JALAL KALILUR REHMAN Vs. FOURTH INCOME-TAX OFFICER

JUDGEMENT

(1.) Per Shri A. Krishnamurthy, Judicial Member - These three appeals are by the assessee, Shri Jalal Kalilur Rehman, relating to his income-tax assessments for the years 1975-76 to 1977-78. The sole objection common in these appeals pertains to the addition to the assessees income, for each of the years, of income derived from a property comprised of a tannery, which, according to the assessee, was declared orally as a wakf property in 1947. It appears that subsequently there was a declaration in a deed dated 30-9-1965 confirming the earlier oral declaration. An application was also made on 27-12-1975 to the Wakf Board under section 25 of the Wakf Act for registration and it appears that after due enquiry under section 27 of the Wakf Act, the Wakf Board issued the necessary notification on 23-11-1977 in the Tamil Nadu Governments Gazette. It is stated before us that the department has accepted the assessees claim for exclusion of the income derived from the property, for the period subsequent to the Gazette notification, but not for the years under appeal, which cover the period before the date of notification. It is the submission of the assessees learned counsel before us that for valid creation of a wakf there need not be an instrument in writing and a wakf can be created even on an oral declaration. The three legal incidents of wakf are, it is stated, (1) irrevocability, (2) perpetuity, and (3) inalienability. It is submitted that it is not in dispute that the requirements are satisfied in this case. The registration does not mean that the wakf is created only from the date of registration, or that it is valid only from that date. As in this case, it is submitted, there was already an oral declaration, the terms of which, at any rate, were reduced to writing on 30-9-1965, for the relevant previous year, the property, being the tannery building, was a wakf property and the income was not liable to be included in the assessees total income. Secondly, it is argued that even if registration is considered to be essential for recognition of the wakf, the effective date of registration in this case, although made by notification on 23-11-1977, would relate back to the date of creation of the wakf, namely, the year 1947, or at any rate the date 30-9-1965. In this connection, reference was made and reliance placed on the decision in U. On. Maung v. Maung Shwe Hpaung Shwe Haung, AIR 1937 Rangoon 446.

(2.) The learned departmental representative in reply, conceded that the claim of the assessee that the wakf was created orally in 1947, was proved to be clearly incorrect according to the assessees own admission considered in the order of the Commissioner for the year 1974-75, and it would follow, therefore, that there was no declaration of the wakf in respect of the property in 1947 and, consequently, the wakf in this case could be said to have been declared only by the instrument in writing in 1965. Since the assessee has chosen to reduce in writing the declaration of wakf by this instrument, which must be held to purport to convey the property to wakf, it is argued that the provisions of the Transfer of Property Act will come into play, and unless it is registered, it would not be valid. It is further argued that according to article 189 in Principles of Mohammaden Law by Mulla (17th edition) if immovable property of the value of Rs. 100 or above is purported to be conveyed to a wakf, it requires registration under the Registration Act. The fact that the wakf is registered under the Wakf Registration Act, it is submitted, does not validate the instrument. In other words, it is submitted that non-registration of the deed in this case on 30-9-1965 under the Indian Registration Act, makes the transfer of the property to the wakf invalid. It is submitted that the observations of the ITO in the assessment order for 1977-78, where it is mentioned that the property would vest with the wakf on the date of notification in the Gazette does not reflect the correct state of law and arise from a mistaken notion of the law. It is further argued that section 5(2) of the Wakf Act contemplates a notification of the beneficiaries who derive right and interest in the wakf property and, therefore, it is argued that there is no entitlement before such notification. Lastly, it is submitted that even if in this case the registration by notification is held to be valid, the transfer can take effect only from the date of notification and not earlier. As the periods involved in these appeals are prior to such notification, it is submitted, the assessee was rightly assessed on the income.

(3.) The points that arise for consideration in this case are firstly, as to whether the assessee had created an oral declaration of wakf in respect of the property in question in 1947 or not. Secondly, whether the wakf deed dated 30-9-1965 is an instrument declaring for the first time the wakf, in regard to the concerned properties, consisting of lands and tannery buildings, and conveying the properties to the wakf, thirdly, whether the deed of wakf dated 30-9-1965 requires registration under the Indian Registration Act and in the absence of registration, it cannot be said that the property has been conveyed to the wakf and lastly, whether even if the registration of the deed of wakf under the Registration Act is not necessary and the registration of the wakf under the Wakf Act is sufficient, the wakf would take effect only from the date of notification of the registration and not earlier.