2023 (8) TMI 108 - HC - Indian Laws

Estate Duty - Validity of waqf created by late Gulam Ahmad Khan - title to the waqf properties - as submitted it is settled law that once a waqf is created the waqif stands divested of his title to the waqf properties - Gulam Ahmad Khan died issueless and as per the terms of the amended deed, petitioner Azad Ahmad Khan, became mutwalli of the waqf who filed returns under Estate Duty Act, with regard to the properties of the waqf and claimed immunity from paying estate duty on the same. HELD THAT - In the present case even after dedicating M/s General Engineering Works to almighty, waqif Gulam Ahmad Khan continued to show the same as his own property in income tax returns filed by him. He even sold off some of the waqf property to pay off his personal debts without seeking necessary permisssion from appropriate authority. Furthermore, there is no evidence on record to prove that Gulam Ahmad Khan ever spent Rs. 100 towards any charitable purpose. Absence of any real dedication and subsequent treatment of the property by waqif Gulam Ahmad Khan as his personal property, thus, falls into the exception to the rule, once a waqf always a waqf, carved out by their Lordships in the case of Chhedi Lal Mishra 2007 (2) TMI 721 - SUPREME COURT relied upon by the counsel for the petitioners. Privy Council in the case of Mohammad Ali Mohammad Khan v. Mt. Bismillah Begam 1930 (7) TMI 21 - THE PRIVY COUNCIL has held that when there is no intention to dedicate the waqf property to the almighty rather there were some ulterior motives, the deed can not be treated to be a valid waqf. Actions of the waqif Gulam Ahmad Khan shows that he has throughout treated the waqf property as his personal, therefore, it could rightly be held that there was no actual dedication of property and he had no intention to create a waqf and as such the deed can not be held to have constituted a valid waqf. Exemptions from paying estate duty - Whether petitioner s claim for exemption from paying estate duty also does not hold good as waqif Gulam Ahmad Khan had, while executing the waqf deed made provisions for maintenance of himself, his brother and the petitioner, who himself claim to have been adopted as a son by the waqif Gulam Ahmad Khan.? - As Gulam Ahmad Khan reserved to himself the right to modify the terms of the waqf-deed and he actually effected a titamma not less than a year before his demise goes to show that he had reserved life interests in the property while settling it through the waqf deed. This issue has already been decided in a reference by Central Board Direct Taxation in the case of Hamid Hussain v. Controller of Estate Duty 1871 (8) TMI 1 - ALLAHABAD HIGH COURT held that the power to amend the wakf deed so as to include himself among the beneficiaries is only an instance of the wide powers reserved by the settlor to himself. As we have said the powers under clause 7(e) are expressed in the widest termst. So long as the character of the wakf is maintained, it is open to the settlor to make any changes and changes which may directly benefit him in the terms and conditions of the deed. We are of opinion that the settlor reserved an interest in the wakf property for life and therefore the case falls within the scope of section 12. Since waqif Gulam Ahmad Khan reserved to himself the absolute right to amend the waqf deed and made provisions therein for his maintenance out of the waqf property therefore it is held that petitioner cannot claim exemptions from paying estate duty.

Summary

Issues Involved:
1. Validity of the waqf created by Gulam Ahmad Khan.
2. Applicability of Sections 5 and 12 of the Estate Duty Act, 1953.

Summary:

1. Validity of the Waqf:
The petitioner challenged the assessment order, appellate order, and the Income Tax Appellate Tribunal's order regarding the validity of the waqf created by Gulam Ahmad Khan. The petitioner argued that the waqf was valid under the Mussalman Waqf Validating Act, 1913, and that once a waqf is created, the waqif is divested of his title to the waqf properties. However, the court noted that the inclusion of Mst. Hasina Khatun as a beneficiary, who had no blood relation with the waqif, contradicted the tenets of a waqf-alal-aulad. The court observed that Gulam Ahmad Khan continued to treat the waqf property as his own, including it in his income tax returns and selling parts of it to pay personal debts, indicating no actual dedication to the waqf. The court cited the Supreme Court judgment in 'Chhedi Lal Misra v. Civil Judge, Lucknow' and the Privy Council's decision in 'Mohammad Ali Mohammad Khan v. Mt. Bismillah Begam' to conclude that there was no genuine intention to create a waqf, thus rendering the waqf invalid.

2. Applicability of Sections 5 and 12 of the Estate Duty Act, 1953:
The petitioner contended that the Tribunal erred in applying Sections 5 and 12 of the Estate Duty Act, 1953, arguing that the reservation of interest in the waqf property by Gulam Ahmad Khan did not amount to passing of the property upon his death. The court, however, found that Gulam Ahmad Khan had reserved the right to modify the waqf deed and made provisions for his maintenance, thereby retaining a life interest in the property. The court referred to the Division Bench judgment in 'Hamid Hussain v. Controller of Estate Duty', which held that such reservations fall within the scope of Section 12, leading to the conclusion that the petitioner could not claim exemption from paying estate duty.

Conclusion:
The writ petition was dismissed, upholding the orders of the assessment authority, the appellate authority, and the Income Tax Appellate Tribunal, and confirming the invalidity of the waqf and the applicability of estate duty.