Law: Income Tax Act, 1922

Section: 4,4(3X.4,

Income-tax Act (XI of 1922)---S. 4(3X.4, second proviso-Waqf-Waqf deed providing for expendi­ture or setting apart wholly two third of income of Waqf properly for religious or charitable purposes-Such income, held, exempt from income-tax and unexpended income of property, if any, cannot be again set apart. from being expended in coming years. The income of a property held under trust wholly for religious or charitable purposes is exempted from tax, but this exemption will not apply to a case where so much of the income as remains unexpended during the, previous year. In the instant case the income-tax return submitted by the --state did not chow any unexpended income but it is the Income-tax Officer who artificially worked out an expended income or surplus but then it will not be taxable if it can be shown that the notional un-expended income is set apart in terms of the provision of the Wakfnama. In this case, the unexpended amount of income, if any, need not be again set apart by the Mutwalli for being expended in the coming years in view of the specific allotment of the 2/3rd of the income in the Wakf deed for religious or charitable purposes. In this view of the matter the Supreme Court finds that the High Court Division rightly applied the provisions of section 4 (3) (i) of the Income-tax Act in this case. The Director of Taxation &c Excise v. Mehdi Ali Khan Panni (1979) 7 B T D 90 distinguished. JUDGMENT SHAHBUDDIN AHMAD, J.--These two appeals by special leave arise out of two identical judgments and orders of the High Court Division in Reference Case No. 5 of 1973 and Reference Case No. 11 of 1969, respectively, under section 66(1) of the Income-tax Act, 1922. Excepting the assessment years, the relevant facts of these two appeals and the question of law also being common the appeals have been heard analogously and are being disposed of by this judgment. Appellant is the Income-tax Commissioner and respondent is the assessee representing a Wakf Estate. Reference Case No. 11 of 1969 was disposed of by the High Court Division by an elaborate judgment dated 6-2-1976, and on the bass of this judgment the other Reference Case was disposed of on 12-2-1976.…

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