1871 (8) TMI 1 - HC - Indian Laws

Estate Duty Act, 1953 - Whether the sum of Rs. 3,61,939, or any part thereof being the value of the properties settled by the deceased as wakf properties, was rightly included in the principal value of the estate of the deceased and charged to estate duty under section 2 or, in the alternative, under section 10 of the Estate Duty Act - Whether there is a gift under section 10 of Estate Duty Act

Issues Involved:
1. Whether the sum of Rs. 3,61,939 being the value of the properties settled by the deceased as wakf properties was rightly included in the principal value of the estate of the deceased and charged to estate duty under section 2 or section 10 of the Estate Duty Act.
2. Whether a wakf is considered a "settlement" within the meaning of section 12 of the Estate Duty Act.
3. Whether the deceased had reserved any interest in the wakf property that would attract the provisions of section 12.
4. Whether section 10 of the Estate Duty Act applies to the wakf deed.

Detailed Analysis:

Issue 1: Inclusion of Wakf Properties in Estate Value
The Central Board of Direct Taxes referred the question of whether the value of the wakf properties, Rs. 3,61,939, should be included in the principal value of the deceased's estate and charged to estate duty under section 2 or section 10 of the Estate Duty Act. The deceased had executed a deed of wakf, and the Assistant Controller held that these properties must be deemed to have passed on the death of the deceased under section 12 or, alternatively, under section 10 of the Act.

Issue 2: Wakf as a "Settlement" under Section 12
The accountable person contended that a wakf is not a "settlement" within the meaning of section 12 of the Estate Duty Act. Section 12(1) defines property passing under any settlement made by the deceased where an interest for life or any other period determinable by reference to death is reserved to the settlor. The court examined whether wakf property could be considered "settled property" under section 2(19), which defines "settled property" as property limited to or in trust for any persons by way of succession. The court concluded that the wakf deed, being a dedication or endowment, must be considered a settlement within the meaning of section 2(19) and falls within the scope of section 12.

Issue 3: Reserved Interest in Wakf Property
The accountable person argued that the deceased had no interest in the wakf property after vacating the office of mutawalli in 1950. However, the court found that the deceased retained the right to reside in certain specified house properties and the power to amend the terms of the wakf deed, including the list of beneficiaries and their shares. The court held that these powers were sufficient to bring the property within the scope of section 12. The power to amend the wakf deed was expressed in the widest terms, enabling the settlor to include himself as a beneficiary and benefit from the wakf property. Therefore, the court concluded that the settlor reserved an interest in the wakf property for life, making the entire wakf property subject to estate duty under section 12.

Issue 4: Applicability of Section 10
The Board held, in the alternative, that section 10 of the Estate Duty Act applies. The accountable person contended that section 10 could not apply because the wakf deed is not a gift. The court agreed, noting that wakfs are a specialty of Muslim law and do not involve an element of gift. The primary concept of a wakf is a permanent dedication for religious, pious, or charitable purposes, and it extinguishes the right of the wakif, transferring ownership to God. Therefore, section 10, which pertains to gifts, does not apply to the wakf deed.

Conclusion
The court held that the sum of Rs. 3,61,939 was rightly included in the principal value of the estate of the deceased and charged to estate duty under section 12 of the Estate Duty Act. The Controller of Estate Duty was entitled to costs assessed at Rs. 200, with counsel's fee assessed in the same figure.

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