Law:

Section:

Section 64 of the Income-tax Act, 1961 [corresponding to section 16(3)(b) of the Indian Income-tax Act, 1922] - Transfer of assets - For benefit of spouse etc. - Whether God Almighty in capacity of a transferee receiving property under a deed of waqf is a juristic entity and is, therefore, a person as used in section 16(3) of 1922 Act - Held, yes - Whether where under a waqf - created by an assessee under Mussalman Waqf Validating Act, 1913, there was a transfer of assessee's property in favour of a person who held a part of income of property for benefit of wife and children of assessee, said part of income could, therefore, be included in total income assessee under provisions of section 16(3)(b) of 1922 Act - Held, yes FACTS The assessee had executed a registered deed of waqf on 28-10-1941. Under the deed of waqf, the income of certain property was dedicated for the benefit of his wife and children The ITO held that the income, which arose from the assets transferred by this deed of waqf was liable to be assessed as the income of the assessee under section 16(3)(b) of the 1922 Act. The appeals by the assessee to the AAC failed .The Tribunal, in their appellate order, held that "mutwalli, although not a trustee in the sense of English law, undoubtedly was put in possession of the property and was entitled to realise and receive the income from the trust property. The income was, therefore, not of God but, for the purposes of the Act, was the income of the mutwalli and therefore, the transferee of a waqf, at least for the purposes of the clause (b) of section 16(3). On reference: HELD The position of a mutwalli under the Mussalman Waqf Validating Act can, in no circumstances, be compared with that of a trustee. In the case of a trust, the ownership in the property vests in the trustees though this vesting is for the benefit of others. It is a well settled principle of Muslim law that in the case of a waqf no rights in the property vest in the mutwalli. He merely acts as a manager on behalf of the waqf. The property actually vests in God Almighty. In the light of this well settled principle of Mohammedan law, it is not at all possible to hold, for purposes of…

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