Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7
PETITIONER:
MAHANT SRI SRINIVAS RAMNUJ DAS, MAHANT OF EMAR MATH, PURI
Vs.
RESPONDENT:
THE AGRICULTURAL INCOME TAX OFFICER, PURI & ANR.
DATE OF JUDGMENT12/09/1978
BENCH:
TULZAPURKAR, V.D.
BENCH:
TULZAPURKAR, V.D.
BHAGWATI, P.N.
PATHAK, R.S.
CITATION:
1978 AIR 1736 1979 SCR (1) 656
1978 SCC (4) 315
ACT:
Orissa Agricultural Income Tax Act, 1947, S. 8(1),
whether suffers from the vice of discrimination and as such
hit by Art. 14 of the Constitution- Scope of 8(1). 9 and 16
of the Act.
HEADNOTE:
The appellant is the Mahant of Emhar Math of Puri which
is an ancient Public Hindu Religious Trust. Being a trustee,
the appellant has been assessed in the status of an
"individual" under the Orissa Agricultural Income Tax Act,
1947 for the assessment years 1948-49 to 1967 68 in respect
of the income derived from agricultural lands owned by the
trust. These assessments were made after granting the
exemption under s. 8(1) of the Act which provides that "any
sum derived from land held under such trust and actually
spent for the said purpose (charitable or religious
purposes) shall not be included in the total agricultural
income of such assessee."
The appellant challenged the constitutional validity of
s. 8 (1) of the Act under which the assessments were made
principally on the ground that s. 8(1) was discriminatory
and hit by Art. 14 of the Constitution, in as much as under
the said provision, in respect of non-public muslim trusts
created for religious or charitable purposes the exemption
contemplated therein was con fined to such agricultural
income or was actually spent for the public purposes of
charitable or religious nature, while in the case of muslim
trusts (Waqfs) the entire agricultural income whether spent
for charitable or religious purpose or not, was exempt from
the operation of the Act under s. 9 of the Act. The Orissa
High Court, negatived the said contention on an examination
of the provisions of Sections 8 and 9 in the context of the
scheme of the Act and dismissed the Writ Petition.
Dismissing the appeal by special leave the Court.
^
HELD: ( 1 ) S. 8 ( 1 ) of the Orissa Agricultural
Income-tax Act, 1 947 is free from the vice of
discrimination under Art. 14 of the Constitution and the
said provision is perfectly valid and constitutional.
[663 G-Hl
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7
(2) The scheme of the Act is that under the charging
provision agricultural income-tax is levied on the total
agricultural income of the previous year of every assessee
subject to the exemption which have been provided for under
Sections 8, 9 and 16.
[661 C-D]
The legislative intent of granting of limited exemption
is brought out by Sections 8(1) and 16 of the Act. Whereas
exemption in regard to the amount actually spent for
charitable purposes under S. 8(1) is in relation to the
agricultural income of a public charitable trust, the
exemption of similar nature and extent contemplated by s. 16
is in regard to the agricultural income of any assessee who
may not be a trustee owning lands under a public charitable
trust, in other words, in either case, the exemption is
confined to such part of the agricultural income which is
actually spent. by the assessee f. charitable purposes.
[661 D-E]
657
(3) Section 9 of the Act, in terms, says that the
exemption thereunder is confined to Muslim Trusts "referred
to in s. 3 of the Musalman Waqf Validating Act, 1913". S. 3
of the Validating Act refers only to muslim trusts which are
in the nature of Waqf-alal-aulad. The exemption in s. 9 of
the Act, therefore clearly applies only to Muslim Trusts
which are in the nature of Waqf-alal-aulad. The marginal
note to s. 9 as well as the proviso to the section make this
clear.
[662 B, 633 B C]
If that be so, then all muslim trusts other than Waqf-
alal-aulad squarely fall under s. 8 ( I ) and to all such
waqfs the limited exemption contemplated therein would
apply. If that be so, the gravamen of complaint that all
waqfs (Muslim Trusts) other than waqf-alal-aulad are
receiving favourable treatment as against non-Muslim public
charitable trusts must fall to the ground.
