Judgment :- The petitioner has preferred this writ petition seeking quashing of demand notices at Annexures-'J', 'K' and 'L' or in the alternative to declare Section 72 of the Wakf Act, 1995, as unconstitutional. 2. The petitioner A.R.A. Basith Saheb Charitable Trust is a private Trust located at Mysore Road, Bangalore, generally serving the poor traveling public. It is a Wakf property, basically caters to the accommodation needs for the 'travelling public' at a nominal cost and also provides space for conduct of marriages, etc., mostly to poorer sections of the society. Out of its income, it maintains the upkeep of institutions which involves considerable expenditure. Out of the net income, contribution is made to the Wakf Board in accordance with the provisions of the Wakf Act, 1995. The District Wakf Officer issued notice dated 28.9.2005 calling upon the petitioner to submit the statement of accounts for the period from 1.4.2002 to 2005, budget estimate for the year 2005-06 and demanded a sum of Rs.3,13,830/-being the provisional demand towards Wakf contribution as per Annexure-A. The petitioner furnished necessary particulars sought for and also pointed out that a sum of Rs.1,51,842/-is the excess claim made. Infact, later its Auditors pointed out that there was an error in the calculation made by them as they have taken the gross annual income instead of net annual income, which resulted in several correspondences between the parties. Again one more demand notice was issued as per Annexure-E demanding a sum of Rs.4,17,355/-. In reply to the same, the petitioner pointed out that they have already made excess payment of Rs.1,51,842/-and have requested for the aforesaid amount to be adjusted towards future dues. Thereafter, Annexure-G came to be issued claiming a sum of Rs.1,82,995/-failing which they threatened to take action for recovery of the said amount. The petitioner sent a clarification as per Annexure-H. Thereafter, after taking legal opinion, the respondents have issued the impugned demand notices contending that the petitioner is not entitled to deduct any amount towards the expenditures incurred in maintaining the Wakf under Section 72 of the Wakf Act. Aggrieved by the same, the petitioner is before this Court. 3. The petitioner sent a clarification as per Annexure-H. Thereafter, after taking legal opinion, the respondents have issued the impugned demand notices contending that the petitioner is not entitled to deduct any amount towards the expenditures incurred in maintaining the Wakf under Section 72 of the Wakf Act. Aggrieved by the same, the petitioner is before this Court. 3. The learned counsel for the petitioner contended that Explanation-I to Section 72 deals with only agricultural properties which has no application in so far as calculating the net annual income derived by the Wakf in so far as deciding percentage of contribution to be made by the Wakf. It is the Explanation-II, which is to be taken into consideration in deciding net annual income. Therefore, net annual income for the purpose of this section is the net profit derived by the Wakf, which necessarily includes deduction of all the expenditure from the net annual income of the Wakf and the contribution is to be paid on such net profit and not on net annual income. If the said explanation is to be accepted, there is no need to strike down Section 72. 4. Per contra, learned counsel appearing for the Board submitted, Explanation-I defines what the net annual income is. It also provides what are the deductions, which are permissible before the net annual income is arrived at. Beyond what is permissible under the said Explanation, no other expenditure could be deducted and therefore she submitted that the stand of the Board is correct and the demand notices issued are legal and valid and do not call for interference. 5. In order to appreciate the rival contentions, it is necessary to look at the Act. In order to provide for the better administration of wakfs and/or matters connected therewith or incidental thereto, the Parliament enacted the Wakf Act, 1995. One of the object in enacting this law is to strengthen the finance of the Wakf Board, one of the measures being contemplated is to raise the rate of the contribution by a Wakf to the Wakf Board from 6% of its annual income to 7%. Section 3(J) defines what the net annual income of a Wakf is. It states in relation to a Wakf, means net annual income determined in accordance with the provisions of the Explanation to sub-section (1) of Section 72. Section 3(J) defines what the net annual income of a Wakf is. It states in relation to a Wakf, means net annual income determined in accordance with the provisions of the Explanation to sub-section (1) of Section 72. Section 13 of the Act provides for incorporation and establishment of Wakf Board. The Wakf Board to be established under Section 13 of the Act shall be a body corporate having perpetual succession and a common seal with power to acquire and hold property and to transfer any such property subject to such conditions and restrictions as may be prescribed and shall by the said name sue and be sued. Section 32 of the Act, deals with powers and function of the Board. One such functions of the Board is to scrutinize and approve the budget submitted by Mutuwalli and to arrange for the auditing of accounts of Wakf, to call for such returns, statistics, accounts and other information from the Mutuwalli with respect to the Wakf property as the Court may from time to time require. To