COMMISSIONER OF INCOME TAX Vs. MOOSA HAJI AHMED

JUDGEMENT

(1.) THIS is a reference under S. 66(1) of the Indian IT Act, 1922, at the instance of the CIT, Gujarat. The assessees in this case are the trustees of Haji Ahmed Haji Abdul Kadar Moosa Wakf Fund. The assessment years with which we are concerned are the years 1954 55 to 1958 59, the relevant accounting periods being the years ending 31st March, 1954, to 31st March, 1958. The deed of wakf, which is required to be considered in this case, is dt. 6th July, 1953. The deed is in Gujarati language. The English translation of that deed, which is annexed as annexure "A" to the reference paper book, does not correctly translate the relevant provisions contained in the deed of wakf. The relevant portion of the translation set out in the statement of the case does not bring out the true effect of the original clause in Gujarati. Clause 7 of that deed of wakf provides that the surplus out of the income of the wakf shall be utilised by the trustees for the following purposes and objects of the wakf : (1) to help the poor. In doing so, help must first be given out of the income of the wakf to the relations of Haji Ahmed Haji Abdul Kadar Moosa who are poor. Thereafter, preference should be given to the members of the Memon Jamat residing in the mohalla of Haji Ahmed Haji Abdul Kadar who are poor. There are other provisions subsequently set out. The trustees are authorised to apply the income of the trust fund to any of the objects of the trust in such manner and to such extent as the trustees may, in their absolute discretion, deem fit. The question that has arisen for consideration is whether the income of this trust is exempt from taxation under the provisions of s. 4(3)(i) of the Act. Sec. 4(3)(i) of the Indian IT Act, 1922, provides as under :

(2.) THE question that arises for consideration is whether the properties in question are held in trust or other legal obligation wholly for charitable purposes. The learned Advocate General placed reliance upon a decision of the Bombay High Court in the case of Trustees of Gordhandas Govindram Family Charity Trust vs. CIT (1952) 21 ITR 231. In that case, a Division Bench of the Bombay High Court consisting of Chief Justice Chagla and Justice Tendolkar held that in India, relief of the poor by itself would not be a charitable object unless it involved as object of general public utility and, consequently, any charity which was intended for the relief of the poor relatives of the settlor or donor was not a charity that fell within the definition of the Indian IT Act. They further held that where the primary purpose of the settlor was to benefit the members of his family and remotely and indirectly to benefit the general public then it could not be stated that the settlement was for a charitable purpose within the meaning of the IT Act. He very fairly invited our attention also to a decision of the Supreme Court on the subject in the case of Trustees of the Charity Fund vs. CIT (1959) 36 ITR 513. In that case, a deed of trust executed by Sir Sassoon David, Bart., provided, inter alia as follows :

(3.) APPLYING the test laid down by the Supreme Court to the facts of the present case, we have no doubt in our minds that the dominant object of the settlor in providing sub cl. (1) of cl. 7 was to benefit the poor. The fact that a provision has been made that the relations of Haji Ahmed Haji Abdul Kadar Moosa out of the poor were to be helped first could not make any difference. The fact that it has been provided that the members of the Memon Jamat of the mohalla of Haji Ahmed Haji Abdul Kadar Moosa who were poor were to have preference, after the poor relations had been exhausted, would not equally matter. It may be that the relations of the settlors may not be poor. It may be that, in course of time, they may become extinct. But the trust would remain and would have to be carried out. What we have to consider is, what was the dominant intention. The trust was to be in operation so long as there were properties to which the trust could attach. In the course of the arguments reference has not been made to any other provision. Reading the deed of wakf as a whole, the dominant intention appears to be charitable.