Appeals Nos 213 and 214 of 64
Appeals from the judgment and order dated April 4 1961 of the Madras High Court in Case Referred No 130 of 1956
Niren DeAdditional Solicitor General R Ganapathy Iyer and RN Sachthey for the appellants in both the appeals
A V Vishwanatha Sastri MM Ismail and R Gopalakrishnan for the respondent in both the appeals
The Judgment of the Court was delivered by Subba Rao J
In the town of Nagore in Tanjore District Madras State there is a Durgha consecrated to Hazerath Sayed Shahul Hameed Quadir Ali Ganja Savoy Andavar who lived some 400 years ago
The said Durgha receives large income from immovable properties endowed to it and the offerings in cash and kind made by the devotees
The Durgha and its properties are now being administered under a scheme settled by the Madras High Court on March 16 1955
Under the scheme the management of the administration of the affairs of the said Durgha vests hereditarily in 8 trustees called Nattamaigars who constitute a board of trustees
The said board of trustees shall from among themselves elect one as a managing trustee and he shall hold office for a term of 3 years
The managing trustee shall at the end of each fasli prepare a balance sheet verified by the manager and ascertain the net amount available for payment to kasupangudars who are the descendants of Saiyed Muhammed Eusoof the foster son of the saint
The Managing Trustee shall declare the amount due to each of the kasupangu share and shall allocate the amount to each kasupangudar sharer in the list to be prepared for that purpose 661 in each year
He shall pay the amount to each kasupangudar in accordance with the list
It is said that at present there are 640 kasupangudars
Briefly stated under the scheme the management of the properties of the Durgha both movable and immovable vests in Nattamaigars and the kasupangudars are entitled to the surplus in accordance with their shares
For the assessment years 1953 54 and 1954 55 the Income tax Officer assessed the surplus income in the hands of the Managing Trustee as an association of persons
The Appellate Assistant Commissioner on appeal confirmed the same
On further appeal the Income tax Appellate Tribunal took the same view
At the instance of the assessee the Tribunal submitted the following question for the opinion of the High Court of Madras under s661 of the Income tax Act
1922 hereinafter called the Act Whether the provisions of Section 41 can be said to apply to the assessees in this case
 A Division Bench of the High Court which heard the reference
held that the Managing Trustee qua the surplus income managed the property and derived the income on behalf of the kasupangudars and that the assessment should be made on the said Managing Trustee to the extent of the interest of each of the kasupangudars in the income received by him
In the result it answered the question in the affirmative and in favour of the assessee
The Commissioner of Income tax Madras on a certificate of fitness granted by the High Court has preferred the present appeals against the said Order
The learned Additional Solicitor General appearing for the Revenue contended that the Natmaigars being trustees the properties of the Durgha vested in them and therefore they or the Managing Trustee administered the trust properties in their own right and not on behalf of the kasupangudars and hence s41 of the Act did not apply with the result the Income tax Officer had rightly assessed the surplus income in the hands of the trustees as an association of persons
Mr AV Viswanatha Sastri learned counsel for the assessee respondent argued on the other hand that the Nattamaigars of the Durgha were not trustees as understood in the law of trust but were only managers managing the properties on behalf of the Durgha and kasupangudars
On that assumption his argument proceeded
as the Nattamaigars as managers held the surplus on behalf of the kasupangudars for distribution in definite shares s41 of the Act was attracted
At the outset we may make it clear that in this appeal we are concerned only with the surplus remaining on hand with the Nattamaigars after meeting the expenses of the Durgha
662 The problem presented in these appeals falls to be decided on a true construction of s41 of the Act
The material part of s41 reads 1 In the case of income profits or gain chargeable under this Act which the Courts of Wards the Administrators General the Official Trustees or any receiver or manager including any person whatever his designation who in fact manages property on behalf of another appointed by or under any order of a Court or any trustee or trustees appointed under a trust declared by a duly executed instrument in writing whether testamentary or otherwise including the trustee or trustees under any Wakf deed which is valid under the  are entitled to re ceive on behalf of any person the tax shall be levied upon and recoverable from such Court of Wards AdministratorsGeneral Official Trustee receiver or manager or trustee or trustees in the like manner and to the same amount as it would be leviable upon and recoverable from the person on whose behalf such income profits or gains are receivable and all the provisions of this Act shall apply accordingly
