LexTRUSTEES OF H.E.H. THE NIZAM' S PILGRIMAGE MONEY TRUST, HYDERABAD versus COMMISSIONER OF INCOME TAX, ANDHRAPRADESH, HYDERABAD
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TRUSTEES OF H.E.H. THE NIZAM' S PILGRIMAGE MONEY TRUST,
HYDERABAD
V.
COMMISSIONER OF INCOME TAX, ANDHRAPRADESH,
HYDERABAD
APRIL 20, 2000
[D.P. WADHWAAND SYED SHAH MOHAMMED QUADRI, JJ.]
Wealth Tax Act, 1957: Section 5( l)(i).
Wealth Tax-Exemption of-Conditionsfor-AYs 1974-75 to 1977-78-
Held : In order to obtain exemption the public purpose of a charitable or
religious nature should be in India-The place of location of the trust property
is irrelevant.
Trusts Act, 1882 :
Sections 9 and 34-Applicability of-Private trust-Creation of-With a
corpus fund-Objects of-{ i) To meet expenses of pilgrimage of the settlor, (ii)
for making religious offerings at certain holy places abroad and (iii) after death
of the settlor for certain specified religious or charitable purposes at the same
holy places-After death of the sett/or trustees could not incur expenditure due
to restrictions in sending monies outside India-Therefore, trustees.filed appli-
cation under S. 34 seeking permission to utilise trust fund within India for
purposes specified in trust deed, which was allowed-Validity of-Held: Trusts
Act applies only to private trusts-After death of the sett/or in view of the tenns
of the deed, trust became a public trust and, therefore, the provisions of Trust
Act not applicable-Hence, Court's permission does not alter objects of Trust.
Section 34-Trust-Objects of-Application to alter-Held : Such an
application cannot be treated as a suit und.er S. 92 CPC.
Code of Civil Procedure; 1908 : Section 92.
Doctrine of Cy pres-Invoking of-Held : In the circumstances of the
case, the q·uestion of invoking the doctrine of Cy pres does not arise.
Doctrines:
Doctrine of Cy pres-applicability of
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SUPREME COURT REPORTS
[2000] 3 S.C.R.
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The appellant-assessee created a trust with a corpus fund of a certain
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amount. The objects of the Trust were to meet the expenses of Haj pilgrim-
age of the appellant during his lifetime and those of the members of his
family accompanying in him on such pilgrimage outside India and also for
making religious offerings at sucb places. After the death of the appellant
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th.e net income and the unspent accumulations of income, if any, were to be
spent or utilised by the trustees for all or any of the religious or charitable
purposes specified in the trust deed. After the death of the appellant the
trust became a Public Charitable and Religious Trust. But the trustees
could not spend the income in view of the restrictions imposed by the
Government of India on sending monies outside India. Therefore, the
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trustees passed a resolution to spend the income of the Trust property
including the accumulations thereof only on objects and purposes specified
in the trust deed within the territory of India.
Therefore, the trustees filed an application before the Chief Judge,
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City Civil Court seeking relief under Section 34 of the Indian Trusts Act,
1882, which was allowed. For the Assessment Years 197 4-75 to 1977-78 the
trustees claimed exemption under Section 5(1)(i) of the Wealth Tax Act,
1957 on the ground that the properties/assets were held in Trust for public
purposes of charitable and religious nature in India in view of the said
order of the Chief Judge. However, the High Court disallowed the claim of
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the appellant. Hence this appeal.
On behalf of the appellant-assessee it was contended that as situs of
the Trust property was in India, therefore, the property was exempted
under Section 5(1)(i) of the Act irrespective of where the income thereof
was utilised; that after the approval of the resolution of the Board of
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Trustees by the Chief Judge, City Civil Court the property must be deemed
to be held for charitable or religious purposes in India; and that Section 34
of the Trusts Act might be taken as wrongly mentioned and the order
passed by the Court be treated as on a suit/petition under Section 92 of the
Code of Civil Procedure, 1908 for change of the objects of the Trust by
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applying the doctrine of Cy pres to save the Trust from failing.
Dismissing the appeal, this Court
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HELD : 1. On a plain reading of Section 5(1)(i) of the Wealth Tax Act,
1957 it is evident that the situs of the property held in Trust is irrelevant;
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what is relevant for granting exemption is that the public purpose of
TRUSTEES OF H.E.H. THE NIZAM' S PILGRIMAGE MONEY TRUST v. C.l.T., A.P.
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