[663 C, E]
As regards Muslim trusts which are in the nature of
waqf-alal-aulad which alone are covered by s. 9 the proviso
clearly shows that the share of the beneficiary under such a
trust far from being exempted is brought tb tax and the tax
is made realisable from the mutawali and read with the
proviso the main provision really confines the benefit of
exemption only to ultimate illusory or remote public
charitable or religious purpose an(l is thus completely
consistent with the object and scheme of the Act.
[663 F-G]
Fazlul Rabbi Pradhan v. State of West Bengal & ors AIR
1965 SC 1722, applied.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1 770 of
1972.
Appeal by Special Leave from the Judgment and order
dated 30th November, 1971 of the Orissa High Court in O.J.C.
No. 48 of 1968.
P. K. Chatterjee and Rathin Dass for the Appellant.
S. V. Gupte, Attorney General and G. S. Chatterjee for
the Respondent.
The Judgment of the Court was delivered by
TULZAPURKAR, J.-The short question raised in this
appeal by special leave is whether s. 8(1) of the Orissa
Agricultural Income Tax Act, 1947 suffers from the vice of
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7
discrimination and as such hit by Art. 14 of the
Constitution ?
The appellant is the Mahant of Emar Math at Puri, which
is an ancient public Hindu Religious Trust. The trust owns
considerable endowed properties both agricultural and non-
agricultural. After the passing of the Orissa Agricultural
Income Tax Act, 1947 (hereinafter called ’the Act’), the
appellant as a trustee has been assessed in the status of an
’individual’ under the Act for the assessment -years 1948-49
to 1967-68 in respect of the income derived from
agricultural lands owned by the trust. It appears that these
assessments have been made after granting the exemption
under s. 8(1) of the Act which provides that "any sum
derived from land held under such trust and actually spent
for the said purposes (charitable or
658
religious purposes) shall not be included in the total
agricultural income of such assessee". By a Writ Petition
No. 48 of 1968, filed under Arts. 226 and 227 of the
Constitution, the appellant challenged the constitutional
validity of s. 8(1) of the Act under which the assessments
were made principally on the ground that s. 8(1) was
discriminatory and hit by Art. 14 of the Constitution
inasmuch as under the said provision in respect of non-
Muslim public trusts created for religious or charitable
purposes the exemption contemplated therein was confined to
such agricultural income as was actually spent for the
public purposes of charitable or religious nature while in
the case of Muslim trusts (wakfs) the entire agricultural
income, whether spent for charitable or religious purposes
or not, was exempt from the operation of the Act under s. 9
of the Act. The contention was refuted on behalf of the
respondents. On an examination of the provisions of ss. 8
and 9 in the context of the scheme of the Act the Orissa
High Court negatived the said contention and dismissed the
Writ Petition on November 30, 1971. The appellant has come
up in appeal to this Court.
Since counsel for the appellant raised the self-same
contention before us in support of the appeal it will be
desirable to set out the provisions of ss. 8 and 9 of the
Act in order to appreciate his submissions on the point.
Section 8 runs thus:
"8. Exemption of charitable or religious trusts:-
(1) Where the assessee is a trustee and the trust under
which he holds the property is a trust, created for
public purposes of a charitable or religious nature,
any sum derived from land held under such trust and
actually spent for the said purposes, shall not be
included in the total agricultural income of such
assessee.
(2) In this section purposes of a charitable
nature include relief of the poor, education, medical
relief and advancement of any other object of general
public utility."
