1968 (11) TMI 34 - HC - Wealth-tax

Inclusion of value of the properties in the net wealth of the assessee as on the valuation date

Issues Involved:
1. Whether the value of the properties covered by the document dated October 14, 1953, could be included in the net wealth of the assessee as on the valuation date, March 31, 1957.
2. Whether the document in question constituted a wakf or a will.
3. Whether the properties could be excluded from the net wealth of the assessee under section 3 of the Wealth-tax Act.
4. Whether the document could be revoked by the assessee.
5. Whether the assessee's case fell within the exception contained in section 5(1)(i) of the Wealth-tax Act.

Issue-wise Detailed Analysis:

1. Inclusion of Property Value in Net Wealth:
The primary question was whether the properties covered by the document dated October 14, 1953, could be included in the net wealth of the assessee as on the valuation date, March 31, 1957. The court found that the properties could not be included in the net wealth of the assessee because the ownership of the properties was transferred to God the Almighty upon the execution of the wakf deed on October 14, 1953. Hence, the properties ceased to belong to the assessee from that date.

2. Nature of the Document (Wakf or Will):
The court examined whether the document constituted a wakf or a will. It was determined that the document was a wakf deed and not a will. The court noted that the executants intended to reserve the income of the properties for their benefit during their lifetime while dedicating the corpus of the properties for charitable purposes. The document's reference to "192 Mulla Shariat 1950" and the absence of any provision preserving the interest of the executants in the corpus of the properties indicated that the properties were dedicated for charitable purposes from the date of the document's execution.

3. Exclusion from Net Wealth under Section 3 of the Wealth-tax Act:
According to section 3 of the Wealth-tax Act, wealth-tax is charged on the net wealth of an individual, Hindu undivided family, or company on the valuation date. The court concluded that since the ownership of the properties was transferred to God upon the execution of the wakf deed, the properties ceased to belong to the assessee. Therefore, the properties could not be included in the net wealth of the assessee on the valuation date, March 31, 1957.

4. Revocability of the Document:
The court addressed the argument that the document could be revoked by the assessee. It was held that the document, being a wakf deed, was not capable of being revoked. Even if the document were considered a will, the court noted that there is a difference of opinion on whether a joint and mutual will can be revoked after the death of one of the testators if there is no specific provision prohibiting revocation. However, since the document was determined to be a wakf deed, the question of revocation did not arise.

5. Exception under Section 5(1)(i) of the Wealth-tax Act:
The court considered whether the assessee's case fell within the exception contained in section 5(1)(i) of the Wealth-tax Act, which exempts property held under trust or other legal obligation for any public purpose of a charitable or religious nature in India from wealth-tax. The court did not decide on this point, as the finding that the properties could not be included in the net wealth of the assessee under section 3 of the Act was sufficient to answer the reference.

Conclusion:
The court answered the question referred to it in the negative, concluding that the value of the properties covered by the document dated October 14, 1953, could not be included in the net wealth of the assessee as on the valuation date, March 31, 1957. The assessee was entitled to her costs of the reference, with counsel's fee set at Rs. 200.

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