Law: Wealth Tax Act, 1957

Section: 5(1)(i),21A

Wealth tax----Exemption---Charitable trust---Waqf---Property vesting in God ---Twenty�five per cent. of income from property to be utilised for preserving corpus of Waqf---Income from Waqf property to be utilised for charitable and religious purposes ---Waqf entitled to exemption---Indian Wealth Tax Act, 1957, S.5(1)(i).Under section 5(1) of the Wealth Tax Act, 1957, exemption is allowable to a trust or other legal entity for any property held by it under trust or other legal obligation for any public purpose of a charitable or religious nature in India. This means that the purpose of the trust should be charitable or religious. The income of the corpus may not be used wholly for the purpose of the trust. It is sufficient if the purpose and object itself is predominantly for a public charitable purpose:Held, that, in the instant case, the Tribunal had found from the reading of various classes of the Waqf deed that a Waqf was created by the donor out of his own property in accordance with. Muslim law and the provisions of the Mussalman Waqf Validating Act, 1913. The donor glad divested himself of all the property rights and held them only as Mutawalli in perpetuity and forever. It was also seen that nearly 25 per cent. of the income of the Waqf property was to be utilised either for the maintenance of Waqf property for charity and also as a reserve fund for reserving the corpus and for use on charitable and religious occasions and purposes by the Mutawalli. The Waqf was entitled to exemption under section 5(1)(i).JUDGMENT Four questions have been referred by the Tribunal for the opinion of this Court. The questions referred ate as follows: "(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the property was held by the Mutawalli under trust or other legal obligation for a public purpose of charitable or religious nature? (2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the public are interested in a substantial portion of the income of waqf property and also in the corpus?…