would certainly be asset within the meaning of section 2e and would be liable to be included in the net wealth of the assessee
26 B C Vidya Varuthi vs Balusami Ayyar 48 IA 302 312 Abdul Karim Adenwalla vs Rahimabai  Commissioner Hindu Religious Endowments Madras vs Shri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt   1019 and Commissioner of Inland Revenue vs Crossman  referred to 20 Commissioner of Wealth Tax Bombay City vs Purshottam NAmersey  Anr  approved
ii When the statute uses the words if sold in the open market it does not contemplate actual sale or the actual state of the market but only enjoins that it should be assumed that there is  an open market and the property can be sold in such a market and on that basis the value has to be found out
It is a hypothetical ease which is contemplated and the Tax Officer must assume that there is an open market in which the asset can be sold
26 E F iii The contention that the right to receive a share of the income was a mere right to an annuity where the terms and conditions relating thereto precluded the commutation of any portion into a lump sum grant must be rejected
The word annuity could not be given its popular and dictionary meaning but should be given the signification which it has assumed as a legal term owing to judicial interpretation
Where the legislature uses a legal term which has received judicial interpretation courts must assume that the terms has been used in the sense in which it has been judicially interpreted
26 G H 27 A B