inspect, or cause inspection of Wakf property, accounts, records or deeds and documents relating thereto. Section 36 of the Act, deal with registration of Wakfs. Every Wakf whether created before or after the commencement of this Act shall be registered at the office of the Board. Application for registration shall be made by the Mutuwalli. It shall be made in such form and manner and at such places as the Board may by regulation provide and shall contain particulars like the gross annual income from the properties of the Wakf, the amount of land revenue, cesses, rates and taxes annually payable in respect of the Wakf properties and an estimate of the expenses annually incurred in the realisation to the income of the Wakf properties. It also should contain the amount set apart under the Wakf for the salary of the Mutuwalli and allowances to the individuals and amount set apart for purely religious purposes, charitable purposes and any other purpose. Section 44 of the Act deals with the budget. Every Mutuwalli of a Wakf shall, in every year prepare, in such form and at such time as may be prescribed, a budget in respect of the financial year next ensuing showing the estimated receipts and expenditures during that financial year. Chapter VII of the Act deals with finance of the Board. Every Mutuwalli of a Wakf shall, in every year prepare, in such form and at such time as may be prescribed, a budget in respect of the financial year next ensuing showing the estimated receipts and expenditures during that financial year. Chapter VII of the Act deals with finance of the Board. Section 72 sets out the annual contribution payable to Board by every Wakf. It reads as under:- "72. Annual contribution payable to Board: The mutawalli of every Wakf, the net annual income of which is not less than five thousand rupees, shall pay annually, out of the net annual income derived by the wakf, such contributions, not exceeding seven percent of such annual income, as may be prescribed, to the Board for the services rendered by such Board to the Wakf. Explanation-I: For the purpose of this act, "net annual income" shall mean the gross income of the wakf from all sources, including nazars and offerings which do not amount to contributions to the corpus of the wakfs, in a year after deducting therefrom the following, namely; i) xxx xxx xxxxx ii) xxx xxx xxxxx iii) xxx xxx xxxxx iv) xxx xxx xxxxx v) xxx xxx xxxxx Provided that the following items of receipts shall not be deemed to be income for the purposes of this section, namely; a) xxx xxx xxxxx b) xxx xxx xxxxx c) xxx xxx xxxxx d) xxx xxx xxxxx e) xxx xxx xxxxx f) xxx xxx xxxxx g) xxx xxx xxxxx h) xxx xxx xxxxx Explanation II. – In determining the net annual income for the purposes of this section, only the net profit derived by any Wakf from its remunerative undertakings, if any, shall be taken as income, and in respect of its non-remunerative undertakings, such as, schools, colleges, hospitals, poor homes, orphanages or any other similar institutions, the grants given by the Government or any local authority or donations received from the public or fees collected from the pupils of educational institutions shall not be taken as income." 6. A reading of the aforesaid provision makes it clear that for the purpose of payment of annual contribution to the Board under the Act, Wakfs are divided into two categories. The Wakfs whose net annual income is less than Rs.5,000/-and the Wakfs whose annual income is more than Rs.5,000/-. A reading of the aforesaid provision makes it clear that for the purpose of payment of annual contribution to the Board under the Act, Wakfs are divided into two categories. The Wakfs whose net annual income is less than Rs.5,000/-and the Wakfs whose annual income is more than Rs.5,000/-. The Wakfs whose annual income is less than Rs.5,000/- are exempted from payment of any annual contribution to the Board. In other words, Section 72 of the Act, has no application to a Wakf whose net annual income is less than Rs.5,000/-. The liability to pay annual contribution arises only in respect of Wakfs whose net annual income is not less than Rs.5,000/-. Therefore, in order to find out whether a particular Wakf is liable to pay any contribution, it is necessary to find out what its net annual income is. Section 3(j) defines net annual income, in relation to Wakf, means net annual income determined in accordance with the provisions of the Explanation to sub-section (1) of Section 72. The said sub-section of Section 72 has two explanations. Explanation-I deals with the meaning of the net annual income referred to in sub-section (1) of Section 72 "for the purpose of the Act" and the Explanation-II to the said Section deals with the meaning of the net annual income "for the purpose of Section 72". Therefore, the legislature has consciously defined the meaning of the net annual income for the purpose of the Act and for the purpose of the Section differently. Therefore, the question is what is the object behind the two meanings given to the word 'net annual income' in the Act. 7. In so far as Explanation-I is concerned, the net annual income means the gross income of the Wakf from all sources including nazars and offerings which do not amount to contribution to the corpus of the wakf, in a year after deducting therefrom the expenditure set out in the Explanation-I. This definition is for the purpose of the Act and it is on that basis we have to find out whether the net annual income of the said wakf exceeds