3·'S.C;R. BY COURT : In accordance with the opinidn · of th~ majority, the petitions must fail except to the ext"Jnt that we declare r.10 (c) to be an unreasonable restraint upon the right of the
petitioners to carry on thei.r avocation, and r. ll, when it prescribes a renewal fee of Rs. 50, invalid inasmuch as it has provided not for a fee but for a tax. Subject to this, the petitions are. dismissed. The
petitioners will pay the costs of the other side (one set only), as they have lost substantially. Petitions dismissed except for sl·ight mod·ifi· cation. COMMIS8IONER OF INC0.\1E-TAX, KERALA
AND COIMBATORE v. PUTHIYA PONMANICHINTAKAM WAKF MANAGER P. P. AYESHA BI BI (P. B. GAJENDRAGADKAR, K. SuBBA RAO and M. H!DAYATULLAH, JJ.) Income Tax-Wakf-AssesBment-If must be in tlte status
of individual or as association of persons-llfut(J;waU.i, 1j a trustee-Indian Income-tax Act, 1922(11of1922), s. 41(1), First proviso-MuBBalman WakfValidating Act, 1913 (6 of 1913), ss . .3,4. The question for determination in the appeal was whether
the wakfin question should be assessed to tax under s.41(1) of the Indian Income-tax Act. 1922, through the manager as individual or as an association of persons at the maximum rate under the first proviso to that section on the ground that the individual shares of the beneficiaries were indeterminate and unknown. The wakf deed directed the mutawalli to do acts
necessary for charitable purposes and to meet the maintenance expenses of the wakif's children, grand-children, the female children born in the future and the male children born to the said female children and after payment of taxes and meeting of expenses for repairs and maintenance of properties, to utilise the l!alance of the income for daily necessary expenses of the house and for food for purchasing dresses and other necessities for the male and female members of the tarwad, for conducting specified ~eremonies, for feeding the poor and for meet_ing such. other necessary expenses and thereafter to utilise lhe balance, if any, in acquiring properties yielding good income.
Chandra/cant K rishnarao . P'l'ad,ha,n v. The Colledo'I' of Customs, Bombay Suliba Rao J. AUifUst 14. CDmmi#icmtr of Incottt1•tfJ~, Fitralo and Ooim1>otore v. Puthiyu Ponmott1chi"1r1kau1
H"akf· Manager P. 1~. Ay1eha 8j n; Si.bba Rao J, f -[1962] Held, that under.the terms of the wakf deed the individual shares of the beneficiaries were indeterminate wi1hin the meaning of the first proviso to s.41 (I) of 1he Indian 'Income:iax Act, 19~2, and as such the a>Sessee was liable to pay income-tax thereunder at the maximum rate.
1 t was not co11ect in vie\\' of ss.3 anrl 4 of the Mussalman WakfV;;lidating Act, 1913, to say that ui:der rhe wakfdeed the property vested in the Almighty and the Mutawalli did not therefore, receive the income on behalf of any person \vithin the meaningofsAl(I) of the Indian Income-Tax Act and as such
the pro\'iso could not come into operation. Under the Mahomedau law wakf property \'Cs!• in the Almighty only in an ideal sense and the :\futawalli, acting in his 11an1e1 utilises
the income for tl'e ad van ta~e of the Lenrficia1irs. The \\'07(lS '(011 hrhalf of any person" in s.41 or the Act, therefore, could only mean on behalf of the brneficiarirs and not on behalf of the Almighty.
Jervun Do.a Sahoo v. Sha/, Ku/,eer-ood-deen, (1841) 2 M.I. A. '.'90, referred to. field, further, that there ,,.a,s no .scope for iJnporting the ~fahom~dan Law of wakf in s.41 of the Act since that section in r_xprcss terins treated the Mutawalli as a 11 ustre though hr is not one in the technical sense under 1he Mohamedan [aw.
Crvxr. APPELLATE JURISDICTION: Civil Appeal No. 397 of 1960. Appeal from the ju1lgmcnt and order dated November 24, 1958, of the Kerala High Court in I. T. R. No. 23 of 1957. K . • \r. Rajagopala Sastri awl P.C. ;l/enon, for the
appellant. A. V. Vi.s·wanatha Sastri, Narayanaswami and R. Gopalahishnan, for the respondent. 1961. August 14. The Ju1lgment of the Court was 1lelivered by SuBBA RAO, J.-This appeal by certificate
granted by the Hi,gh .Cour~ of Kenda raises ~he question of the upphca lion oi s. 41 (I) of the Indian Income-tax Act (hereinafter called .the Act) to the facts of the c11se. 3 S.C.R.
