Judgement

Appeal (No. 50 of 1929) from a judgment of the Court of the Judicial Commissioner of the Central Provinces (August 4, 1927), upon a reference under s. 66, sub-s. 2, of the Indian Income-tax Act, 1922.

The appellant, who was the head of a Mahomedan community of about 250 persons of the Dawoodi Bohras of Nagpur, was assessed at Rs.2072-14 for income-tax under the Indian Income-tax Act, 1922, in respect of income arising from property vested in him as head.

Law. Rep. 57 Ind. App. 260 ( 1929- 1930) Mohammad Ibrahim Riza V. Commissioner of Income-Tax, Nagpur 92

The property of the community was held under two trust deeds of August 25, 1917, and November 22, 1922, executed by the previous head of the community. The earlier deed provided that the scheduled properties should be held on trusts, Stated as to clauses 3, 5 and 6 in the judgment. By the remaining clauses the property and income were devoted to the following purposes stated shortly (1.) For suitably maintaining the dignity of the settlor as head, and of the succeeding heads, and defraying all their expenses. (2.) For providing all the members of the community with all the necessaries of life as the head deemed fit. (3.) For giving suitable secular and religious education to the members.

The objects of the trust provided by the deed of 1922 were practically the same as by the deed of 1917.

The substantial question raised by the reference to the Court of the Judicial Commissioner was whether the income from the property was exempt from tax by s. 4, sub-s. 3 (i.) and (ii.), of the Indian Income-tax Act, 1922, the terms of which appear from the judgment.

The Court of the Judicial Commissioner held that no part of the income was exempt.

1930. May 19. Dunne K.C. and E. B. Raikes K.C. for the appellant. The deeds constituted a valid wakf of the whol3 property according to Mahomedan law, and the Mussulman Wakf Validation Act, 1913, although the maintenance of the mutawalli was provided for. According to the conception of that law, which governed the parties, the whole property was devoted to charitable and religious purposes. The income was therefore exempt from tax by s. 4, sub-s. 3 (i.) and (ii.).

De Gruyther K.C. and Wallach for the respondent were not called upon.

The judgment of their Lordships was delivered by

LORD TOMLIN, In this case the appellant seeks to displace an assessment to income-tax made upon him in respect of property vested in him as the head of a community which is a sect of the Dawood Borah tribe, located at Nagpur. The community [have, apparently, a common stock, all the property being vested in the head of the sect. The property is utilized in part in carrying on a series of shops, the profits of the trade being treated as part of the income of the community.

In the Courts below the appellant rested upon certain trust deeds executed, one on August 25, 1917, and the other on November 25, 1922. By the first deed the then head of the community declared the trusts of the property vested in him, and by the second deed the trusts of the same property were explained and expanded.

Their Lordships think that the short point which this appeal raises is, whether, having regard to the terms of those deeds, the income of the property vested in the head of the community is exempt from income-tax, having regard to the provisions of s. 4, sub-s. 3 (i.) and (ii.), of Act XI. of 1922.

That sub-section so far as material is in these terms " This Act shall not apply to the following classes of income (i.) Any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied or finally set apart for application, thereto. (ii.) Any income of a religious or charitable institution derived from voluntary contributions and applicable solely to religious or charitable purposes."

Law. Rep. 57 Ind. App. 260 ( 1929- 1930) Mohammad Ibrahim Riz