HAZRAT PIRMOHAMED SHAH SAHEB ROJA COMMITTEE Vs. COMMISSIONER OF INCOME TAX GUJARAT

JUDGEMENT

(1.) This is a reference which comes before us on q requisition under section 66 (2) of the Income-tax Act, 1922. There are two questions referred to us but they both relate to the same point, namely, whether the income of the assessee derived from properties held by it is exempt from tax under section 4(3) (i). There is also reference to section 4 (3) (ii) in the second question, but that is obviously due to some mistake because, as pointed out by the Tribunal, the claim for exemption under section 4 (3) (ii) was expressly given up by counsel who appeared on behalf of the assessee before the Tribunal and the only claim pressed was for exemption under section 4 (3) Ii). We will, therefore, delete the words "and/or 4(3) (ii)" in the second question and confine the scope of the enquiry before us to the determination of the question whether the income of the assessee is exempt from tax under section 4(3) (i) which was the only question debated before the Tribunal. In order to answer this question it is necessary to state a few facts.

(2.) Hazarat Pirmohamed Shah Saheb was a renowned Muslim Saint who lived in Gujarat in the early half of the eighteenth century. He protected what is called by the Tribunal "a sectarian doctrine" and gathered around him a large following during his lifetime. From out of his followers who were considerable in number, he initiated 100 as his disciples and those initiated came to be known as Murids. He, however, did not permit Murids to initiate others as Murids with the result that after his death there could be no further Murids by initiation. But the descendants of Murids became Murids and the class of Murids was, therefore, constituted of the descendants of the original Murids initiated by the Saint. The Murids came mostly, if not entirely from Sunni Bohra community, Sunni being one of the two sects of the Muslim community, namely Sunni and Shia. On death of Hazrat Pirmohamed Shah Saheb which occurred sometime 1742 A.D. his disciples i.e., Murids and other devotees subscribed moneys and collected donations for the purpose of building a Roza or Dargah i.e., a Mausoleum to commemorate his memory. Out of those moneys a Roza was built and there was also built alongside the Roza a mosque for the purpose of offering Ratias and prayers. In accordance with Islamic doctrine, all Muslims, whether Murids or non-Murids, had unrestricted access to the Roza and the Mosque. Now the maintenance of the Roza and the mosque required moneys and so also did the observance of festive occasions such as Urs, death anniversaries etc., at these institutions. Several gifts of properties were, therefore, made by the Murids for these purposes and certain properties were also purchased by persons in management out of offerings made at these institutions. All these properties were treated as properties of the Roza and the income from these properties after payment of municipal taxes, insurance premia and other outgoings in respect of the properties was utilised for maintenance of the Roza and the mosque and observance of the festive occasions such as Urs, death anniversaries etc. It appears from the statement of receipts and expenditure for the years 1942-43 to 1956-57 produced before the Tribunal which is Annexure `L' to the Statement of Case that during those years a part of the surplus income of the properties after meeting this expenditure on the maintenance of festive occasions such as Urs, death anniversaries etc., was also utilised for running Madrassas and Library and payment of expenses on items such as Langar and Bhandar for giving food to pilgrims attending the Roza and the mosque on festive occasions. This statement also shows that after meeting the aforesaid expenditure, there was a surplus of receipts over expenditure every year, but this surplus was at no time utilised for the personal benefit of the Murids. The Murids, however, had two kinds of rights in the properties of the Roza. Some of the Murids who had contributed to the cost of construction of certain rooms were entitled to reside in those rooms when they came to the Roza presumably from places outside Ahmedabad and they were also liable to carry out alterations or repairs to those rooms at their own cost. Then there were certain date trees in the premises of the Roza and the Murids were entitled to the dates from those trees. The properties of the Roza were considerable in number and they were situate in different places like Ahmedabad, Kadi and Viramgam. Barring the Roza, the mosque and the rooms meant for the occupation of the Murids entitled to reside therein, the rest of the properties were let out and produced income by way of rent which forms the subject matter of assessment in the present reference.

(3.) The earliest records available are the records of the first survey operations carried out between 1870 and 1880 and they show that at that time the Roza and the mosque were recognised as Wakf and were entered as such in the Revenue records. The properties which were purchased for the Roza from time were also described as sold to the Wakf of the Roza in the documents conveying the properties. Now there is no positive evidence on record to show definitely how the properties of the Roza ere managed prior to 1888 but the minutes of the meeting of Murids held on 15th of October 1888 indicate that until then the management of the Roza properties was being looked after by the general body of Murids through certain appointed agents. At this meeting resolutions were passed by the general body of Murids laying down certain rules in connection with the management and administration of the Roza properties. In these resolutions as also in the minutes the properties were described as belonging to the Roza and by the resolutions a committee was appointed to manage and administer the Roza properties. The Committee was to look after the properties of the Roza, maintain the Roza and the mosque and defray the expenses incurred on Urs and other functions in the Roza. The Committee to which we shall for the sake of convenience refer as the Roza Committee thereafter carried on the management and administration of the Roza properties. This state of affairs continued until the time when the Mussalman Wakf, Act, 1923 came into force. On the coming into force of that Act the Roza Committee was called upon to furnish a statement containing the description and particulars of the Roza properties as also a statement of accounts on footing that the Roza properties were properties held by way of Wakf to which the provisions of the act applied. The Roza Committee, however took up the stand that the Wakf on which the Roza properties were held was not a Wakf within the scope and ambit of the Act and the Roza committee was therefore, not liable to file any statement of particulars or statement of accounts under the provisions of the Act. This led to a series of litigations between the Roza Committee on the one hand and the Anjuman -I-Islam District Wakf Committee and other leading Sunni Muslim citizens on the other. It is not necessary to make any detailed reference to these litigations for the purpose of the present reference but it is sufficient to state that in these litigations of the aforesaid two parties the later contended that the Wakf was a Wakf for the benefit of all Muslims while the former contended that the Wakf was a Wakf-al-Aulad meant only for the benefit of the Murids and their descendants who would also be Murids. While the last of these litigations was pending, the Bombay Public trusts Act 1950 came into force on 21st January 1952. Since the Act required applications to be made for registration of all public trusts on pain of penalty, the Roza Committee made an application to the Charity Commissioner on 30th May1952 for registration of the Wakf. The application was made under protest since the contention of the Roza Committee was as it has always been, that the Wakf was not a Waki for the benefit of the public but was a Wakf merely for the benefit of the Murids and was, therefore, not liable to be registered as a public Trust. The application was however, withdrawn on 2nd November 1953. The Assistant Charity Commissioner thereupon started a suo motu inquiry under the Act but before this inquiry was concluded, the Roza Committee made another application for registration of the Wakf to the Charity Commissioner on 28th April 1955. In this application the Roza Committee conceded that the Wakf was for the benefit of the public and was, therefore liable to be registered as a Public Trust. No appeal or revision application was preferred against this order of the Assistant Charity Commissioner until the beginning of January 1958 when the Roza Committee having regard to what happened in the income-tax proceedings initiated against it, to which we shall presently refer made an application to the Charity Commissioner to revise this order. The Charity Commissioner however, by an order dated 6th January 1958 held that the order passed by the Assistant Charity Commissioner had become final and conclusive since no appeal had been preferred against it and that in any even the Wakf was clearly public trust and was rightly registered as such.