MOHAMMAD HUSSAIN SAIT Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) UNDER Section 64 of the E.D. Act, 1953, the following question has been referred to us for our opinion :

(2.) BY a document dated November 1, 1934, one (late) Mohamed Ismail created a wakf in favour of himself, his family and his descendants and ultimately for the benefit of the poor, of the properties belonging to him. This wakf was of a permanent character, He dedicated the immovable properties described in the schedule thereunder for his benefit and for the benefit of his family, children and descendants and ultimately for the benefit of the poor Muslims in accordance with the conditions and rules stipulated in the wakf deed. He also appointed his father, Mohamed Musa Sait, as the mutawalli of the aforesaid wakf. After the demise of the father, the office of mutawalli would be hereditary in the family. Clause 4 of the deed provided that the succession to the office of mutawalli would be from the deceased's lineal male descendants. Clause 9 provided that the mutawalli would be entitled to a remuneration of Rs. 40 a month in addition to any actual expenses incurred in looking after the properties from the income of the said endowed properties. Clause 10 gave power to the mutawalli to reserve two months' rent of the endowed properties for the repair and maintenance of the said properties. Clause 13 which is important for the purpose of this case stipulates how the surplus of the income from the endowed properties should be utilised. That clause is in these terms:

(3.) CLAUSE 13 of the deed which we have extracted already clearly indicates that the surplus income from the settled properties will have to be divided every month by the mutawalli among the members of the family including the settlor and that a male was entitled to take two shares and a female to take one share. We are concerned with the reservation of interest in favour of the settlor. There is clearly a provision that a share must be given to the settlor. This has to come from out of the surplus monthly income of the settled properties. The question is whether such a reservation will amount to a reservation of interest in the settled properties. If such a reservation will amount to a reservation of interest in the property, Section 12 will be attracted. We consider that when a specific provision is made in the deed that from out of the surplus income of the settled properties, a specified share after meeting specified expenses should be paid to the settlor, there is a reservation of interest in the properties. This court in Anantha Iyer v. Mittadar Ramaswami Iyer [1914] MWN 891 (Mad) has gone to the extent of holding that where by a document rents and profits of a certain land were to be received by the creditor for a fixed term of years in lieu of the principal and interest, the document created a mortgage because there was a transfer of interest in specific immovable property within the meaning of Section 58(a) of the Transfer of Property Act. Section 12 of the E.D. Act does not speak of the transfer of interest in the immovable property. In order that the section might apply, all that is required is that there should be a reservation of interest in property. In this case, there is such a reservation in view of CLAUSE 13 of the wakf deed. This view of ours is supported by the decision of this court in T. A. Devaki Ammal v. CED [1978] 111 ITR 403 (Mad), the High Court of Bombay in Khatizabai Mohomed Ibrahim v. CED [1959] 37 ITR (ED) 53 and the Allahabad High Court in Hamid Hussain v. CED [1972] 83 ITR 309. Our attention was also drawn to the decision of the Supreme Court in CED v. R. Kanakasabai and it was contended on behalf of the accountable person that Section 12(1) would not be attracted at all. We consider that the facts of the case decided by the Supreme Court are different from the facts of the present case. In that case, it was held that no interest in the properties settled was reserved to the deceased during his lifetime or for any period after the properties were settled, nor was there any provision in the deeds enabling the deceased to reclaim the property or its possession under any circumstances, and, in such circumstances, the Supreme Court held that Section 12 was wholly inapplicable to the facts of that case. This decision, we consider, may not be applicable to the facts of the present case.