V.Bhargava, J. - (1.) This is a reference under Section 66 (1), Income-tax Act, in which the following questions have been referred to us : "Q. 1. Whether, in the circumstances of the case, the income of the wife and children of the assessee arising from the Waqf-alal-aulad created by him on 28-10-1941 under the Muslim Waqf Validating Act of 1913 can be included in the total income of the assessee under the provisions of Section 16 (3) (b)? Q. 2. Whether under the Waqf created on 28-10-1941 by the assessee under the Musalman Waqf Validating Act, 1913, the assets have been transferred to 'God' or to the Mutwalli holding possession of such assets ? Q. 3. Whether the word 'Person' as used in the last sentence of Section 16 (3) includes such an entity as 'God'? Q. 4. Whether the transfer of assets as contemplated by Section 16 (3) (b) includes the transfer of assets to the human agency through whom the management of the Waqf is carried on ? "
(2.) Nadir Ali Shah and Muhammad Ishaq of Meerut City executed a registered deed of waqf on 28-10-1941. Under the deed of waqf, the income of the property shown in the schedule was dedicated for the benefit of the wife and children of the executants. The Income-tax Officer held that the income, which arose from the assets transferred by this deed of waqf for the benefit of the wife and minor children of the executants of the deed, was liable to be assessed as the income of the executants themselves under Section 16 (3) (b), Income-tax Act and consequently assessed as such. The appeals by the assessee to the Appellate Assistant Commissioner of Income-tax and the Income-tax Appellate Tribunal failed. Consequently, on his application the above questions were referred to this Court by the Income-tax Appellate Tribunal Allahabad Bench.
(3.) We take up the second question first as the answer to the first question depends on the answer that is given to the remaining three questions. The Income-tax Appellate Tribunal, in their appellate order, held that "Mutwalli, although not a trustee in the sense of English Law, undoubtedly is put in possession of the property and is entitled to realise and receive the income from the trust property. The income is, therefore, not of God but, for the purposes of the Act, is the income of the Mutwalli. If construed in this way, it must be taken that the transferee of a Waqf, at least for the purposes of this sub-clause, is the Mutwalli. This would result in the position of the Mutwalli being similar to that of a trustee properly so called." This view taken by the Income-tax Appellate Tribunal has been strenuously contested on behalf of the assessee. We feel ourselves unable to agree with the view taken by the Tribunal. The position of a Mutwalli under the Musalman Waqf Validating Act can, in no circumstances, be compared with that of a trustee. In the case of a trust, the ownership in the property vests in the trustees though this vesting is for the benefit of others. It is a well-settled principle of Muslim law that in the case of a waqf no rights in the property vest in the mutwalli. He merely acts as a manager on behalf of the waqf. The property actually vests in God Almighty. In Vidya Varuthi v. Balusami Ayyar, 48 I. A. 302: (A. I. R. (9) 1922 P. C. 123) it was held by their Lordships of the Judicial Committee that "Neither the sajjadanashin nor the Mutawalli has any right in the property belonging to the waqf; the property is not vested in him and he is not a 'trustee' in the technical sense," In the same case their Lordships further proceeded to hold that "Neither under the Hindu Law nor in the Muhammadan system is any property 'conveyed' to a shebait or a Mutawalli, in the case of a dedication. Nor is any property vested in him; whatever property he holds for the idol or the institution, he holds as manager with certain beneficial interests regulated by custom and usage. Under the Mohammedan law, the moment a waqf is created, all rights of property pass out of the wakif, and vest in God Almighty. The curator, whether called mutwalli or 'sajjadana-shin' or by any other name, is merely a manager. He is certainly not a trustee' as understood in the English system." In the light of this well settled principle of Mohammedan law, it is not at all possible to hold, for purposes of the Income-tax Act or any other law, that the property which is subject to a waqf vests in the mutwalli and not in God Almighty. Our answer to the second question, therefore, is that under the waqf created on 28-10-1941 by the assessee under the Musalman Waqf Validating Act, 1913, the assets have been transferred to 'God and not to the mutwalli holding possession of such assets.;