Section 9 runs thus:
"9. Exemption of Wakf-alal-aulad. -All
agricultural income of Muslim trusts referred to in
section 3 of the Musalman Wakf Validating Act, 1913,
created before the commencement of this Act, shall be
excluded from the operation of this Act:
Provided that the share of a beneficiary under a
trust under the aforesaid Act, commonly known as Wakf-
alal
659
aulad, shall not be exempted and the tax may be
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7
realised from the mutawali and the basis of taxation
shall be the share of each beneficiary.
Explanation.-For the purposes of this section, a
beneficiary means the settler, his family, children and
descendants."
Since s. 9 refers to Muslim trusts ’referred to in section 3
of the Musalman Wakf Validating Act, 1913’, it would be
proper to set out the provisions of s. 3 of the Musalman
Wakf Validating Act, 1913. Section 3 of that Act runs ac
follows.-
"3. Power of Mussalmans to create certain wakfs.-
It , shall be lawful for any person professing the
Mussalman faith to create a wakf which in all other
respects is in accordance with the provisions of
Musalman law, for the following among other purposes:-
(a) for the maintenance and support wholly or
partially of his family, children or descendants,
and
(b) where the person creating a wakf is a Hanafi
Mussalman, also for his own maintenance and
support during his life-time or for the payment of
his debts out of the rents and profits of the
property dedicated:
Provided that the ultimate benefit is in such
cases expressly or impliedly reserved for the poor or
for any other purpose recognized by the Mussalman law
as a religious, pious or charitable purpose of a
permanent character."
Mr. Mukherjee for the appellant contended that the
exemption contemplated by s. 8(1) of the Act is confined
only to such part of the income derived from agricultural
lands held under a public charitable or religious trust as
is actually spent for the charitable or religious purposes
while under s. 9 all agricultural income of Musalman trusts
(wakfs) irrespective of whether the same is spent on public
purposes of charitable or religious nature or not is exempt
from the operation of the Act; in other words in the matter
of granting exemption between the agricultural income of two
types of public trust created for charitable or religious
purposes, the Act has practised hostile discrimination
against agricultural income of non-Muslim public trusts, the
classification having no reasonable nexus with the object
sought to be achieved by the statute which is to tax
agricultural income derived from lands and to exempt the
income so derived
660
by a public charitable or religious trust. According to him
though s. 9 refers to all agricultural income of Muslim
trusts "referred to in s. 3 of the Musalman Wakf Validating
Act, 1913, (Act VI of 1913), the wakfs contemplated by s. 3
of the said Act (Act VI of 1913) include not merely Wakf-
alal-aulad but also other wakfs where property has been
permanently dedicated for any purposes recognised by the
Musalman Law as religious, pious or charitable and this, he
argued, becomes clear from sub-clause (a) of s. 3 which
speaks of wakf created by a Muslim for the maintenance and
support wholly or partially of his family, children or
descendants; in other words, according to Mr. Mukherjee, s.
9 of the Act is not confined to Muslim trusts known as wakf-
alal-aulad but is applicable to all wakfs and, therefore, in
case of wakfs other than wakf-alal-aulad the exemption
granted by s. 9 of the Act which is in respect of all
agricultural income must be regarded as discriminatory as
against the exemption granted by s. 8(1) of the Act. He,
therefore, urged that s. 8(1) which grants a limited
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7
exemption would be violative of Art. 14 of the Constitution.
On the other hand, the learned Attorney-General appearing
for the respondents contended that s. 9 is confined to
Muslim trusts commonly known as wakf-alal-aulad and all
other Muslim trusts are covered by s. 8(1) of the Act with
the result that to all such Muslim trusts, other than wakf-
alal-aulad, the limited exemption is applicable. He urged
that wakfs-alal-aulad do stand in a class by themselves and
as such have been dealt with by s. 9 in keeping with the
objective of the Act. He further urged that sections 8(1), 9
and 16 showed the scheme of the Act and if these provisions
were considered in light of the main objective of the
enactment it was clear that s. 8(1) could not be held to be
discriminatory or violative of Art. 14.
