GUL MUHAMMAD KHAN, J.-This tax reference has been made by the Income tax Appellate Tribunal Pakistan. Lahore, at the instance of the assessee. It pertains to the assessment you 1962-63 and arises out of the order dated 30th April, 1970 of the Tribunal. It raises the following question of law : "Whether on the facts and in the circumstances of the case the Appellate Tribunal was justified in bolding that the entire income from the properties was assessable in the hand of the applicant ?'--
2. The petitioner' is one of the sons of Khan Bahadur Sheikh Muhammad Naqi, who had, ride deeds dated 20th April, 1931 and 16th March, 1943 created a Waqf- Alal-Aulad of his properties mentioned therein in favour of his sons grad than descendants, hater, on 22nd December, 1950, a declaration as made by K. B. Sh. Muhammad Naqi by which he divided his property in three categories 'A', 'B' and `C' arid apportioned their income as under :- ---A'
(i) Sheikh Muhammad NaqiRs. 8,400 per year before distribution to sons.
(2) Sh. Fayyas-ad-Din.26 % of the balance not income.
(3) Sh. Saeed-ud-Din.23 % of the balance not income.
(4) Sh. Rasheed-ud-Din.17 % of she balance get income.
(5) Sh, Nisar Ahmad.14% of the balance not income.
80 %. ---B---
(1) Sh. Muhammad Siddiq-/8/-
(2) Mst. Anwari Begum -/4/-
(3) Mst. Goti Ara Begum -/4/- ---C'
Properties shown to Schedule 'C' continued to remain that of K. & Sheikh Muhammad Naqi: Subsequently, by an award, which had been made a rule of the Court, on 22nd July, 1957. The learned Senior Civil Judge, Lahore, appointed the assesses as the sole Mutwalli of the properties as mentioned in that award for the benefit of his own branch of beneficiaries. He was being assessed, however, as an individual for the entire income received by him. .
3. On 27th December, 1961, the aasessee by virtue of a deed of declaration, the not income of' the properties in his charge between himself and his only son Dr. S. A. Rahman in the ratio of 60 and 40 respectively. Later, in his income-return for the charge year 1962-63 the assesses declared a sum of Its. 15,485 as his share of the income of the immovable properties being held by him as Mutwalli.
The Income-tax Officer, however, vide his order dated 8th December, 1966, did not accept the contention of the assesses that the assignment of the 40 % of the income to his son absolved him of tax liability to that extent. He, therefore, brought to tax the entire income a having accrued to him. Aim appeal by the assesses hailed before the Appellate Assistant Commissioner and was dismissed on 29th June, 1968. A second appeal bore the Tribunal also failed with the following observations : "Who learned counsel appearing for the appellant argues that the father divested himself of 40 % of his income in favour of his son and this was according to the intention of the creator of the WW, who wanted the income of the properties to be utilised for the benefit of members of family of the Waqf. Bat when confronted with the question as regards the authority for creating additional conditions in the We deed he could not come up with any satisfactory reply. ,The very fad that s part of the income has been allocated to the son, itself proves beyond any shadow of doubt that the income initially belonged to the assesses appellant who merely paid a part of his income to his son but this payment war certainly after tax was attracted. The Insome-tas Off, was therefore, perfectly Justified in assessing the entire Income in the hands of the assessee . We have no reason to interfere with the orders of the officers below."
4. It is contended by the learned counsel for the petitioner teat the assesses was liable to be taxed on only 60 % of the income as the rang had already been validly assigned in pursuance to a deed of 4edatisdoas. He aged to section 40 of the Income-tax Apt and C. I. T. v. C. N Pathak ((1971) 23 Taxation 129) brat the same does not apply to this caw. A reference to third proviso 0o section 16(l)
(c) is also not relevant as the asseesee is neither a settlor or a disponer. The learned counsel Won referred to Raja Bejoy Singh Budharia v. C. I. T ((1933) 1 I T R 135) and C.I. T v. Abubaker Abdul Rehman ((1930) 7 I T R 139) but the same would set be attracted to the case in hand.
5. It may be noted here that the petitioner. According to the Waqf deed is one of the Mutwallis.
According to the award, which may at the most be considered to be an arrangement inter se the Mutwallis, the assessee had to manage a definite portion of the property as a Mutwalli. The case is, therefore, specifically covered by the provisions of section 41, the relevant portion of which reads as under :- "In the case of income profits or gains chargeable under this Act------------. Any trustee or trustees appointed under a trust declared by a duly executed instrument In writing whether testamentary or otherwise (including the trustee or trustees under any Watt deed which is valid under the Mussalman Wakf Validating Act, 1913) are entitled to receive on behalf of any person, the tax a shall be levied upon and recoverable from such. ------... Trustee or trustees in the like manner and to the same amount as it would be leviable upon and recoverable from the pawn on whose behalf such income, profits or gains are receivable and all the provisions of this Act shall apply accordingly."
6. The nest paint is whether the assessee was liable to be taxed for the entire income in his hands or was to be taxed only for that portion was retained by him under the deed ofThe learned counsel referred to page 259 of the Jurisprudence by Solmond, 1966 Edition. He also drew our attention to section 6 of the Transfer of Prop" Act. It was stated that the deed of declaration by the petitioner created a lawful assignment and, therefore, the same was valid under the income-tax Act to attract an exemption of that portion of the income in the bonds of the assesses. Reference was also made to para. 202 of Mohammadan Law by Mulla, 15th Edition.
7. We, however, do not agree that tie contention being raised by the learned counsel for the assessee is in any way relevant. The question involved is not whether the deed of declaration validly assigned a portion of the income to the petitioner's son but whether the arms attracted an exempt. 3n under the Income-tax Act to that extent ? As discussed above the case of the petitioner can be brought under section 41 of the Income-tax Act. The finding of fact given by all the Income- tax authorities is that the entire income accrued to the assessee, who could spend it for his well being and for his line of the family members. The Appellate Assistant Commissioner also held that the assessee was not bound in lair to give any share of the income to his son. 11 is the assessor himself who divested himself of the share of the income to give the same to his son, In this view of the matter the assesses is liable to be taxed for the entire income as his case may at the most fall under the first proviso to section 41. No other provision of the Income-tax Act will, however, be attracted. The petitioner thus applied a part of his income for his son. It is, therefore, a case of application of income and not of a valid or legal assignment attracting exemption under the law.
The question referred to us is, therefore. Answered in the affirmative. The petitioner shall pay the cots of this petition.