H.N. Seth, J.
1 . At the instance of the Commissioner of Wealth-tax, the Income-tax Appellate Tribunal, has referred the following question for the opinion of this court:
'Whether, on the facts and in the circumstances of the case and on a proper construction of the wakf deed dated March 24, 1950, it could be said that no life interest was created in favour of the assessee-mutawalli so as to make the value thereof liable to wealth-tax in the hands of the assessee ?'
2. The assessee is the daughter of Raja Abdul Hasan Khan of Bilari. After his death, she inherited all the properties left by him. In respect of some of the properties received by her by way of inheritance, the assessee created a wakf in the name of Raja Abdul Hasan Khan on August 25, 1950, which was duly registered. The wakf deed provided that the assessee was to remain the mutawalli of the wakf till her death. After her death her eldest son, Amir Mohd. Khan, was to be the mutawalli. Thereafter, the eldest son of Amir Mohammad Khan and his heir in the male line of descent, generation after generation, were to be the mutawallis. In case of break, mutawalliship was to devolve on the male heir of the assessee's another son, and if there was a break in that line also the mutawalliship was to be transferred to her other male heirs. Every mutawalli was to be the follower of the faith of Shia-Asan-Ashari and if he did not follow that faith he was to be deprived of mutawalliship. In case where a minor became a mutawalli then during his minority or incapacity the duties of mutawalliship were to be performed by a committee constituted by three members. The method for constituting the committee was also laid down in the deed. The deed, further provided that it was incumbent on the mutawalli to discharge the duties diligently and to avoid everything that was against the aims and objects of the wakf. For rendering service as provided in the wakf deed the mutawalli was to get 10% of the income of the wakf as remuneration. He was also entitled to charge travelling expenses if he was required to undertake a journey in connection with the discharge of his duties. During the period of minority or incapacity of a mutawalli, he was to get 2/3rds amount of the remuneration which was normally payable to him. The balance 1/3rd remuneration was to be paid to the guardian or naib mutawalli or any other person who discharged the duties of the mutawalli. In case more than one person acted as mutawalli the said l/3rd amount was to be distributed equally amongst them. The remuneration which was payable to the wakif, namely, Kani Abid Sahiba, was deemed to be endowed for maintaining male and female off-springs of her according to her directions, saving of course the expenses due for the maintenance of the parents and after her death the incoming mutawalli was to be entitled to have the remuneration for their personal use. The expenses to be met from the usufruct of the wakf property were as follows:
(a) Government demands which have been legally imposed were to be met first.
(b) The collection and management charges were to be met.
(c) After meeting these two expenses, the remuneration of the mutawalli was to be deducted.
(d) After deducting these three types of expenses, the remaining amount would be held to be the profits of the wakf which was to be spent according to the rates mentioned in all the beads to meet the aims and objects of the wakf.
3. The net profit of the wakf was to be spent on the following basis:
(a) 40% of the profit of the wakf was to be spent on Azadari and Taziadari.
(b) 5% of the income was to be spent on inauguration of happy meetings in connection with birthday anniversaries of Chaharda Masoomin, functions on Idul Fitar, Iduz-Zuha, Id-e-Ghadeer, Id-e-Mubahila, Nauroz, Shabebarat Nazar offerings of the 22nd and 27th of Rajab, etc.
(c) 12% of the income was to be spent for Fatihas, recital of Quran, etc.
(d) 7% of the income was to be spent for preservation, maintenance, repairs and extension of those buildings in which the ceremonies were held.
(e) 25% of the income was to be spent for assistance of educational purposes, subscription to educational institutions, hospitals, etc.
(f) 8% of the income was to be spent for assistance, help, monetary benefits of sufferers from unforeseen misfortunes and accidents, natural calamities, litigation expenses, and protection of the rights of the wakf.
(g) 3% of the income was to be spent for spiritual gain, good deeds, works calculated to benefit in the next world and acts for eternal gainsfor the executant.
