2002 (4) TMI 39 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Roza Trust is a wakf and the properties at Rasulabad, Vasna, Isanpur, and Sarsa are wakf properties.
2. Whether the income of the Roza Trust is eligible for exemption under section 11 of the Income-tax Act, 1961.
3. Whether the actual expenditure on the maintenance of the Sajjadanashin and his family not exceeding Rs.30,000 a year should be included in the income of the Roza Trust.
4. Whether the judgment of the Bombay High Court in First Appeal No. 188 of 1952 operates as res judicata in the present case.
5. Whether the properties at Rasulabad, Vasna, Isanpur, and Sarsa belong to the Roza Trust or the individual Sajjadanashin.

Issue-wise Detailed Analysis:

1. Whether the Roza Trust is a wakf and the properties at Rasulabad, Vasna, Isanpur, and Sarsa are wakf properties:
The Tribunal concluded that the lands in question were wakf properties belonging to the Roza Trust. The Tribunal took into consideration historical records, including the Sanad granted by Aurangzeb, which assigned six villages for the maintenance of the tomb and its custodian, and found that there was dedication of these lands for charitable and religious purposes. The Tribunal held that the primary and dominant purpose of the grant was public religious and charitable, and the maintenance of the Sajjadanashin was incidental to the primary object of the wakf.

2. Whether the income of the Roza Trust is eligible for exemption under section 11 of the Income-tax Act, 1961:
The Tribunal held that the income of the Roza Trust was eligible for exemption under section 11 of the said Act, provided the conditions mentioned therein were fulfilled. The Tribunal restored the matter to the Income-tax Officer to assess the income of the lands as the income of the Roza Trust and to grant the benefit under section 11 subject to the fulfilment of the conditions mentioned therein.

3. Whether the actual expenditure on the maintenance of the Sajjadanashin and his family not exceeding Rs.30,000 a year should be included in the income of the Roza Trust:
The Tribunal held that the actual expenditure on the maintenance of the Sajjadanashin and his family not exceeding Rs.30,000 a year would not be included in the income of the Roza Trust. However, it was held that the Sajjadanashin receives such income by reason of his office, and any monetary receipt in the hands of a person by reason of his office was the income in his hands and was taxable.

4. Whether the judgment of the Bombay High Court in First Appeal No. 188 of 1952 operates as res judicata in the present case:
The Tribunal held that the decision of the Bombay High Court in First Appeal No. 188 of 1952 did not operate as res judicata because the Roza Trust was not represented in those proceedings, and the question whether the properties were public trust properties was not before the court. It was held that Saiyed Musamiya Razvi was not prevented from taking up the stand that the properties in question belonged to the Roza Trust.

5. Whether the properties at Rasulabad, Vasna, Isanpur, and Sarsa belong to the Roza Trust or the individual Sajjadanashin:
The Tribunal, on its own appreciation of the evidence on record, came to the conclusion that the properties in question belonged to the Roza Trust and, therefore, its income was assessable in the hands of the Roza Trust. The Tribunal did not blindly rely upon the findings given by the Charity Commissioner and made its own assessment of the material on record for reaching the said conclusion. The Tribunal held that the evidence regarding the establishment of the wakf was so predominant that inconsistent conduct of Saiyed Musamiya Razvi or his ancestors cannot displace the existence of the wakf.

Conclusion:
The Tribunal's findings were upheld, and it was concluded that the Roza Trust is a wakf, and the properties at Rasulabad, Vasna, Isanpur, and Sarsa are wakf properties belonging to the Roza Trust. The income of the Roza Trust is eligible for exemption under section 11 of the Income-tax Act, 1961, subject to the fulfilment of the conditions mentioned therein. The actual expenditure on the maintenance of the Sajjadanashin and his family not exceeding Rs.30,000 a year should not be included in the income of the Roza Trust but is taxable in the hands of the Sajjadanashin. The judgment of the Bombay High Court in First Appeal No. 188 of 1952 does not operate as res judicata in the present case.