One P. B. Umbichi and his wife executed a cleed dated DeDcmber 20, 1915, creating thereunder ;a wakf of their properties. It was provided therein, inter. aJ,ia,. that the. income from the properties
mentiOned therein should be utilised for the m1in- tenance of their two daughters and their children .on the female side;· For 40 years upto and inclusive of the assessment year 1954-55, the income-tax
assessments were made on the wakf through itR manager under s. 41 of the Act in the status of an individual · But, for the assessment year l!l55-5G, th!l Income-tax Officer treatecl the assessee as an
association of persons, and1 on the ground that the .shares of the beneficiaries are indeterminate, levied tax at the maximum rate under the first proviso to s. 41 of the Act. On appeal, the Appellate Assis-
tant Commissioner of Income-tax helcl that the Income-tax Officer was not right in holding that the members of the family were indeterminate, but he confirmed the assessment for the reason that,
as the shares were not specified among the indivi- dual members of the family and also between the members of the family on the one hand and the charitable and religious purposes on the other, the
first proviso to s. 41 would be applicable to the assessee. On further appeal, the Income-tax Appel- late Tribunal took the view that the proprietary right/! in the property in question vested in the
AJmighty and that the Mutawalli was only to look after and administer the properties as a manager and, therefore, the proper person in whose hands the income from the properties should be assessed
was the Mutawalli in his status as an "individual" at the rates applicable to an individual. In that. view, the appeal was allowed. At the instance of the Commissioner of Income-tax, the Appellate
Tribunal referred to the High Court of Kerala the following question for its determination : "Whether in the facts and circum~tances of the case, the first proviso to section 41 j:;
, ,. . , .!!-ppli.cs,kl~,''. , . , Commiarion1r of lncome-tax,.K1rala and QoiWtbatore v. Puthiya Ponmaniehtntakam Wakf Manager P. P, Ay1slia Bi Bj Subba Rao J, -1961 …..__ C<im'i'K'iiomr of
lnco.,,,,,.tax, Kernln and CMmbntMt v. Put hi ya J>onntanieltintalca na IVakJ Manattr P. P. Ayesh11 Ri fl, [1962] The High Court held that the said proviso was not applicable, aii under the wakf deed the h<:'ncficiaries
and their shares were ascertainabl<'. Aggrieved by the said order, the Commissioner of Income-tax has pref<'rred the present appeal. Mr. Rajagopala Sastri, leamed counsel for the Commissioner of Income-tax, contended tlmt on a
fair reading of the terms of the wakf deed it would be clear that the Mutawalli was only directed to maintain the members of the family, that none of the members of tl1c familv had anv ascertainable
share in tho income, and that, therefore, the c'l.Se ,;quarely fell within the first proYiso to s. 41 of the Act. :\fr. Viswanatha Sastri, lcarnecl counsel for the respondent, in addition to his a.ttcmpt to sustain
the co11structio11 put upon thr wakf deed by the High Court, contended that th<' instant e.1s<> fell outside the scope of s. 41(1) of the Act, as the :\fotawalli was only r\'cei\-ing the income on L<'-
half of t.he Almighty, that tho Almighty was not a "person", and that, therefore, as the main scetion 1lid uot apply, the proviso nlso would not be attrnctcd. with the result that
the :\Iutnwalli wonld have to be assessed :rn 11n "individual". As the argument turns upon the <'OnHtructio11 of"· 41 of the Act, it will he eo1w<'nie11t at the out- Het to rt>ad the rnlevant· parts tlH•rpof.
