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TMI Blog1968 (11) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee and her husband, Lt. Col. Khan Bahadur Ahmed Baksh, on 14th October, 1953. The husband had died some time in 1955. The Wealth-tax Officer construed the document as a will and held that the wakf was to come into existence after the death of the assessee and, therefore, the properties covered by the will were liable to be included in the net wealth of the assessee. The assessee went up in appeal to the Appellate Assistant Commissioner, who agreeing with the view taken by the Wealth-tax Officer dismissed the appeal on 27th November, 1962. The assessee then preferred a second appeal to the Appellate Tribunal, which was allowed in her favour on 20th June, 1964. The Tribunal held that the document created a wakf and the properties became trust properties and as the assessee ceased to be their owner they could not be included in her net wealth. The Commissioner of Wealth-tax then applied for a reference under section 27(1) and the Tribunal referred to us the question of law that we have already set out. The main contention raised by the learned counsel for the revenue is that the document dated 14th October, 1953, is merely a will as the wakf under that document is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the upkeep of the property and buildings, i,e., Kothi No. 214 Allah Kothi and No. 215 Ram Nam Kothi. (8) During our lifetime we will manage this trust and after the demise of either of us, the survivor will manage the trust and during his or her lifetime he or she will appoint trustees." The document then contains directions for the establishment of the college. The expenses for constructing the building are to be met from the proceeds of sale of shares and the fixed deposit account. The income of the properties is estimated to be nearly Rs. 30,000 and the document provides as to how this income is to be spent. A sum of Rs. 16,641 out of the annual income goes towards smaller charities, maintenance of the properties and other incidental expenses and the rest is to be utilised for purposes of the Girls' Intermediate College. By reading the document as a whole two things are clear. Firstly, the executants intended to reserve nearly the entire income of the properties for their benefit during their lifetime ; the only obligation during their life was to spend a sum of Rs. 100 per month on the charities and the rest of the income was to be spent for the maintenance and upkeep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read harmoniously with other clauses in the document and when so read they must be understood as conveying that the income of the properties was to be utilised for charitable purposes after the demise of the executants and not that the dedication of the corpus itself was to remain postponed during the lifetime of the executants. A formal dedication or use of the word " wakf " or an express transfer of the corpus of the properties to God is not necessary for constituting a wakf ; the dedication of the properties to purposes recognised by Mahomedan law as religious or charitable may be inferred and that in itself will give rise to a wakf : [Jeun Doss Sahoo v. Shah Kubeer-ood-Deen ; Khawaja Muhammad Hamid v. Mian Mahmud and Mohammad Sabir Ali v. Tahir Ali]. If the effect of the document is immediate dedication of the corpus of the properties with reservation of life interest in the income, the document will amount to wakf, where as if the dedication is to come into effect after the death of the executant, the document will amount to a will : [Jaun Bebee v. Abdolla Barber ; Mahomed Zain Khan v. Murul Hasson Khan and Ma E. Khin v. Maung Sein. Having given our anxious consideration to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document the right of the assessee and her husband in the properties covered by the wakf was extinguished and the ownership was transferred to God. According to section 3 of the Wealth-tax Act, wealth-tax is charged in respect of the net wealth on the valuation date of every individual, Hindu undivided family and company. The expression " net wealth " is defined in section 2(m) and means the aggregate value computed in accordance with the provisions of the Act of all the assets belonging to the assessee on the valuation date. By reading this defnition in section 3, it becomes clear that an assessee is liable to pay wealth tax in respect of assets belonging to him and assets not belonging to him on the valuation date cannot be included in his net wealth. We have already said that on execution of the document dated 14th October, 1953, that ownership of the assessee and her husband in the properties covered by the document was extinguished and was transferred to God the Almighty. From that date the corpus of the properties ceased to belong to the assessee. It logically follows that the properties could not be included in the net wealth of the assessee on 31st March, 1957, which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for any public purpose of a charitable or religious nature. Reference in this connection may be made to two cases of the Supreme Court, viz., Fazlul Rabbi Prvadhan v. State of West Bengal and Yeshwant Rao v. Commissioner of Wealth-tax. In Fazlul Rabbi's case certain wakfs, in which family endowments were substantial along with provisions for religious or charitable objects, were held not to fall within the words---" other legal obligation exclusively for a purpose which was charitable or religious or both." And in Yeshwant Rao's case where under a trust deed assets were first held for a fixed period for the benefit of a charitable trust and thereafter for the benefit of the children of the settlor, it was held that during the period the assets were held for the benefit of the charitable trust, they could not be said to be held for the benefit of the children within section 4(1)(a)(iii) of the Wealth-tax Act as it stood before its amendment by Act 46 of 1964. These cases are not directly in point and we do not propose to decide whether the assessee's case falls within the exception contained in section 5(1)(i) of the Act, for our finding that the properties covered by the wakf-deed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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