H.N. Seth, J. - (1.) AT the instance of the Commissioner of Wealth-tax, the Income-tax Appellate Tribunal, has referred the following question for the opinion of this court: "Whether, on the facts and in the circumstances of the case and on a proper construction of the wakf deed dated March 24, 1950, it could be said that no life interest was created in favour of the assessee-mutawalli so as to make the value thereof liable to wealth-tax in the hands of the assessee ?"
(2.) THE assessee is the daughter of Raja Abdul Hasan Khan of Bilari. After his death, she inherited all the properties left by him. In respect of some of the properties received by her by way of inheritance, 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, mutawalliship 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 wakf. For rendering service as provided in the wakf deed the mutawalli was to get 10% of the income of the wakf as remuneration. He was also entitled to charge travelling expenses if he was required to undertake a journey in connection with the discharge of his duties. During the period of minority or incapacity of a mutawalli, he was to get 2/3rds amount of the remuneration which was normally payable to him. THE balance 1/3rd remuneration was to be paid to the guardian or naib mutawalli or any other person who discharged the duties of the mutawalli. In case more than one person acted as mutawalli the said l/3rd amount was to be distributed equally amongst them. THE remuneration which was payable to the wakif, namely, Kani Abid Sahiba, was deemed to be endowed for maintaining male and female off-springs of her according to her directions, saving of course the expenses due for the maintenance of the parents and after her death the incoming mutawalli was to be entitled to have the remuneration for their personal use. THE expenses to be met from the usufruct of the wakf property were as follows: (a) Government demands which have been legally imposed were to be met first. (b) THE collection and management charges were to be met. (c) After meeting these two expenses, the remuneration of the mutawalli was to be deducted. (d) After deducting these three types of expenses, the remaining amount would be held to be the profits of the wakf which was to be spent according to the rates mentioned in all the beads to meet the aims and objects of the wakf. The net profit of the wakf was to be spent on the following basis: (a) 40% of the profit of the wakf was to be spent on Azadari and Taziadari. (b) 5% of the income was to be spent on inauguration of happy meetings in connection with birthday anniversaries of Chaharda Masoomin, functions on Idul Fitar, Iduz-Zuha, Id-e-Ghadeer, Id-e-Mubahila, Nauroz, Shabebarat Nazar offerings of the 22nd and 27th of Rajab, etc. (c) 12% of the income was to be spent for Fatihas, recital of Quran, etc. (d) 7% of the income was to be spent for preservation, maintenance, repairs and extension of those buildings in which the ceremonies were held. (e) 25% of the income was to be spent for assistance of educational purposes, subscription to educational institutions, hospitals, etc. (f) 8% of the income was to be spent for 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 assessee was a mutawalli of the wakf and as per Clause 7 of the deed, 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.
(3.) 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 annuity but remuneration at the rate of 10% of the annual income of the wakf. The income of the wakf was not constant and, therefore, the remuneration also fluctuated. After referring to Section 2(m) of the Wealth-tax Act, which denned "net wealth", and Section 2(e), which denned "assets", the Appellate Assistant Commissioner came to the conclusion that the word "property" had a wide import and it included every possible interest which a person could acquire, hold or enjoy. The right of the assessee to receive 10% of the income of the wakf was certainly a property in her hands and as the enjoyment of the property was not limited to six years it would form part of her assets. The Appellate Assistant Commissioner, therefore, came to the conclusion that the value of such assets was liable to be included in the wealth-tax assessment of the assessee. He upheld the order made by the Wealth-tax Officer. The assessee then went up in appeal before the Tribunal. After considering the provisions of the wakf deed, the. Tribunal came to the conclusion that the mutawalli had no property or interest in the wakf property. The departmental authorities were, therefore, not justified in treating the right to receive remuneration as property or interest in the property. They erred in valuing the same and in adding it to the net wealth of the assessee. In the result it directed the deletion of an amount of Rs. 61,160 from the wealth of the assessee. The Commissioner of Wealth-tax then moved the Tribunal and at his instance the Tribunal has referred the aforementioned question for the opinion of this court.;