"Section 41 : ( l) Iu the 1·ase of income, prutlts ur gains chargeable under this Act which …… any trustee or trustccH appointed under a trust declared by a duly executed instrument in writing whether testamentary
or otherwise, including the trustee or trustees under any Wakf deed which is valid under the l\Iussalman Wakf \'alidating Act. l!ll3, are entitled to receive on behalf of any person, the tax shall be levied upon and
recoverable from such …… trustee or trustees, t l 3~_.o.R. $UPR-mME d{)URT REPORTS in the like manner and to the same amount as it would be leviable upon and recoverable .from the person on whose behalf.such income,
profits or gains are receivable, and all the · pr~wisi<ins .of this Act shall apply accordingly : Provided that where· any such income, . profits or gains or any part thereof are net
. _specifioally receivable on behalf of any one person, or where the individual shares of the persons on whose behalf they are receivable are indeterminate or unknown, the tax shall
he levied and recoverable at the maximum rate, hut, where such persons have no other personal inr.om<> chargeable under this Act and none of them is an artificial juridical· . person, as if such income, profits or gains or
such part thrreof were the total income of an association of persons." This section in terms applies to a trustee under a wakf deed which is valid under the Mussalma.n Wakf 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 bene- ficiary. But, under the first proviso to that section, there are two exceptio1:s to the !(eneral 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 un- known. In those two circumstances, tax shall be
levied ancl recoverable at the maximum rate. It is agreed that the firnt exception does not apply to the in8tant <:aHe. But the question that falls to be decided is whether the individual shares of the
persons on whose behalf the ineome is receivable are indetermi1iate or unknown. The answer to the question depends upon the construction of the ~ I Comm16.BiQnrr o r n_eo~~;. ·s~,yta
rtnd Coi,,W~tor~ … ' .. ':~(.,· ·, \ : PutMya Pon1naniclaintakam W akf. Mani:tger P. P . • 4y&llG Bi Bi Subha R(io .! . 1Ml -o-i-…ioMr of fn~, K#rala and Ooimbalore v. PulJriya
Ponmtmiehinlaka "' JVal;J Manager 1'. P. Ayeaha Bi Bi Subba R''" J. t i42 l:ibPiiE!llE COURT REPORTl:i provisions of the Wakf deed. The Wo.kf <leed waR executed on December 20, l!JoO by Umbichi and his
wife dedicating their entire property, moveable and immoveable, of total valuo of rupees one lakh for the objects mentioned therein. The Mutawalli appointed thereunder was directed to manage the
properties in such a way as "to do acts necessary for charitable purposes and to meet the maintenance expenses of their children and grand-children and the female children that might be born to them in
future, and to the malo children born to the said female children". Tho document proceeded to give further specific directionA iu the management of the propnrties. After payment of taxes and meeting
the expenses incurred for repairs and maintenance of the properties, the balance of the income should he utilised for the "daily necessary expenses of the house and food expenses as we aro doing now",
and for purchaHing "dresses and other nccc.ssitics for the then male and female members of the tarwad" and for conducting "nerchas (ceremonies) such as Yasin, Moulooth, etc., charitable
ceremonies for feeding tho poor and such other necessary expenses", and out of the balance, if any, the Mutawalli was directed lo acquiro properties yielding 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 sharci; of the beneficiarios are specified ? The document docs not expressly specify the shares
of the beneficiaries; nor does it do so by necessary implication. Indeed, the individual s~arcs of the beneficiaries are not germane to the objects of the document. The l\fotawalli was directed to bear,
out of the income, the expen8e8 necessary for maintaining the members of the tarwad and to conduct the neccsaary religious ceremonies. The distribution of the family income and fa,mily
expenses was left to tho discretion of the •. – _. ,_ ~ S.C.R. sttP.R.EM.E doURT REPORTS i43 Mutawalli, the document also further contemplated that the Mutawalli by his prudent and efficient
management w:ould save sufficient amounts for purchasing properties. 'fhe directions indicate beyond any reasonable doubt that no specified share of the income was given to any of the benefi-
ciaries, and their right was nothing more than to be maintained, having regard to their reasonable requirements which were left to the discretion of Mutawalli. While it is true that the number of
beneficiaries would be ascertainable at any given point of time, it is not possible to hold, ::is the High Court held, that under the document the beneficiaries had equal shares in the income. The