4. In this case we are concerned with the nature of the right which the assessee had in respect of 10% income of the property which she was entitled to receive in her capacity as a mutawalli. While making the assessment, the Wealth-tax Officer observed that the assessee was a mutawalli of the wakf and as per Clause 7 of the deed, 10% of the income was to belong to her, she had an interest in the property as mutawalli to the extent of 10% of its net income. He capitalised the value of the remuneration on the basis of Parks' Principles and Practice of Valuation and worked it out to a figure of Rs. 61,160, For this purpose he considered the annual value of the remuneration to be Rs. 5,500.
5. In appeal, the Appellate Assistant Commissioner referred to the deed of wakf in detail and observed that the amount receivable by the assessee was not a fixed annuity but remuneration at the rate of 10% of the annual income of the wakf. The income of the wakf was not constant and, therefore, the remuneration also fluctuated. After referring to Section 2(m) of the Wealth-tax Act, which denned 'net wealth', and Section 2(e), which denned 'assets', the Appellate Assistant Commissioner came to the conclusion that the word 'property' had a wide import and it included every possible interest which a person could acquire, hold or enjoy. The right of the assessee to receive 10% of the income of the wakf was certainly a property in her hands and as the enjoyment of the property was not limited to six years it would form part of her assets. The Appellate Assistant Commissioner, therefore, came to the conclusion that the value of such assets was liable to be included in the wealth-tax assessment of the assessee. He upheld the order made by the Wealth-tax Officer.
6. The assessee then went up in appeal before the Tribunal. After considering the provisions of the wakf deed, the. Tribunal came to the conclusion that the mutawalli had no property or interest in the wakf property. The departmental authorities were, therefore, not justified in treating the right to receive remuneration as property or interest in the property. They erred in valuing the same and in adding it to the net wealth of the assessee. In the result it directed the deletion of an amount of Rs. 61,160 from the wealth of the assessee. The Commissioner of Wealth-tax then moved the Tribunal and at his instance the Tribunal has referred the aforementioned question for the opinion of this court.
7. According to Mohammedan law, in the case of a wakf, all rights of ownership to the property pass out from the settlor and vest in God. So the mutawalli or the Sajjadanashin has no right or interest in the wakf property and the property does not vest in him. He is not a trustee in the technical sense. He is merely its superintendent or a manager. In the case of Sri Vidya Varuthi Thirtha Swamigal v. Baluswami Ayyar A.I.R. 1922 P.C. 123, 127, Mr. Justice Ameer Ali, while dealing with the rights of a wakif under a Mohammedan wakf, observed as follows:
'When once it is declared that a particular property is wakf, or any such expression is used as implies wakf, or the tenor of the document shows, as in the case of Jewan Doss Sahoo v. Shah Kubeeruddeen, [1887] 2 M.I.A. 390 that a dedication to pious or charitable purposes is meant, the right of the wakf is extinguished and the ownership is transferred to the Almighty. The donor may name any meritorious object as the recipient of the benefit. The manager of the wakf is the mutawalli the governor, superintendent or curator. In Jewan Das Sahoo's case the Judicial Committee call him 'procurator' It related to a khankha, a Mohammedan institution analogous in many respects to a mutt where Hindu religious instruction is dispensed. The head of these khankhas, which exist in large numbers in India, is called a sajjadanashin. He is the teacher of religious doctrines and rules of life, and the manager of the institution and the administrator of its charities, and has in most cases a larger interest in the usufruct than an ordinary mutawalli. But neither the sajjadanashin nor the mutawalli has any right in the property belonging to the wakf; the property is not vested in him and he is not a 'trustee' in the technical sense.'
