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TMI Blog1973 (11) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... two trusts created by two sisters by two different documents, both executed on the same day, namely, January 12, 1937. Both the trust deeds were in identical terms. The two sisters belonged to Dawoodi Bohra community and the trusts were executed in respect of certain properties which were situated at Surat and Bombay and and by these two trust deeds the properties were vested for the benefit of Dawoodi Bohra community to be managed and applied by the chief of the Dawoodi Bohra community, namely, the Mullaji Saheb and by his successors-in-office. The Mullaji Saheb as the head of the community is known as Dai-ul-Mutlak. Under the trust deed, in the preamble it is mentioned that the executant of the trust deed who belonged to Dawoodi Bohra community and was a follower of the Dawoodi Bohra religion believed in the theory that Mullaji Saheb for the time being is the vicegerent of the Imam in seclusion and, therefore, she declared that the properties described in the document were made a wakf in accordance with the religious belief of her community. The dedication is to Dawat Hadiayah, a sort of a representative body for the Dawoodi Bohras. It is further mentioned in the deed that the M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t community and the Tribunal held that the other clauses of the trust deed also pointed to the same conclusion. The Tribunal observed that the trusts were wholly religious. The question whether the entire income was exempt or not was altogether a different question. Section 11(1)(a) states that income derived from property, etc., must be " applied to such purposes in India ", and if any income is applied to religious purposes outside India, that may not be exempt but the primary exemption for wholly religious trusts would not be taken away. According to the Tribunal, the trust was wholly religious and, therefore, entitled to exemption under section 11(1)(a). Since, however, the lower authorities did not examine as to which part of the income would be exempt in view of the observations made by the Tribunal, the matters were remanded back to the Income-tax Officer and thereafter, at the instance of the revenue the question hereinabove set out has been referred to us for our opinion. In order to find out whether these trusts are for wholly religious purposes within the meaning of section 11(1)(a) or for wholly charitable purposes or partly religious or partly charitable entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time being and then only if such sale or mortgage is, in the opinion of the Dai-ul-Mutlak, absolutely necessary for the purposes of the Dawat. Then come the words which are relied upon by the revenue whether that purpose is or is not religious, social or charitable according to the law of the land : and in the latter event the said Mullaji Saheb shall have full power to sell or mortgage the said properties or any part thereof and to execute the necessary deeds and documents of whatever description for that purpose required, always provided, however, that the said property shall never be sold or mortgaged for paying off any debt of the Dawat or of the Dai-ul-Mutlak ". Clause 5 throws no light on the question before us. Under clause 6, the settlor said : " It is my request that the net income of my share in the Bombay property as described in the schedule 'A', hereunder may be utilised for the purpose of Faize-Hashami, an institution for feeding the Hajees of the Dawoodi Bohra community at Mecca during Haj season, and for any other object as His Holiness deems fit and proper at his sole and absolute discretion. " Under clause 7 the settlor requested that the net income fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as understood by the Mohammedan law and further that she was dedicating the properties to the Dawat Hadiayah, that is, the Dawoodi Bohra community. She has also made it clear in clause 4 that the property which she was dedicating in trust by this particular deed of trust was always to remain the property of the Dawat Hadiayah, that is, of the Dawoodi Bohra community and if there was any occasion to alienate the property, then under clause 4 it could be either sold or mortgaged for the purposes of the Dawat. Of course, under clause 4 it was provided that whether Dawat purpose was or was not charitable, according to the law of the land if, in the opinion of the Dai-ul-Mutlak for the time being, it was absolutely necessary, the property could be sold for the purpose of the Dawat. The controversial clause, in our opinion, is clause 8, because it clearly stated that apart from the specific objects mentioned in clauses 6 and 7, namely, Faize-Hashami-Saifi-Daras of Surat or Madresah Tyebiyah, it was competent to the Dai-ul-Mutlak for the time being to make use of the rents and income arising from the properties settled upon trust in his absolute discretion for any purpose of the Dawat in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve felt some doubt on this point because of the admittedly wide powers of the Mullaji. On the other hand, the consistent past user of the suit gulla funds, fortified as it is by similar consistent user of other gulla funds, and the absence of instances in India of cessation or substantial alteration of usual gulla objects, goes far, I think, to show that these usual objects must be satisfied first. In my judgment, therefore, it is only the surplus of the gulla funds which can be spent on surplus objects. The defendants contended that the surplus objects were those of the Dawat generally. Assuming for the sake of argument that that contention is correct, are the general objects of the Dawat charitable ? I will again cite the book, Ex. A.L. for it is the then Dai's own description of his obligations before the present controversy arose. It runs : ' He (the Dai) is the trustee of the public funds which it is his duty to dispose of economically, and at his discretion as directed by the sacred rules, in relieving the distressed and the needy and paying the expenses incurred by them and his deputies and discharging their sacred duties and in keeping schools and institutions for rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 1961. We must make it clear that the real controversy between the parties is regarding exemption under section 11(1)(a) and not whether the trusts are wholly religious or wholly charitable. Even if the trusts are partly religious and partly charitable, so long as no part of the income or corpus can be utilised for a purpose which is not either charitable or religious, there is no doubt that the exemption under section 11(1)(a) will be available to the assessee. In the instant case we find that, in spite of the apparently wide language of the clauses of the deed of trust, in fact reading the trust deed as a whole, it transpires, particularly in the light of the decision of the Bombay High Court in Advocate-General of Bombay v. Yusufally, that the apparently wide discretion has to be exercised within the four corners of the wakf and for Dawat purposes. What are Dawat purposes, have been described by Marten J., at page 1102, in Advocate-General of Bombay v. Yusufally and, in our opinion, it is only within the four corners of Dawat purposes as recognised by the Dawoodi Bohra community that the Mullaji Saheb can use the corpus or the income of this fund. Under these circumstances, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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