Before Islam, the usage in Arabia was that whatever spoils were won in a battle these were distributed among the combatants, subject to the condition that one-fourth of the share was given to the chief of the tribe. This implied that whatever spoils fell into the hands of a combatant belonged to him.
The first battle fought by the Muslims was the battle of Badr. After the victory some Muslims went in pursuit of the enemy and gathered some booty. They took the plea that whatever they had obtained belonged to them. Those who had stayed behind to guard the Holy Prophet argued that as they had taken part in the war, they had the right to an equal share in the booty.
To solve the matter, the following verse was revealed to the Holy Prophet:
"People ask thee about the spoils,
Say, they belong to the Allah and the Apostle."
This verse abrogated the principle that the spoils were the exclusive right of the combatants. The verse, however, did not indicate how the spoils were to be distributed. To settle that issue, another verse was revealed as follows:
"Whatever spoils of war you capture;
One-fifth of them belongs to
Allah and the Apostle and to the near of kin,
And the poor and the wayfarers."
In accordance with this injunction the practice with the Holy Prophet was that four-fifths of the spoils were distributed among the Muslims at large, and one-fifth was retained by the Holy Prophet for his personal use and for the use of persons closely related to them. A part was used for providing relief to the poor, the widows, and the orphans.
This one-fifth was known as 'Khums'. This became a subject of controversy in the time of the caliphate of Umar. Ali, Abbas, and other Uashmites pleaded that even after the death of the Holy Prophet, 'Khums' should be distributed among those who were related to the Holy Prophet.
Umar did not accept this view. He distributed four-fifths among the warriors participating in the war, and the 'Khums' was credited to the Baitul Mal for the use of the Muslims at large.
Umar argued that the Holy Prophet himself declared that the prophets leave no inheritance, and as such the relatives of the Holy Prophet could claim no preference in the matter of distribution of the spoils of war. The entire Muslim community was the heir of the Holy Prophet, and as such the 'Khums' was to be used for the benefit of the entire Muslim community, and could not be earmarked as a privilege for any particular section.
Umar's view was that as with his death, the Holy Prophet lost his share of the 'Khums', his relatives lost that special privilege as well. After the death of the Holy Prophet, the relatives of the Holy Prophet and the other Muslims were to be treated at par. Thus they could have their share as Muslims and not on the basis of relationship with the Holy Prophet.
Umar also argued that if it was held that the relatives of the Prophet were to enjoy a special privilege even after his death, this would imply that this practice should continue for ever. Such a course would be irrational. That would imply the creation of a privileged group within the Muslims, a sort of Brahmins with born privileges and that would be repugnant to Islam.
During the caliphate of Umar, the Hashmites felt unhappy at the decision of Umar though they did not challenge it. Among the four schools of the law that developed among the Muslims, the school of Imam Shafi argued vehemently in favour of special privilege for the relatives of the Holy Prophet. The other schools upheld the decision of Umar.