Before considering the rival contentions touching the
constitutional validity of s. 8(1) of the Act it would be
proper to keep in mind the main objective as well as the
scheme of the Act, particularly in regard to the charging
provision and the provisions dealing with exemptions
contained therein. The Act, as its preamble would indicate,
has been put on the Statute Book with the object of imposing
a tax on agricultural income derived from lands situated in
the State of Orissa. Section 2(a) defines the expression
"agricultural income" comprehensively. The charging
provision is contained in s. 3 which provides that
agricultural income tax at the rate or rates specified in
the Schedule shall be charged for each financial year in
accordance with and subject to the provisions of this Act on
the total agricultural income of the previous year of every
person; the proviso, however, states that no agricultural
income tax shall be
661
charged on the agricultural income of the Central Government
or any A State Government or any local body. Section 5
prescribes limits of taxable income while s. 6 prescribes
the method and manner of determining the agricultural income
of every assessee. Then come the two material provisions
dealing with exemptions, namely, ss. 8 and 9 which have been
reproduced above. The other material section which deals
with exemption is s. 16 which provides that agricultural
income tax shall not be payable by an assessee in respect of
any amount actually spent by him out of his total
agricultural income for the benefit of the people of the
State or for charitable purposes, but this exemption is
subject to the proviso that agricultural income tax shall be
payable on the remainder of the total agricultural income of
such assessee at the rate which would have been applicable
if such deduction had not been made. It is unnecessary to
refer to other provisions as they are not material for our
purposes. The scheme if the Act, as disclosed by the
aforesaid provision, is that under the charging provision
agricultural income tax is levied on the total agricultural
income of the previous year of every assessee subject to the
exemptions which have been provided for under ss. 8, 9 and
16. It is also clear that whereas the exemption in regard to
the amount actually spent for charitable purposes under s.
8(1) is in relation to the agricultural income of a public
charitable trust, the exemption of similar nature and extent
contemplated by s. 16 is in regard to the agricultural
income of any assessee who may not be a trustee owing lands
under a public charitable trust; in other words, in either
case the exemption is confined to such part of the
agricultural income which is actually spent by the assessee
for charitable purposes. The legislative intent of granting
such a limited exemption having been thus clearly brought
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7
out by ss. 88(1) and 16 of the Act, the question would be
whether by enacting s. 9 the Legislature really intended to
accord or has actually accorded favourable treatment to
Muslim trusts in the matter of granting exemption in the
manner suggested by counsel for the appellant ?
Having regard to the submissions made by counsel for
the appellant the question raised for determination may be
formulated thus: Whether ss. 8 and 9 while providing for
exemption to charitable or religious trusts discriminate
between agricultural income derived from lands held under
non-Muslim public trusts and those held under Muslim trusts
and accord to the latter a favourable treatment as against
the former by confining the exemption in the former case to
such income as has been actually spent for public purposes
of charitable or religious nature ? In other words is s.
8(1) which confers a limited exemption as compared to s. 9
hit by Art. 14 ? It
662
has not been disputed before us that Muslim trusts known as
Wakf-alal-aulad constitute a distinct class from other types
of wakfs but the discrimination complained of is founded
upon plea that s. 9 of the Act covers all Musalman wakfs and
not merely wakfs known as the Wakf-alal-aulad and,
therefore, it will be necessary to examine the provisions of
s. 9 in order to ascertain whether the plea that it covers
all Musalman wakfs is warranted or not. Section 9 in terms
says that the exemption thereunder is confined to Muslim
trusts "referred to in s. 3 of the Musalman Wakf Validating
Act, 1913" and the question is what wakfs are referred in s.
3 of the Musalman Wakf Validating Act, 1913 (hereinafter
called ’the Validating Act’). The Validating Act, as we
shall indicate presently, was enacted only for the purpose
of validating wakfs in the nature of wakf-alal-aulad: As has
been pointed out by this Court in Fazlul Rabbi Pradhan v.
