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Interpretation of the term "religious or charitable purposes" under the Income Tax Act in the context of a wakf property. Analysis: The judgment involved a question referred to the High Court regarding whether a property held under a wakf was held under trust wholly for religious or charitable purposes as per Section 4(3)(1) of the Income Tax Act. The wakf deed in question outlined that the property was to be utilized for the maintenance of the donor and his descendants until the line became extinct, after which it would benefit orphans and widows through a Mahomedan Association. The assessee contended that the income derived from the property should be exempt from Income Tax as it was held for religious or charitable purposes. However, the Income Tax authorities disagreed, stating that the income was not exempt until it was applied for religious or charitable uses as specified in the wakfnama. The case was referred to a larger Bench after a Division Bench of the Court had differing opinions. A preliminary objection was raised regarding the validity of the reference under Section 66(3) of the Income Tax Act, but it was overruled as the Judges did not intend their decision to be final. The judgment delved into the principle of construction to interpret the term "religious or charitable purposes" in the Income Tax Act. It was argued that the term should be construed with reference to English law, considering the drafting language of the Act and the intention to ensure equal application across different communities. The judgment referenced precedents and principles from English law to support the interpretation of the term. It highlighted that even if the principles of Mahomedan law were to be applied, the property in question could not be considered held wholly for religious or charitable purposes. The judgment also referred to previous Privy Council decisions regarding wakf properties and the distinction between pious purposes and religious or charitable purposes. Ultimately, the Court held that the income derived from the property was assessable to Income Tax as it was primarily utilized for the maintenance of the assessee and his children, rather than for religious or charitable purposes. In conclusion, the Court returned the answer to the reference, stating that the income was assessable, and directed the assessee to pay the costs. The concurring Judges agreed with the decision, emphasizing the application of legal principles and precedents in interpreting the term "religious or charitable purposes" under the Income Tax Act.
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