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TMI Blog1972 (1) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee created a wakf in the name of Raja Abdul Hasan Khan on August 25, 1950, which was duly registered. The wakf deed provided that the assessee was to remain the mutawalli of the wakf till her death. After her death her eldest son, Amir Mohd. Khan, was to be the mutawalli. Thereafter, the eldest son of Amir Mohammad Khan and his heir in the male line of descent, generation after generation, were to be the mutawallis. In case of break, muta walliship was to devolve on the male heir of the assessee's another son, and if there was a break in that line also the mutawalliship was to be transferred to her other male heirs. Every mutawalli was to be the follower of the faith of Shia-Asan-Ashari and if he did not follow that faith he was to be deprived of mutawalliship. In case where a minor became a mutawalli then during his minority or incapacity the duties of mutawalliship were to be performed by a committee constituted by three members. The method for constituting the committee was also laid down in the deed. The deed further provided that it was incumbent on the mutawalli to discharge the duties diligently and to avoid everything that was against the aims and objects of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assistance, help, monetary benefits of sufferers from unforeseen misfortunes and accidents, natural calamities, litigation expenses, and protection of the rights of the wakf. (g) 3% of the income was to be spent for spiritual gain, good deeds, works calculated to benefit in the next world and acts for eternal gains for the executant. In this case we are concerned with the nature of the right which the assessee had in respect of 10% income of the property which she was entitled to receive in her capacity as a mutawalli. While making the assessment, the Wealth-tax Officer observed that the asmssee was a mutawalli of the wakf and as per clause 7 of the deed, 100/10 of the income was to belong to her, she had an interest in the property as mutawalli to the extent of 10% of its net income. He capitalised the value of the remuneration on the basis of Parks' Principles and Practice of Valuation and worked it out to a figure of Rs. 61,160. For this purpose he considered the annual value of the remuneration to be Rs. 5,500. In appeal, the Appellate Assistant Commissioner referred to the deed of wakf in detail and observed that the amount receivable by the assessee was not a fixed annuit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes is meant, the right of the wakf is extinguished and the ownership is transferred to the Almighty. The donor may name any meritorious object as the recipient of the benefitThe manager of the wakf is the mutawalli the governor, superintendent or curator. In Jewas Das Sahoo's case the Judicial Committee call him ' procurator ' It related to a khaskba, a Mohammedan institution analogous in many respects to a mutt where Hindu religious instruction is dispensed. The head of these khankhas, which exist in large numbers in India, is called a sajjadanashin. He is the teacher of religious doctrines and rules of life, and the manager of the institution and the administrator of its charities, and has in most cases a larger interest in the usufruct than an ordinary mutawalli. But neither the sajjadanaskin nor the mutawalli has any right in the property belonging to the wakf; the property is not vested in him and he is not a ' trustee ' in the technical sense. " The observations made by Ameer Ali J. in the aforesaid case were approved by the Privy Council in the case of Haji Abdur Rahim v. Narayan Das Aurora. It is, therefore, clear that the assessee as a mutawalli did not have any int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate value of all the debts owed by the assessee on the valuation date. If the right of the assessee to receive 10% of the net income of the wakf property can be described as an asset, its value will have to be included in the net wealth. The expression " asset " has been defined in section 2(e), as including property of every description, movable or immovable, unless it is covered by one of the exceptions mentioned therein. The right of the assessee to receive 10 per cent. remuneration is not such a right which is covered by the exception mentioned in section 2(e). Such a right is property and as such it had to be valued and included in the wealth of the assessee. I have, therefore, to consider whether the right of the assessee to receive 10 per cent. of the net income is a right which can be described as property within the meaning of section 2(e) of the Act. I have already held that this is not an interest in wakf property. Section 3 is the charging section which provides for payment of wealth tax in respect of the net wealth of an assessee. Section 4 describes certain assets which are to be included while computing the net wealth of the assessee. Section 5 provides that we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the wakf deed does not amount to an interest in the wakf property. Such a right is neither transferable nor is it saleable and cannot be included in the asset within the meaning of section 2(e) of the Wealth-tax Act. It is not capable of valuation as provided in section 7 of the Act and cannot be included in the net wealth of the assessee. I, accordingly, answer the question referred to us in the affirmative and in favour of the assessee. The a will get the costs of this reference, which I assess at Rs. 200. Counsel's fee is also assessed at the same figure. PATHAK J.-I regret I am unable to agree with my brother, Seth J. In my opinion, the right to remuneration flowing to the assessee as a mutawalli under the wakf deed constitutes an asset for the purposes of the Wealth-tax Act. Section 3 of the Wealth-tax Act charges wealth-tax in respect of the net wealth of an asseessee. Section 2(m) of the Act defines " net wealth " to mean the amount by which the aggregate value of the assets exceeds the debts owed by the assessee on the valuation date. Section 2(e) of the Act defines " assets " as including " property of every description, movable or immovable ". Certain exceptions h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of shares burdened by a restriction on their transferability. The provision under consideration was section 7(5) of the Finance Act, 1894, which provided that: " The principal value of any property shall be estimated to be the price which. in the opinion of the commissioners such property would fetch if sold in the open market at the time of the death of the deceased." The limitation on the transferability of the shares was made the basis of an argument for putting a different valuation on the shares from that proposed. Viscount Hailsham, Lord Chancellor, observed : " My Lords, it seems to me that this construction involves treating the provisions of section 7, sub-section (5), as if their true effect were to make the existence of an open market a condition of liability instead of merely to prescribe the oper market price as the measure of value. The right to receive the price fixed by the articles in the event of a sale to existing shareholders under sub-clause 14(a) is only one of the elements which went to make up the value of the shares. In addition to that right, the ownership of the share gave a number of other valuable rights to the holder, including the right to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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