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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

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    (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

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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

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    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

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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

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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.

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    (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