1972 (1) TMI 39 - HC - Wealth-tax

Whether, on the facts and in the circumstances of the case and on a proper construction of the wakf deed dated, March 24, 1950, it could be said that no life interest was created in favour of the mutawalli so as to make the value thereof liable to wealth-tax in the hands of the assessee ?

Summary

Issues Involved:
1. Whether the right to remuneration as mutawalli under the wakf deed constitutes an "asset" within the meaning of section 2(e) of the Wealth-tax Act, 1957.
2. Whether such a right is transferable or saleable and can be included in the net wealth of the assessee.
3. Whether the right to receive 10% of the net income of the wakf property is an interest in the wakf property.

Detailed Analysis:

1. Whether the right to remuneration as mutawalli under the wakf deed constitutes an "asset" within the meaning of section 2(e) of the Wealth-tax Act, 1957:
The primary issue was whether the right to receive 10% of the net income of the wakf property as a mutawalli could be considered an "asset" under section 2(e) of the Wealth-tax Act. The Tribunal initially concluded that the mutawalli had no property or interest in the wakf property, and thus, the right to receive remuneration was not an asset. However, the High Court held a different view. According to the judgment, "property" is a term of the widest import and includes every possible interest which a person can acquire, hold, or enjoy. The right to remuneration, even if not transferable, still constitutes property and thus, qualifies as an asset under the Wealth-tax Act.

2. Whether such a right is transferable or saleable and can be included in the net wealth of the assessee:
The court examined whether the right to receive remuneration was transferable or saleable. According to section 6(dd) of the Transfer of Property Act, a right to future maintenance cannot be transferred. The wakf deed specified that the mutawalli's remuneration was deemed endowed for the maintenance of her offspring, making it non-transferable. Despite this, the court concluded that the non-transferability of the right did not exclude it from being considered an asset under the Wealth-tax Act. The court emphasized that section 7 of the Act, which provides for the valuation of assets, does not define what constitutes an asset but merely prescribes the method of valuation.

3. Whether the right to receive 10% of the net income of the wakf property is an interest in the wakf property:
The court noted that under Mohammedan law, all rights of ownership in the wakf property pass to the Almighty, and the mutawalli has no right or interest in the property itself. The mutawalli is merely a manager or superintendent. Therefore, the assessee, as a mutawalli, did not have any interest in the wakf property. However, the right to receive 10% of the net income was considered a separate right and thus an asset.

Conclusion:
The High Court, after considering the opinions of the judges, concluded that the right to remuneration as a mutawalli under the wakf deed is indeed an "asset" within the meaning of section 2(e) of the Wealth-tax Act. This right, although non-transferable, still constitutes property and must be included in the net wealth of the assessee. The final judgment was in favor of the department and against the assessee, answering the question in the negative.