8. The observations made by Ameer All J. in the aforesaid case were approved by the Privy Council in the case of Haji Abdur Rahim v. Narayan Das Aurora, A.I.R. 1923 P.C. 44. It is, therefore, clear that the assessee as a mutawalli did not have any interest in the property which was the subject-matter of the wakf and as such on this account neither any portion of the property nor its value could be included in the assets of the assessee liable to wealth-tax. In this connection learned counsel for the department relied upon the case of Ahmed G.H. Ariff v. Commissioner of Wealth-tax, : [1970]76ITR471(SC) . He relied upon the following observations made by the Supreme Court at page 475 :
'Once it is declared that a particular property is wakf, the right of the wakf is extinguished and the ownership is transferred to the mutawalli. . . . . .'
9. In making this observation the Supreme Court relied upon the case of Vidya Varuthi Thirtha Swamigal v. Baluswami Ayyar A.I.R. 1922 P.C. 123. We have already shown that the observations made by the Privy Council go to show that the ownership in the property is not transferred to the mutawalli. It appears that in the aforesaid observation there is a typographical mistake inasmuch as, instead of saying that the ownership of the property is transferred to the Almighty, it was mentioned that the ownership is transferred to the mutawalli. Subsequent observation made by the Supreme Court on the same page, to the following effect, brings out this mistake.
'As mentioned before, the moment a wakf is created, all rights of property pass out of the wakf and vest in the Almighty. Therefore, themutawalli has no right in the property belonging to the wakf. He is not a trustee in the technical sense, his position being merely that of a superintendent or a manager.'
10. There is, therefore, no escape from the conclusion that after the assessee made the wakf she had no right or interest left in the property made wakf of. She was not even a trustee of that property in the sense in which the expression is technically used.
11. Learned counsel for the department then contended that, as provided in Section 3 of the Wealth-tax Act, the tax is to be charged in respect of the net wealth, on the corresponding valuation date, of each individual, Hindu undivided family and company at the rate or rates specified in the Schedule. The expression net wealth has been defined in Section 2(m) as meaning the amount by which the aggregate value computed of all the assets wherever located belonging to the assessee on the valuation date including assets required to be included in the net wealth as on that date under this Act is in excess of the aggregate value of all the debts owed by the assessee on the valuation date.
12. If the right of the assessee to receive 10% of the net income of the wakf property can be described as an asset, its value will have to be included in the net wealth. The expression 'asset' has been defined in Section 2(e), as including property of every description, movable or immovable,. unless it is covered by one of the exceptions mentioned therein. The right of the assessee to receive 10 per cent. remuneration is not such a right which is covered by the exception mentioned in Section 2(e). Such a right is property and as such it had to be valued and included in the wealth of the assessee.
13. I have, therefore, to consider whether the right of the assessee to receive 10 per cent. of the net income is a right which can be described as property within the meaning of Section 2(e) of the Act. I have already held that this is not an interest in wakf property.
14. Section 3 is the charging section which provides for payment of wealth-tax in respect of the net wealth of an assessee. Section 4 describes certain assets which are to be included while computing the net wealth of the assessee. Section 5 provides that wealth-tax shall not be payable by an assessee in respect of certain assets mentioned therein. Similarly, Section 6 provides that in computing the net wealth of any person, resident or not ordinarily resident in India, certain assets are to be excluded while computing his net wealth. Section 7 then provides for a method for determining the value of the asset. According to this section the value of any asset other than cash shall be estimated to be the price which, in the opinion of the Wealth-tax Officer, it would fetch if sold in the open market on the valuation date. Sub-section (2) of that section then provides for a special method for the valuation of a business which is being carried on by the assessee. No other method for valuing an asset has been provided in the Act. It follows that, apart from cash, assets contemplated by Section 7 are such assets which are capable of being valued in accordance with the provisions of the Act. The Act provides that the assets are to be valued according to the price which, in the opinion of the Wealth-tax Officer, they can fetch, if sold on the valuation date. Only such assets are capable of being sold in open market which under the law are transferable. In view of the provisions of Section 7 of the Act, even if the expression 'property' as defined in Section 2(e) of the Act is given the widest possible meaning, still it will have to be limited to only such property which is capable of being sold in open market.
