Commissioner of Wealth Tax vs Bargah-e-Fatima Wakf

Syed Shah Mohammed Quadri, J.—In this petition u/s 27(3) of the Wealth-tax Act, 1957 (hereinafter referred to as "the Act"), the Revenue prays for a direction to the Income Tax Appellate Tribunal, Hyderabad, to state a case and refer the following questions to this court for opinion :

"(1) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in holding that where the trust is for the benefit of persons of Shia sect of Muslims in general, without specific names, provisions of section 21(4) are not applicable ?

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in holding that for applying section 21(4), the beneficiaries should be known persons with their shares indeterminate or unknown ?

(3) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal ought the have held that a finding whether the assessee was engaged in religious activities was not called for, since the same issue was concluded by the Wealth-tax Officer by denying the exemption u/s 5(1)(i), and cannot be raised in revision proceedings u/s 25(2) and consequential appeal to the Income Tax Appellate Tribunal ?"

The assessee is a wakf. For the assessment years 1979-80 to 1981-82 returns were filed by the assessee and exemption was claimed u/s 5(1)(i) of the Act. The Wealth-tax Officer disallowed the claim for exemption, completed the assessment and assessed tax as specified in Part I of Schedule I to the Wealth-tax Act. In exercise of the power conferred u/s 25(2) of the Act, the Commissioner revised the assessment and ordered that the assessee should be assessed u/s 21(4) of the Act. On appeal by the assessee, the Income Tax Appellate Tribunal held that the trust is not for any known beneficiary, but the trust is for the benefit of persons of the Shia sect of Muslims and that section 21(4) of the Act applies only if the beneficiaries are known persons and their shares are indeterminate or unknown. It further held that on the facts of the case, section 21(4) of the Act was not applicable. Accordingly, the order of the Commissioner passed u/s 25(2) of the Act, was set aside and the appeal was allowed. The Revenue filed an application u/s 27(1) of the Act to refer the abovesaid questions for the opinion of this court. The Tribunal felt that they are purely questions of fact and dismissed the application.

In our view, the question-whether, on the facts and in the circumstances of the case, section 21(4) of the Wealth-tax Act is applicable is a question of law. We, therefore, direct the Income Tax Appellate Tribunal to refer the following question to this court :

"Whether, on the facts and in the circumstances of the case, section 21(4) of the Wealth-tax Act is attracted ?"

and state the case. In respect of the other questions the wealth-tax case is dismissed.

The wealth-tax case is accordingly ordered.