Rs.5,000/- in order to be liable to pay annual contribution to the Board. If after giving deductions as provided in to sub-clauses (1)(2)(3)(4) and (5) of Explanation-I if the net annual income is less than Rs.5,000/-there is no liability to pay annual contribution under Section 72 to the Board. Proviso to Explanation-I states the items of receipts mentioned therein shall not be deemed to be income for the purpose of Section 72. Therefore, the net annual income of the Wakf calculated in the manner set out in Explanation-I is for the purpose of the Act, to find out whether such a Wakf is liable to pay any annual contribution to the Board as prescribed under Section 72. The contribution payable by the Wakf to the Board is not on the basis of the said net annual income so arrived at under Explanation-I. 8. Explanation-II comes into operation to decide what is the net annual income of the Board for the purpose of paying contribution by the Wakf to the Board. The said Explanation states, in determining the net annual income for the purpose of this Section i.e., Section 72, i.e. for payment of annual contribution to the Board, only the net profit derived by any Wakf from its remunerative undertakings is to be taken as the net annual income of the Wakf. It mandates for the purpose of finding out the net annual income under Explanation II of sub-section (1) of Section 72, the income derived by the Wakf from schools, colleges, hospitals, poor homes, orphanages or any other similar institutions, the grants given by the Government or any local authority or donation received from the public or fees collected from the pupils of educational institutions shall not be taken into consideration as income for the purpose of this section. Similarly, the items of receipts mentioned in the proviso to Explanation-I of sub-section (1) of Section 72 also should not be taken into consideration in arriving at the net annual income for the purpose of section 72. In this context the word "ONLY" used in Explanation assumes importance. Therefore, the intention of the legislature is clear and explicit. For the purpose of determining the contribution payable by a Wakf to the Board, it is the net profit derived by any Wakf from its "remunerative undertakings" ONLY is to be taken into consideration. In this context the word "ONLY" used in Explanation assumes importance. Therefore, the intention of the legislature is clear and explicit. For the purpose of determining the contribution payable by a Wakf to the Board, it is the net profit derived by any Wakf from its "remunerative undertakings" ONLY is to be taken into consideration. Therefore, any income derived from any other source should not be taken into consideration in arriving at the annual income of the Wakf under Section 72 for the purpose of payment of contribution to the Board. 9. Therefore, it follows that, in order to arrive at "the net profit" only the gross income derived by the Board from its remunerative undertakings is to be taken into consideration. Out of the said income, the expenditure incurred by the Wakf in running those remunerative undertakings is to be deducted. If there is any surplus amount remaining, that is the net profit derived by the wakf from its remunerative undertakings. The said net profit would be the annual income of the Wakf under Section 72 of the Act for the purpose of paying annual contribution to the Board. It is out of the said net annual income, the Wakf/Mutuwalli shall pay annually such percentage of the said net annual income as prescribed by the Board towards the contribution to the Board. 10. That is the object behind the definition of two separate "annual incomes" defined in Explanation-I and Explanation-II to sub-section (1) of Section 72 of the Act. In fact, by virtue of the power conferred on the Government under Section 109 of the Act the rate at which contribution is to be made by a Mutuwalli under Section 72 is to be prescribed under the Rules. However, the Section makes it clear that such prescription of the contribution payable should not exceed 7% of such annual income. The Section further states that the said annual contribution is paid by the Wakf to the Board for the services rendered by Board to the Wakf. 11. In the light of the aforesaid provision the demand made by the respondents is not legal and cannot be sustained. The petitioner has to furnish full particulars of the gross income of the Wakf from its remunerative undertakings and they also should furnish the total expenditure incurred in generating the said income. 11. In the light of the aforesaid provision the demand made by the respondents is not legal and cannot be sustained. The petitioner has to furnish full particulars of the gross income of the Wakf from its remunerative undertakings and they also should furnish the total expenditure incurred in generating the said income. It is only after considering the same, giving deduction to the expenditure if it is found valid, the net profit is to be arrived at and only such net profit is to be treated as the net annual income for the purpose of determining the annual contribution payable by the Wakf to the Board. In this view of the matter, the impugned demand notices cannot be sustained. 12. Hence, I pass the following order. (a) The writ petition is allowed. (b) The impugned demand notices are hereby set aside. (c) The Board is given liberty to rework and after giving all permissible deductions, issue demand notices to the petitioner claiming contributions. (d) No costs.