Law:

Section:

Section 10(1) of the Income-tax Act, 1961 [Corresponding to section 4(3)(viii) of the Indian Income-tax Act, 1922] - Agricultural income - Assessment years 1939-40 to 1944-45 - Whether if a person has a right to receive income and to retain it, such income is exempt from taxation if it is agricultural income - Held, yes - Whether agricultural income received by a mutawalli as a beneficiary is exempt from taxation - Held, yes - Whether income received by a servant or agent as a salary out of agricultural income is not exempt from taxation - Held, yes - Whether where agricultural income was realised by mutawalli from waqf property on behalf of principal, amount of 10 per cent of such income retained by mutawalli out of money realised could not be said to be agricultural income so as to be exempt from tax - Held, yes FACTS The property in question came in the hands of the one 'A', under a tamilknama. 'A' died in 1915 and the property then came into the hands of the assessee, who was his eldest son. There was a litigation between the assessee and other legal heirs of 'A'. The assessee had been appropriating to himself about one-tenth of the total income from the waqf properties. For the assessment years 1939-40 to 1944-45, the ITO and the AAC held that the ten per cent of the income which the assessee had been getting as his remuneration for his work as mutawalli was taxable income. Against the assessment orders the assessee filed an appeal before the Tribunal. Before the Tribunal two questions were raised, which were as follows: (1) What was the status of the appellant with reference to the waqf, and (2) whether the allowance or such portion of it as was derived from the agricultural properties was liable to income-tax. The Tribunal had held that there was no evidence to show that the assessee was a sajjadanashin and that it was not possible under the Mohammedan law that he could be considered as such. The Tribunal came to the conclusion that the assessee was not a beneficiary. The Tribunal then considered the question whether 10 per cent of the income received by the assessee as remuneration for his services could be taxable income or it was exempt from…

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