15. Section 6(dd) of the Transfer of Property Act provides that a right to future maintenance in whatsoever manner arising, received or determined cannot be transferred. In the instant case the wakf deed provides that the mutawalli's remuneration in the hands of Smt. Kaniz Abid Sahiba will be deemed to be endowed for the maintenance of her male and female offsprings. It, therefore, follows that the mutawalli's remuneration in the hands of Smt. Kaniz Abid had been secured for the maintenance of her children and others and was not transferable. Even if the right to manage the property and to receive the mutawalli's remuneration may, in a very wide sense, be considered to be property, still it would not be an asset contemplated by Section 2(e) of the Act, inasmuch as the two rights are neither transferable nor saleable.
16. In view of the aforesaid discussion, 1 hold that the right which the assessee has as a mutawalli under the wakf deed does not amount to an interest in the wakf property. Such a right is neither transferable nor is it saleable and cannot be included in the asset within the meaning of Section 2(e) of the Wealth-tax Act. It is not capable of valuation as provided in Section 7 of the Act and cannot be included in the net wealth of the assessee.
17. I, accordingly, answer the question referred to us in the affirmative and in favour of the assessee. The assessee will get the costs of this reference, which I assess at Rs. 200. Counsel's fee is also assessed at the same figure.
Pathak, J.
18. I regret I am unable to agree with my brother, Seth J, In my opinion, the right to remuneration flowing to the assessee as a mutawalli under the wakf deed constitutes an asset for the purposes of the Wealth-tax Act. Section 3 of the Wealth-tax Act charges wealth-tax in respect of the net wealth of an assessee. Section 2(m) of the Act defines 'net wealth' to mean the amount by which the aggregate value of theassets exceeds the debts owed by the assessee on the valuation date. Section 2(e) of the Act defines 'assets' as including 'property of every description, movable or immovable'. Certain exceptions have been enumerated in the Act. Therefore, excluding the exceptions, all movable and immovable property, no matter of what description, is an asset for the purposes of the Wealth-tax Act. Whether or not it is transferable does not affect the definition. Ordinarily, it may be possible to say that all property includes the right to transfer it, but because of the peculiar incidents of the property concerned or because of statutory or contractual restrictions, the potential right of the owner of the property may be abridged or excluded altogether. Nonetheless, what remains is still property. Because the right of transfer is absent does not mean that the other incidents of ownership do not continue in the property. The owner may not have the right to transfer but he may enjoy the right of possession or the right to the usufruct. In Ahmed G.H. Ariff v. Commissioner of Wealth-tax : [1970]76ITR471(SC) a case under the Wealth-tax Act, the Supreme Court pointed out that:
''Property' is a term of the widest import and, subject to any limitation which the context may require, it signifies every possible interest which a person can clearly hold or enjoy.'
19. Reference was made to Commissioner, Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of Shirur Mutt : [1954]1SCR1005 , where it was observed that there was no reason why the expression 'property' should not be extended to those well recognised types of interests which had the insignia or characteristic of proprietary interest. And so it was held that mahant-ship, although not heritable like ordinary property, was entitled to claim the protection of Article 19(1)(f) of the Constitution.
20. It has been contended for the assessee that the right to remuneration as mutawalli does not have a market value and Section 7 of the Act cannot be applied and, therefore, it is not an 'asset'. Section 7(1) provides that the value of an asset shall be estimated to be the price which in the opinion of the Wealth-tax Officer it would fetch if sold in the open market on the valuation date. It seems to me that Section 7 cannot be invoked here. Section 7 is merely concerned with the mode of valuing an asset. It in no way indicates what is an asset for the purposes of charge to wealth-tax. That is indicated by Section 3 and the definition of 'net wealth' and 'assets'. In Inland Revenue Commissioners v. Crossman, [1937] A.C. 26; 2 E.D.C. 537, 551 (H.L.) the House of Lords was required to consider the valuation of shares burdened by a restriction on their transferability. The provision under consideration was Section 7(5) of the Finance Act, 1894, which provided that:
'The principal value of any property shall be estimated to be the price which, in the opinion of the commissioners such property would fetch if sold in the open market at the time of the death of the deceased.'
