TaxTMI 
TaxTMI 
2023 (8) TMI 108
X X X X Extracts X X X X
X X X X Extracts X X X X
....as isueless and claims to have adopted his nephew Sardar Abdullah Khan alias Azad Ahmad Khan, the petitioner, as his son. As per the terms of the Waqf deed, an amount of Rs. 100 out of the total proceeds of the M/s. General Engineering Works was to be spent towards almighty and rest of the proceeds were to be utilised as per the wishes of the waqif Gulam Ahmad Khan during his lifetime. Gulam Ahmad Khan also reserved to himself right to effect titamma of the original waqf deed and sell off the assets entrusted to the waqf including M/s. General Engineering Works. With regard to succession of mutwalli, it provided that one Mst. Hasina Khatun would be the next mutwalli and after her demise, her children and their descendants were to succeed her as mutwalli. In case, Mst. Hasina Khatun was to die issueless, then Inam Ahmad Khan, who is the brother of waqif Gulam Ahmad Khan and after him his son Azad Ahmad Khan and his descendants would succeed as Mutwalli of the Waqf. As per clause C (jim) of the waqf-deed, after death of Gulam Ahmad Khan, Rs. 100 were to be continued to spent towards charitable purposes and with regard to rest of the proceeds from the waqf property, Rs. 400 was to be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... petitioner relies upon the judgment of the Supreme Court in the case of 'Chhedi Lal Misra v. Civil Judge, Lucknow'; (2007) 4 SCC 632. The second ground of challenge is that the Tribunal erred in holding that section 5 and 12 of the Act of 1953 are applicable in the present case. He submits that the Tribunal has misinterpreted the explanation to Section 12(1) of the Act of 1953 and wrongly held that since waqif has reserved to himself the right to modify the deed therefore, it amounts to reservation in the property for life. Whereas as per the explanation reservation of interest must be for settler himself as well as for any of his relatives. Unless the interest is reserved for both, the waqif as well as any of his relatives, such reservation would not amount to passing of the property upon settler's death. In support of his contention counsel for the petitioner relies upon a Division Bench Judgment of the Bombay High Court in the case of 'Controller of Estate Duty v. B.B. Nigudkar' reported as (1988) 170 ITR 578. Relevant paragraph of the same reads, '...We have considered the Explanation to section 12(1) carefully. In our view, the word 'and' used in the Explanation to sect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r descendants. Inclusion of Mst. Hasina Khatun as one of the beneficiary of the usufruct of the waqf property, without establishing waqif Gulam Ahmad Khan's relationship with her, goes against the tenets of a waqf-alal-aulad. Further, no doubt creation of a waqf divests the waqif of the waqf property and dedicates it to the almighty, but, there should be actual dedication/delivery of possession of the waqf property to constitute a valid waqf. When the waqif is himself the first mutwalli of the waqf, it becomes difficult to establish actual dedication/delivery of possession, and thus, his subsequent conduct with regard to the waqf property becomes relevant to decide whether there was an actual dedication and creation of a waqf. In the present case even after dedicating M/s General Engineering Works to almighty, waqif Gulam Ahmad Khan continued to show the same as his own property in income tax returns filed by him. He even sold off some of the waqf property to pay off his personal debts without seeking necessary permisssion from appropriate authority. Furthermore, there is no evidence on record to prove that Gulam Ahmad Khan ever spent Rs. 100 towards any charitable purpose. Abs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed a valid waqf. 10. The second ground of challenge that the Appellate Tribunal has wrongly interpreted the explanation to Section 12(1) of the Act of 1953 and read the word 'and' as 'or' to reject petitioner's claim for exemption from paying estate duty also does not hold good as waqif Gulam Ahmad Khan had, while executing the waqf deed made provisions for maintenance of himself, his brother and the petitioner, who himself claim to have been adopted as a son by the waqif Gulam Ahmad Khan. Therefore, the conditions laid down in the case of B.B. Nigudkar (supra) as relied upon by the counsel for the petitioner is already fulfilled. Furthermore, what is required to avail the exemptions from paying estate duty as provided under Section 12 of the Act of 1953 is that there should not be any reservation of interest in the settled property for life by the settler. For reference Section 12 of Act of 1953 reads, '12. (1) Property passing under any settlement made by the deceased by deed or any other instrument not taking effect as a will whereby an interest in such property for life or any other period determinable by reference to death is reserved either expressly or by implication to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mself the right to reside in certain specified house properties and the power to amend the terms of the wakf deed, the list of beneficiaries and the extent of their shares. Are these conditions sufficient to bring the property within the scope of section 12' The power to amend the terms of the settlement is couched in the following language: '7. (e) In future also, I the wakif during my life-time, shall have the right of making amendments; alterations, cancellations and additions of conditions in this wakf deed, as warranted by the prevailing conditions, which right I enjoy at present; and during my life-time I shall specially have the power to make amendments in the rights of the grantees, to include some stranger amongst them and to exclude any body and to increase or decrease the amount of their shares.' 18. The power reserved by this clause is expressed in the widest termst. While perhaps it does not extend to the power of revoking the wakf, it enables the settlor to travel over a wide field, curtailing interests presently enjoyed on the one hand, and in creating or enlarging them in other directions. In so far as the power is exercised for the purpose of including some one....