beneficiaries had no specified share in the income, but only had the right to be maintained. The construction put upon the document by the High Court cannot, therefore, be sustained on the plain
wording of the document. We, therefore, hold that under the terms of the document the individual shares of the beneficiaries are indeterminate within the meaning of the first proviso to s. 41(1) of the
Act. If so, under the said proviso, the assessee is liable to pay income-ta:x: at the ma:x:imum rate. The alternative contention of learned counsel for the respondent remains to be considered. The
argument is that under the Wakf deed the properties vesfin the Almighty and, therefore, the Mutawalli receives the ·income only on behalf of the Almighty and not on behalf of any person
within the meaning of s. 41(1) of the Act, with the result thats. 41(1) is not applicable to the assess- ment in question. The argument is rather subtle, but it has no force. There are three effective answers
to this contention : Firstly, it wa8 not rai8ed 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. Co1nmi8a1'one1' of 1 ncome-ta.-.:, K erala and Coimbatore v. l'uthiya Ponmaniohintaloam Wakf lllanagM" P. P. Aye3ha Bt Bi Subba Rao J Commi#imur of '1'CI> mt-ta.\",. ·K rrala
-,,m Cofrnbator11 PutA/ya Po•u1w11ic.Mntaka11t · WaJtfMllMIJ<' P. I'. AyOAha 11 i Tii i44 SU.PRElllE COURT. REPORTS. _[l~2J Seeondly, though under the i\Iahomedan Law the propcrtie>< rkdicated under a Wakf deed belong
to the Almighty, it is only in the ideal sense, for the Mutawalli i.t1 the name of the Almighty utilises the income for the purposes and for the benefit. of the beneficiaries mentioned therein. Under the
Mahomcdan Law, the moment a Wakf is created all right8 of property pass out of the wakif and vc.st in the Almight~'· The property does not vest. in the :\lutawalli, for he is merely a manager and
not a trustee in the technical sense. Though Wakf property belongs to thl' Almighty, the practical significance of that concept is explained in Jewun. Dos.~ Sahon v. Shah K11beer-ood-dr.en (') thus:
" …………… Wakf signifies tho appropria- t.ion of a particular article in such a manner as subjeets it to tho rules of divine property, whence the appropriator·s right in it is
Axtinguished, and it be«omell a property of · God, by the advantage of it resulting to his creatures." That is, though iu au ideal sense the property veati; in the Almighty, the property is held for the bonofit
of His creatures, that is, the beneficiaries. Though at one time it was considered that to constitute a valid Wakf there must be dedication of property solely to the worship of Goel or for
religions or charitable purposes, the Wakf Validating Act, 1913, discarded that view and enacted bys. 3 that a l\Ius8alman can create a wakf for the maintenanco and support, wholly or partially, of his family,
children or descendants provided the ultimate benefit is expressly or impliedly resened for the poor or for any other purpose recognized by the Mussalman law as a reli~ious, piouR or charitable purpose of a
permanent character. Sectiou .J. of the said Act, goes further and BUJ8 that a wakf shall not be invalid by tho mere circumstance that the benefit (I) (1840) 2 M.J.A; 390, 421. . r
as.c.:R. SUPREME cotJR'i' REPORTS '145 reserved for the poor or for religious purposes is postponed until the extinction of the family. It is, therefore, manifest that under th<' l\Iahomedan
Law, the property vests only in the Almigiity, but the Mutawalli, acting in His name, utilises the income for the advantage of the beneficiaries. Therefore, the words "on behalf of any person" in
s. 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 thats. 41(1) of the Act provides for a
vicarious assessment in order to facilitate the levy and collection of income-ta:x; from a trustee in respect of income of the ' beneficiaries. In express terms it equates t.he Mutawalli of a wakf to a
trustee. For the purpose of s. 41 the l\Iutawalli,is treated as a trustee and, on the analogy of a trustee, he holds the property for the benefit of the beneficiaries. There is no scope for importing the
Mahomedan Law of Wakf in s. 41 when the section in express terms treats the Mutawalli as a trustee, though he is not one in the technical serise under the Mahomedan Law. If tho argument of learned
counsel for the respondent be accepted, it would make s. 41 of the Act otiose so far as wakfs are concerned, for in every case of wakf the property would be held for the Almighty and not for any
person. We, therefore, reject this contention and answer the question in the affirmative. In the result, we set aside the order of the High Court and hold that the respondent was rightly assessed by the Income-tax Officer at the
maximum rate. The appeal is allowed with costs. Appeal Allowed. . 19~1 Commi1•ioner al Income.tax, K~,.qla and Coimbatore v. Puth!1/a Ponmanieh.tntakam Wakf Matwi<• P. P. Ayuha Bi Bi
Subba Rao J .