State of West Bengal and others,(1) wakfs (which were
primarily family settlements in which the benefits to
charity or religion were either illusory or postponed
indefinitely while the property so dedicated was being
enjoyed from generation to generation by the family of the
wakf were regarded as opposed to the rule against perpetuity
as contained in the Indian Succession Act and the Transfer
of Property Act. The leading decision of the Privy Council
in that behalf rendered in Abul Fata Mahomed Ishak and
others v. Russomoy Dhur Chowdhery and others,(2) caused
considerable dissatisfaction in the Muslim community in
India resulting in a representation being made to the
Government of India and consequently the Validating Act came
to be enacted with the primary Object of removing the
difficulties created by that decision. The preamble of the
Act makes this very clear. Section 3 declares the right of a
person professing Musalman faith to create a wakf (which in
all other respects is in accordance with the provisions of
Musalman law) for the maintenance and support wholly or
partially of his family, children or descendants and in the
case of a Hanafi Mussalman also for his own maintenance and
support during the life time or for payment of his debts out
of the rents of the property dedicated provided that the
ultimate benefit is in such cases expressly or impliedly
reserved for the poor or for any other purpose recognised by
the Musalman law as a religious, pious or charitable purpose
of a permanent character. Section 4 also declares that no
such wakf as is referred to in s. 3 shall be deemed to be
invalid merely because of remoteness of benefit to charity.
In fact, s. 3 s declaratory of a right of a Muslim to
(1) A. I. R. 1965 SC 1722.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7
(2) 22 Indian Appeals 76.
663
create a valid wakf of the type described therein and the
proviso makes it clear that but for the reservation of
ultimate benefit to charity that has to be made, such family
settlement (private wakfs) would be invalid. It is
conceivable that a deed or instrument of wakf may be a
composite one, partly incorporating public wakf and partly
private wakf but s. 3 of the Validating Act unquestionably
refers to that part of the instrument which incorporates a
private n wakf-wakf-alal-aulad, the vaildity of which must
depend upon whether in that part of the instrument the
ultimate benefit is expressly or impliedly reserved for
charitable or religious purposes or not. It is thus clear
that s. 3 of the Validating Act refers only to Muslim trusts
which are in the nature of wakf-alal-aulad. The exemption in
s. 9 of the Act, therefore, clearly applies only to Muslim
trusts which are in the nature of wakf-alal-aulad. This is
also clear from the marginal note to s. 9 as well as the
proviso to the section. If that be so then all other wakfs
would squarely fall under s. 8(1) and to all such wakfs the
limited exemption contemplated therein would apply. Even if
the instrument of wakf is a composite one partly
incorporating a public wakf and partly a private wakf that
part which deals with public wakf will fall under s. 8(1)
and the other part will be covered by s. 9, for, the
language d s. 8(1) is wide enough to include such a deed to
the extent that it incorporates a public wakf. In other
words, Muslim trusts i.e. wakfs other than wakf-alal-aulad
would be covered by s. (8) (1) and to such wakfs the limited
exemption contemplated by s. 8(1) would apply. If that be
so, the gravamen of complaint that all wakfs (Muslim trusts)
other than wakf-alal-aulad are receiving favourable
treatment as against non-Muslim public charitable trusts
must fall to the ground.
As regards Muslim trusts which are in the nature of
wakf-alal-aulad which alone are covered by s. 9, the proviso
clearly shows that the share of the beneficiary under such a
trust far from being exempted is brought to tax and the tax
is made realisable from the mutawali and read with the
proviso the main provision really confines the benefit or
exemption only to ultimate illusory or remote public
charitable or religious purpose and is thus completely
consistent with the object and scheme of the Act.
In the result, we are clearly of the view that s. 8(1)
of the Act is free from the vice of discrimination under
Art. 14 of the Constitution and the said provision is
perfectly valid and constitutional. The appeal is.
therefore, dismissed with costs.
S.R. Appeal dismissed.
664