Under this section the income of properties receivable by the enumerated persons for the benefit of others is liable to be assessed to tax in their hands in the like manner and to the same amount as it would be leviable upon and recoverable from the person or persons on whose behalf such income is receivable
This section centres on the basic fact that the person in whose hands the income is assessable shall be entitled to receive the same on behalf of any person if he is not so entitled the provisions of the section cannot be invoked
it is contended that as the properties vested in the managing trustee and he received the income in his own right and not on behalf of the beneficiaries though for their benefit the said income in the hands of the managing trustee fell outside the scope of s41 of the Act
There are two answers to this contention
The doctrine of vesting is not germane to this contention
In some of the enumerated persons in the section the property vests and in others it does not vest but they only manage the property
In general law the property does not vest in a receiver or manager but it vests in a trustee but both trustees and receivers are included in s41 of the Act
The common thread that passes through all of them is that they function legally or factually for others they manage the property for the benefit of others
That the technical doctrine of vesting is not imported in the section is apparent from the fact that a trustee appointed under a trust deed is brought under the section though legally the property vests in him
In the case of a Muslim Wakf the property vests in the Almighty even so the mutawallis are brought under the section
A reasonable interpretation of the 663 section is that all the categories of persons mentioned therein are deemed to receive the income on behalf of another person or persons or manage the same for his or their benefit
None of them has any beneficial interest in the income he collects the income for the benefit of others
In this view even if the Nattamaigars were trustees in whom the properties of the Durgha vested they should be deemed to have received the income only on behalf of the kasupangudars in definite shares
The same conclusion will be reached even if the problem was approached from a different angle
In the well known decision of the Privy Council in Vidya Varuthi Thirtha vs Balusami Ayyar1 the inappropriateness of the use of the expression trustee to the manager of a Hindu or Mahommedan religious endowments was brought out
Therein their Lordships observed Neither under the Hindu Law nor in the Mahommedan system is any property conveyed to a shebait or a mutawalli in the case of a dedication
Nor is any property vested in him whatever property he holds for the idol or the institution he holds as manager with certain beneficial interests regulated by custom and usage
Under the Mahommedan Law the moment a wakf is created all rights of property pass out of the wakf and vest in God Almighty
The curator whether called mutawalli or saijadanishin or by any other name is merely a manager
He is certainly not a trustee as understood in the English system The Privy Council in the context of a wakf property reaffirmed the said observations in Allah Rakhi vs Mohammad Abdur Rahirn2
The effect of the said decisions is that Nattamaigars are only the managers of the properties in which the Durgha and the kasupangudars have beneficial interests
The properties do not vest in them
They receive the income therefrom on behalf of both of them
After meeting the expenses of the Durgha they hold the
balance on behalf of the kasupangudars and distribute the same in accordance with their shares
In this view in terms of section 41 of the Act the Nattamaigars are the managers of the properties on behalf of others and are entitled to receive the income therefrom on behalf of them
With the result the income which they hold on behalf of the kasupangudars can be assessed only in their hands in the manner prescribed thereunder
But it is said that whatever may the doctrine of Hindu or Mohammadan law under the terms of the aforesaid scheme the properties vested in the Nattamaigars and therefore they receive the income in their own right and not on behalf of the kasupangudars
A careful reading of the relevant 11921 LR 48 IA 302 315
2 1933 LR61 
IA 50
664 part of the scheme does not countenance this argument
Clause 3 of the scheme which is the material clause reads The management and administration of the affairs of the Nagore Durgha at Nagore Tanjore District and other thakias and shrines connected therewith mentioned in Schedule A hereunder and all properties movables and  immovables which belong to or have been or may hereafter be given dedicated endowed thereto shall subject 10 the provisions thereof vest hereditarily in the eight trustees or nattamaigars of the Durgha who shall constitute the Board of Trustees
