TaxTMI 
TaxTMI 
1961 (8) TMI 5
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....income from the properties mentioned therein should be utilised for the maintenance of their two daughters and their children on the female side. For 40 years up to and inclusive of the assessment year 1954-55, the income-tax assessments were made on the wakf through its manager under section 41 of the Act in the status of an individual. But, for the assessment year 1955-56, the Income-tax Officer treated the assessee as an association of persons, and, on the ground that the shares of the beneficiaries are indeterminate, levied tax at the maximum rate under the first proviso to section 41 of the Act. On appeal, the Appellate Assistant Commissioner of Income-tax held that the Income-tax Officer was not right in holding that the members of th....
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....ected to maintain the members of the family, that none of the members of the family had any ascertainable share in the income, and that, therefore, the case squarely fell within the first proviso to section 41 of the Act. Mr. Viswanatha Sastri, learned counsel for the respondent, in addition to his attempt to sustain the construction put upon the wakf deed by the High Court, contended that the instant case fell outside the scope of section 41(1) of the Act, as the muthawalli was only receiving the income on behalf of the Almighty, that the Almighty was not a person ", and that, therefore, as the main section did not apply, the proviso also would not be attracted, with the result that the muthawalli would have to be assessed as an " indivi....
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.... Validating Act, 1913. Under the substantive part of the section, tax is leviable on the trustee of the wakf in the like manner and to the same amount as it would be leviable upon and recoverable from the beneficiary, that is, the assessment would be at the individual rates of tax applicable to the beneficiary. But, under the first proviso to that section, there are two exceptions to the general rule, viz., (i) where the income is not specifically receivable on behalf of any one person ; and (ii) where the individual shares of the persons on whose behalf the income is receivable are indeterminate or unknown. In those two circumstances, tax shall be levied and recoverable at the maximum rate. It is agreed that the first exception does not ap....
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....ng good income. The rest of the recitals in the document are not relevant for the present purpose. Can it be said that, under the document, the individual shares of the beneficiaries are specified ? The document does not expressly specify the shares of the beneficiaries ; nor does it do so by necessary implication. Indeed, the individual shares of the beneficiaries are not germane to the objects of the document. The muthawalli was directed to bear, out of the income, the expenses necessary for maintaining the members of the tarwad and to conduct the necessary religious ceremonies. The distribution of the family income and family expenses was left to the discretion of the muthawalli; the document also further contemplated that the muthawal....
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....e to the assessment in question. The argument is rather subtle, but if has no force. There are three effective answers to this contention : Firstly, it was not raised before the High Court--the only question argued before the High Court was whether the beneficiaries of the trust and their individual shares of the income of the trust were ascertainable. Secondly, though under the Mahomedan law the properties dedicated under a wakf deed belong to the Almighty, it is only in the ideal sense, for the muthawalli in the name of the Almighty utilises the income for the purposes and for the benefit of the beneficiaries mentioned therein. Under the Mahomedan law, the moment a wakf is created all rights of property pass out of the wakif and vest ....
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....f the family. It is, therefore, manifest that under the Mahomedan law, the property vests only in the Almighty, but the muthawalli, acting in His name, utilises the income for the advantage of the beneficiaries. Therefore, the words " on behalf of any person " in section 41 of the Act can only mean on behalf of the beneficiaries and not on behalf of the Almighty. The third and more effective answer to the argument is that section 41(1) of the Act provides for a vicarious assessment in order to facilitate the levy and collection of income-tax from a trustee in respect of income of the beneficiaries. In express terms it equates the muthawalli of a wakf to a trustee. For the purpose of section 41 the muthawalli is treated as a trustee and, o....