IMPORTANT POINT
For availing benefit of exemption under Section 5(1)(i) in respect of property held in trust the situs of the property held in trust is irrelevant; what is relevant for granting exemption is that the public purpose of charitable or religious nature should be in India.

JUDGMENT

Syed Shah Mohammed Quadri, J.-These appeals arise out of two reference cases under Section 27(1) of the Wealth-tax Act, 1957 decided by the High Court of Andhra Pradesh, give rise to a common question of law. The appellants are the assessees. Civil Appeal No. 2328 of 1995 is against the order of the Division Bench of the High Court in R.C. No. 192 of 1980 dated March 24, 1987 (reported in 171 ITR 323] pertaining to the Assessment Years 1974-75 and 1975-76. Following the said order, the High Court disposed of R.C. No. 292 of 1982 for the Assessment Years 1976-77 and 1977-78 which gave rise to Civil Appeal Nos. 9269-9270 of 1995.

2. H.E.H. the Nizam of Hyderabad created a trust with a corpus fund of Rs. 22,20,000/-, named "H.E.H. the Nizam s Pilgrimage Money Trust" on November 2, 1950. The objects of the Trust, inter alia, are that during lifetime of H.E.H. the Nizam to meet expenses of Haj Pilgrimage of himself and members of his family accompanying him on such pilgrimage and expenses on visits to holy places of Hedjaz and Iraq and also for making religious offerings at such places as the settlor in his absolute discretion might think fit; that after the death of the Nizam the net income and the unspent accumulations of income, if any, shall be spent or utilised by the trustees for all or any of the religious or charitable purposes specified in clause 3(e) of the said trust deed. H.E.H. the Nizam died on February 24, 1967. During his lifetime, he did not go either for Haj or on any other pilgrimage. After his death, the said Trust became a Public Charitable and Religious Trust and the trustees held the corpus and accumulations of income of the Trust thereunder. But the trustees could not have spent the income of the Trust property in Hedjaz or Iraq under clause 3(e) in view of the restriction imposed by the Government of India on sending monies outside India. After obtaining legal opinion, the trustees passed a resolution dated May 22, 1968 to spend the income of the Trust property including accumulations thereof only on objects and purposes specified in sub-clauses (v), (vi) and (viii) of clause 3(e) within the territory of India. They read as under:

"The Trustees shall hold and stand possessed of the Trust Fund UPON TRUST :-

(a) to (d) *** ***   ***

(c) On and after the death of the Settlor to hold the Trust Fund or the balance thereof then remaining and the unspent accumulations (If any) of the income of the Trust Fund and the investment thereof upon trust to expend or utilise the not income of the Trust Fund as well as the accumulations (if any) of the income thereof made during the Settlor s lifetime and the investments thereof for all or any one or more of the following religious or charitable objects and purposes at Hedjaz and/or Iraq in such manner as the Trustees may in their absolute discretion think proper:-

(i) to (iv) *** *** ***

(v) for constructing, establishing and maintaining dispensaries or hospitals or wards in hospitals and otherwise for medical aid and relief;

(vi) for constructing, establishing, maintaining and running schools, madressas and other educational institutions and otherwise for advancement of education;

(vii) *** *** ***

(viii) for such other religious or charitable purposes as the Trustees may in their absolute discretion think fit in such manner and to such extent as they may think fit."

3. Thereafter, they filed an application before the Chief Judge, City Civil Court, Hyderabad seeking relief under Section 34 of the Indian Trusts Act (for short, the Trusts Act ). On September 29, 1973, the Chief Judge, City Civil Court, Hyderabad allowed the application and directed the trustees to utilise the income of the Trust fund including the accumulated income for the objects and purposes specified in aforementione