Law:

Section:

Section 21 of wealth-tax Act, 1957 - Trust/Trustees - Assessment when assets are held by - Assessment year 1968-69 - Whether where trust deed executed by one 'KB' specifically provided that 80 per cent of income would be divided between beneficiaries of waqf in accordance with Mohanmedan law, distribution was determinate and not fluctuating, and therefore, Tribunal was correct in holding that section 21(1), and not section 21(4), was applicable - Held, yes - Whether 10 per cent of income of waqf meant for spending on sacrifice of two goats each year and on making arrangement for a sabil on some public way was exempt from tax - Held, yes FACTS One 'KB' executed a deed of waqf-alal aulad for charitable purposes. In wealth-tax proceedings, the WTO sought to include the entire value of the waqf properties in the assessment of the waqf. The Tribunal, on an interpretation of the deed, held that 80 per cent of income of the waqf distributed to the heirs of the waqf in defined shares in accordance with the Mohammdan law, was liable to assessment under section 21(1) and not under section 21(4) whereas 10 per cent of the income spent on maintenance and support of the waqf's relations etc. who were not heirs was not exempt. Finally the remaining 10 per cent spent on Muslim widow etc. and granting of scholarships for religious and worldly education etc. was exempt because those objects were clearly charitable in nature. On reference: HELD The trust deed specifically provided that 80 per cent of the income was to be divided between the beneficiaries of the waqf in accordance with the Mohammedan law. It was thus clear that distribution of 80 per cent of the income was determinate and not fluctuating. The Tribunal was justified in holding that section 21(1), and not section 21(4), was applicable. In respect of the second question, the position was that sacrifice of goat in the name of a prophet was undoubtedly of a charitable nature because the subject-matter of sacrifice was meant for the benefit of the members of the public. Similarly, the purpose of sacrificing another goat was to bestow peace on the soul of the waqif and the meat of this sacrifice was also to be…

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