Each trustee or nattamaigar is entitled to hold  office for life and after him the trusteeship shall devolve on his next male heir in accordance with the custom prevailing in respect of such office in the Durgha
 Under this clause the management and administration of the Nagore Durgha and its properties vest in the Nattamaigars
What vests in the Nattamaigars is not the properties of the Durgha but the management and administration thereof
Unless the words are clear we are not prepared to hold that the High Court in framing a scheme for the endowments of the Durgha had introduced a foreign concept of trust in derogation of Mohammadan law We therefore hold that the scheme did not vest the properties of the Durgha in the Nattamaigars
Lastly a faint argument was raised to the effect that under the scheme the managing trustee was not appointed under any order of a Court but was appointed by an agreement among the trustees
But in cl 4 of the scheme the High Court gave a specific direction that the managing trustee shall be elected from among the Board of Trustees
The Managing Trustee elected was certainly appointed under an order of a Court for the election was held pursuant to the order of the Court
That apart in the view we have taken namely that the Nattamaigars are not trustees in the English sense of the term this question does not arise for consideration
In the result we hold that the High Court has rightly answered the question referred to it in the affirmative and in favour of the assessee
The appeals fail and are dismissed with costs
One hearing fee
Appeals dismissed


Summary:
A scheme was settled in 1955 by the Madras High Court for the management of the income and properties of the Durgah consecrated to a saint in Tanjore District
Under the scheme the management of the properties of the Durgah was to be in the hands of eight trustees called Nattamaigars one of whom was to be elected by them as Managing Trustee
The net income of the trust was to be distributed among descendants of the foster son of the saint called Kasupangudars whose definite shares were to be determined each year by a list prepared by the Managing Trustee
For the assessment years 1953 54 and 1954 55 the Income tax Officer assessed the surplus income of the wakf in the hands of the Managing Trustee as an association of persons
The trustees unsuccessfully appealed to the Appellate Assistant Commissioner and the Appellate Tribunal
The controversy centred round the question whether s41 of the Indian Income tax Act 1922 applied to the case
In a reference made by the Tribunal at the instance of the assessee the High Court held that that section 41 applied to the case and that the income was received by the trustees on behalf of the beneficiaries
Aggrieved the Commissioner of income Tax appealed by certificate to this Court
It was contended on behalf of the appellant that as the properties vested in the managing trustee and he received the income in his own right and not on behalf of the beneficiaries though for their benefit the said income in the hands of the managing trustee fell outside the scope of s41 of the Act
HELD The High Court had rightly answered the question in favour of the assessee
i The technical doctrine of vesting is not imported into section 41
This is apparent from the fact that a trustee appointed under a trust deed is brought under the section though legally the property vests in him
In the case of a Muslim Wakf the property vests in the Almighty even so the mutawallis are brought under the section
Thus in some of the persons enumerated in the section property vests and in others it does not
A reasonable interpretation of the section is that all categories of persons mentioned therein are deemed to receive them on behalf of another person or persons or manage the same for his or their benefit
None of them has any beneficial interest in the income he collects the income for the benefit of others
In this view even if the Nattarnaigars were trustees in whom the 65 660 properties of the Durgah vested they should be deemed to have received the income only on behalf of the Kasupangudars in definite shares
662G 663B ii The mutawalli of a Muslim Wakf is merely a manager and not a trustee as understood in the English system
663E Vidya Varuthi Thirtha vs Balusami Ayyar 1921 48 IA 32 and Allah Rakhi vs Mohammad Abdur Rahim 1933 61 IA 50 relied on
Therefore in terms of s41 of the Act the Nattamaigars were the manager of the properties on behalf of other and were entitled to receive the income therefrom on behalf of them
663G H iii Under c13 of the scheme it was the management and administration of the Durgah and its properties which was vested in the Nattamaigars and not the properties themselves
In the absence of clear words it could not be held that the High Court in framing a scheme for the endowments of the Durgah had introduced a foreign concept of trust in derogation of Mohammadan Law
The scheme therefore did not vest the properties of the Durgah in the Nattamaigars and the contention on behalf of the Revenue could not succeed
664D E