21. The limitation on the transferability of the shares was made the basis of an argument for putting a different valuation on the shares from that proposed. Viscount Hailsham, Lord Chancellor, observed :
'My Lords, it seems to me that this construction involves, treating the provisions of Section 7, Sub-section (5), as if their true effect were to make the existence of an open market a condition of liability instead of merely to prescribe the open market price as the measure of value. The right to receive the price fixed by the articles in the event of a sale to existing shareholders under Sub-clause 14(a) is only one of the elements which went to make up the value of the shares. In addition to that right, the ownership of the share gave a number of other valuable rights to the holder, including the right to receive the dividends which the company was declaring, the right to transmit the share in accordance with Article 34, Sub-clauses 1, 2 and 3, and the right to have the shares of other holders who wished to realise offered on the terms of Article 34, Sub-clause 14(a). All these various rights and privileges go to make up a share and form ingredients in its value. They are just as much part of the share as the restriction upon the sale ..... But the purpose of Section 7(5). is not to define the property in respect of which estate duty is to be levied, but merely to afford a method of ascertaining its value.' (Emphasis* is mine).
22. And the Lord Chancellor referred to the words of Lord Buckmaster in Assessment Committee of the Metropolitan Borough of Poplar v. Roberts, [1922] 2 A.C. 93, 103 (H.L.):
'... so to interpret the statute would be to deal with something which was nothing but a measure of value in such a manner as completely to destroy the very object for which that measure was set up.'
23. He also referred to the example where the legislature had fixed the rateable value as the rack rent on an early tenancy and pointed out that it had long since been established that the fact that the premises could not actually be let on an yearly tenancy did not exempt it from liability for rates. In Ahmed G. H. Ariff, : [1970]76ITR471(SC) the Supreme Court affirmed that the expression 'if sold in the open market' in Section 7 of the Wealth-tax Act 'does not contemplate actual sale or the actual state of the market but only enjoins that it should be assumed that there is an open market and the property can be sold in such a market and, on that basis, the value has to be found out. It is a hypothetical case which is contemplated and the tax officer must assume that there is an open market in which the asset can be sold.'
24. In my opinion, the men; circumstance that the right to remuneration as mutawalli is not transferable does not exclude it from being considered as an 'asset' under the Wealth-tax Act.
25. I answer the question referred to in the negative, in favour of the revenue and against the assessee.
26. BY THE COURT (25-1-1972).--As we are unable to agree on the answer to the question referred by the Appellate Tribunal, we refer the following question to a third Hon. Judge for his opinion:
'Whether the right to remuneration belonging to the assessee as mutawalli under the wakf deed dated August 24, 1950, is an 'asset' within the meaning of Section 2(e) of the Wealth-tax Act, 1957 ?'
27. Let the papers of the case be laid before the Hon. the Chief justice for appropriate orders.
Satish Chandra, J.
28. (12-4-1972)-- I have heard Mr. Gopal Behari, learned counsel appearing for the department. No one has appeared on behalf of the assessee. Having heard the learned counsel and having perused the orders of Mr. Justice Pathak and Mr. Justice H. N. Seth, I find myself in agreement with the views expressed by Mr. Justice Pathak. I cannot usefully add to the reasons given by his Lordship. I would answer the question referred to me in the affirmative. Let the papers be laid before the concerned Bench with this answer.
29. BY THE COURT (4-5-1972).--In accordance with the opinion of the third Judge, we answer the question in the negative, in favour of the department and against the assessee. As no one has appeared for the assessee, there will be no order as to costs.