LexCOMMISSIONER OF INCOME-TAX, MADRAS versus MANAGING TRUSTEES, NAGORE DURGHA, NAGORE
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A B c D E F G R COMMISSIONER OF INCOME-TAX, MADRAS ·v. MANAGING TRUSTEES, NAGORE DURGHA, NAGORE April 8, 1965 [K. SuBBA RAo. J.C. ·SHAH AND S.M. SIKRI, JJ.J Wakf-Scheme for management of Muslim Wakf-Trustees cal- led Nattamaiga-rs to manage wakf property-Surplus income to be dist-ributed _among beneficiaries of trust called kasupangudars ac- ~i'cling to ·definite shares-Income how to be assessed,....,Aw!icabi· !itu of Indiian Income Tax Act, 1922(11 ()f 1922). s. 41. A scheme was settled in 1005 by the Madras High Court for the management of the income and properties of the Durgah consecrated to a saint in Tanjore District. Under the scheme the management of the properties of the Durgah was to be in the hands of eight trustees called Nattamaigars one of whom was to be elected by them as Managing Trustee. The net income of the trust was to be distributed among descendants of the foster son of the saint, called Kasupangudars, wh.ose definite shares were to be determined each year by a list prepared bv the Managing Trustee. For the assess- ment years 195~54 and 1954-55, the Income-tax Officer assessed the gu;rplus income of the wakf in the hands of the Managing Trustee as an association of persons. The trustees unsuccessfully app€'aied to the Appellate Assistant Commissioner and the Appellate Tribunal. The controversy centred round the question whether s.41 of the Indian Income-true Act, 1922 awliecl to the case. In a reference made by the Tribunal at the instance of the assessee "the High Court held that that s. 41 ~pplied to the case and that the income was received by the trustees on behalf of the beneficiaries. Aggrieved, the Com- missioner of Income Tax appealed, by certificate, to this Court. rt was contended on behalf of the appellant that as the proper- ties vested in the managing trustee and he received the income in his own right and not on behalf of the beneficiaries, though for their benefit, the said income in the hands of the managing trustee fell outside the scope of s.41 of the Act. HELD: The High Court had rightly answered the question in favour of tbe assessee. (i) The techn'ral doctrine of vesting is not imported into s. 41. This is apparent from the fact that a trustee appointed under a trust deed is brought under the section though legally the property vests in him. In the case of a Muslim Wakf the property vests in the Almighty; even so the mutawallis are brought under the see- tion Thus in some of the persons enumer:_ated in the section property vests and in others it does not. A reasonable interpr-etation of the section is that all categories of persons mentioned therein are deem- ed to receive them on behalf of another person or persons or manage the same for his or their benefit. None of them has any benefbal interest in the income; he collects the income for the benefit of others. In this view even if the N attamaigars were trustees in whom the M9 660 [lllUJj :l ~.C.J\. :Properties of the Durgah vested, they should be deemed to have A.. received the income only on behalf of the Kasupanaudars in defi- nite shares. [662G-663B] (ii) The mutawalli of a Muslim Wald is merely a manager and not a "trustee" as understood in the English system. (663E] Vidya Varuthi Thirtha v. Balusami Ayyar. (1921) 48 I.A. 32 and Al!ah Rakhi v. Mohammad Abdur Rahim, (1933) 61 I.A. 50, relied on. Therefore in terms of s.41 of the Act the Nattamaigars were the manager of the properties on behalf of other and WeTe entitled to receive the income therefrom on behalf of them. [663G-H] B (iii) Under cl.3 of the scheme it was the "management and ad- ministration" of the Durgah and its properties which was vested in the Nattamaiga1& and not the properties themselves. In the absence .of clear words it could not be held that the High Court in framing C a scheme for the endowments of the Durgah had introduced a foreign concept of "trust" in derogation of Mohammadan Law. The scheme therefore did not vest the properties of the Durgah in the Nattamalgars and the contention on behalf of the &venue could not succeed. [664D, El av1L AP PELLA TE JURISDICTION: Civil Appeals Nos. 213 and D 214 of 64. Appeals from the judgment and order dated April 4, 1961. of the Madras High Court in Case Referred No. 130 of 1956. Niren De, Additional Solicitor-General R. Ganapathy Iyer E and R. N. Sachthey, for the appellants (in both the appeals.) A. V. Vishwanatha Stistri
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