Case: Commissioner Of Income-Tax, Keralaand Coimbatore Vs. Puthiya Ponmanichintakam. Wakfmanager P. P. Ayesha Bi Bi

2. One P. B. Umbichi and his wife executed a deed dated December 20, 1915, creating thereunder a wakf of their properties. It was provided therein, inter alia, that the income from the properties mentioned therein should be utilised for the maintenance of their two daughters and their children on the female side. For 40 years upto and inclusive of the assessment year 1954-55, the income-tax assessments were made on the wakf through its manager under S. 41 of the Act in the status of an individual. But, for the assessment year 1955-56, the Income-tax Officer treated the assessee as an association of persons, and, on the ground that the shares of the beneficiaries are indeterminate levied tax at the maximum rate under the first proviso to S. 41 of the Act. On appeal, the Appellate Assistant Commissioner of Income-tax held that the Income-tax Officer was not right in holding that the members of the family were indeterminate, but he confirmed the assessment for the reason that, as the shares were not specified among the individual members of the family and also between the members of the family on the one hand, and the charitable and religious purposes on the other, the first proviso to S. 41 would be applicable to the assessee. On further appeal, the Income-tax Appellate Tribunal took the view that the proprietary rights in the property in question vested in the Almighty and that the Muthawalli was only to look after and administer the properties as a manager and, therefore, the proper person in whose hands the income from the properties should be assessed was the Muthawalli in his status as an "individual" at the rates applicable to an individual. In that view, the appeal was allowed. At the instance of the Commissioner of Income-tax, the Appellate Tribunal referred to the High Court of Kerala the following question for its determination:"Whether in the facts and circumstances of the case the 1st proviso to S. 41 is applicable." The High Court held that the said proviso was not applicable, as under the wakf deed the beneficiaries and their shares were ascertainable. Aggrieved by the said order, the Commissioner of Income-tax has preferred the present appeal.

Reasoning: It is agreed that the first exception does not apply to the instant case. But the question that falls to be decided is whether the individual shares of the persons on whose behalf the income is receivable are indeterminate or unknown. The answer to the question depends upon the construction of the provisions of the Wakf deed. The Wakf deed was executed on December 20 1915 by Umbichi and his wife dedicating their entire property, moveable and immoveable, of total value of rupees one lakh for the objects mentioned therein. The Muthawalli appointed thereunder was directed to manage the properties in such a way as "to do acts necessary for charitable purposes. and to meet the maintenance expenses of their children and grand-children and the female children that might be born to them in future and to the male children born to the said female children." The document proceeded to give further specific directions in the management of the properties. After payment of taxes and meeting the expenses incurred for repairs and maintenance of the properties, the balance of the income should be utilised for the "daily necessary expenses of the house and food expenses as we are doing now", and for purchasing "dresses and other necessities for the then male and female members of the tarwad and for conducting "nerchas (ceremonies) such as Yasin Moulooth, etc., charitable ceremonies for feedling the poor and such other necessary expenses", and out of the balance if any, the Muthawalli was directed to acquire properties yielding good income. The rest of the recitals in the document are not relevant for the presentdocument does not expressly specify the shares of the beneficiaries; nor does it do so by necessary implication. Indeed, the individual shares of the beneficiaries are not germane to the objects of the document. The Muthawalli was directed to bear, out of the income, the expenses necessary for maintaining the members of the tarwad and to conduct the necessary religious ceremonies. The distribution of the family income and family expenses was left to the discretion of the Muthawalli; the document also further contemplated that the Muthawalli by his prudent and efficient management would save sufficient amount; for purchasing properties. The directions indicate beyond any reasonable doubt that no specified share of the income was given to any of the beneficiaries, and their right was nothing more than to be maintained having regard to their reasonable requirements which were left to the discretion of Muthawalli. While it is true that the number of beneficiaries would be ascertainable at any given point of time it is not possible to hold, as the High Court held that under the document the beneficiaries had equal shares in the income. The beneficiaries had no specified share in the income but only had the right to be maintained. The construction put upon the document by the High Court cannot, therefore, be sustained on the plain wording of the document. We therefore, hold that under the terms of the document the individual shares of the beneficiaries are indeterminate within the meaning of the first proviso to S. 41(1) of the Act. If so, under the said proviso the assessee is liable to pay income-tax at the maximumis, though in an ideal sense the property vests in the Almighty, the property is held for the benefit of His creatures, that is the beneficiaries. Though at one time it was considered that to constitute a valid Wakf there must be dedication of property solely to the worship of God or for religious or charitable purposes the Wakf Validating Act, 1913, discarded that view and enacted by S. 3 that a Mussalman can create a wakf for the maintenance and support, wholly or partially, of his family, children or descendants provided the ultimate benefit is expressly or impliedly reserved for the poor or for any other purpose recognized by the Mussalman law as a religious, pious or charitable purpose of a permanent character. Section 4 of the said Act goes further and says that a wakf shall not be invalid by the mere circumstance that the benefit reserved for the poor or for religious purposes is postponed until the extinction of the family. It is, therefore, manifest that under the Mahomedan Law, the property vests only in the Almighty but the Muthawalli acting in His name, utilises the income for the advantage of the beneficiaries. Therefore the words "on behalf of any person in S. 41 of the Act can only mean on behalf of the beneficiaries and not on behalf of the Almighty.10. The third and more effective answer to the argument is that S. 41(1) of the Act provides for a vicarious assessment in order to facilitate the levy and collection of income-tax from a trustee in respect of income of the beneficiaries. In express terms it equates the Muthawalli of a wakf to a trustee. For the purpose of S. 41 the Muthawalli is treated as a trustee and, on the analogy of a trustee, he holds the property for the benefit of the beneficiaries. There is no scope for importing the Mahomedan Law of Wakf in S. 41, when the section in express terms treats the Muthawalli as a trustee, though he is not one in the technical sense under the Mahomedan Law. If the argument of learned counsel for the respondent be accepted, would make S. 41 of the Act otiose so far as wakfs are concerned, for in every case of wakf the property would be held for the Almighty and not for any person. We, therefore, reject this contention and answer the question in the affirmative.