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It is evident from that a reading of the above provision that for claiming exemption thereunder, it is necessary that the property should be held under trust or other legal obligation "for any public purpose of a charitable or religious nature in India"; exemption is not available if the property is held under trust for purposes outside India, even though the purposes may be of a charitable or religious nature.
Now let us see whether the objects and purposes of the trust concerned herein are located within India or outside. We have already referred to the preamble portion in the trust deed where the settlor had stated that during his lifetime for the last 35 years prior to the execution of the trust deed, he had been collecting and setting aside 30,000 gold sovereigns to form a fund to meet his expenses "for visit and pilgrimage to various Mahomedan shrines and other holy places in Hedjaz and Iraq, and for making religious offerings and expending moneys for charitable purposes at such places". Clause (e) of paragraph 3 makes the matter clear beyond any doubt. It says that after the death of the settlor - we are concerned herein with the position obtaining after the death of the settlor -the trustees shall hold the trust fund and the unspent accumulations, if any, for spending or utilizing "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 in their absolute-discretion think proper", and then follow the eight sub-clauses elaborating the purposes. Thus, the entire income and the accumulations are to be spent by the trustees only for religious or charitable purposes at Hedjaz (which, as the trust deed makes it clear, means and refers to Mecca and Madina) and in Iraq. The various objects elaborated in sub-clauses (i) to (viii) are, therefore, objects to be performed only at Hedjaz and/or Iraq. The proviso to paragraph 3 also goes to show that the construction of "sarais", etc; was to be done entirely outside India. We are, therefore, of the opinion, on a fair and reasonable reading of the trust deed, that all the objects and purposes of the said trust are located outside India, and that none of the objects and purposes are to be performed within, nor were intended to be performed within, India. It is, therefore, clear that the exemption under section 5(1)(i) is not available to the trust property.
Mr. Y. Ratnakar sought to argue that sub-clauses (v), (vi) and (vii) relate and refer to the objects and purposes to be performed in India, and that inasmuch as the trustees have decided, and the Chief Judge has permitted them under section 34 of the Trusts Act to spend the income on such objects within India and further because objects (i) to (iv) mentioned in clause (e) have become impossible of application, it must be held that the trust property is held in trust for objects and purposes within India. He also submitted that the objects of the trust are indubitably charitable or religious in nature. It is not possible to agree. The said argument is premised on the assumption that the objects mentioned in sub-clauses (v), (vi) and (vii) are to be performed within, or were intended to be, and can be performed within, India. As indicated above, we cannot agree with this interpretation. On a plain reading of the trust deed, it is clear beyond any doubt that all the purposes and objects of the trust are situated and were intended to be performed outside India and none within India. In such a case, the resolution of the trustees dated May 22, 1968, is invalid and ineffective. Similarly, the order of the learned Chief Judge dated September 29, 1973, under section 34 of the Trusts Act is equally inoperative and without jurisdiction. It must be remembered that the Trusts Act applied only to private trusts and not to public trusts. After the death of the settlor, the trust in question became a public trust which is evident from the objects mentioned in clause(e) in paragraph 3 of the trust deed. Moreover, section 34 provides only for a summary enquiry and order with respect to "management or administration of the trust property other than questions of detail, difficulty or importance.." The only questions upon which the opinion, advice or direction of the court can be sootier the "present questions respecting the management or administration of the trust property". This fact would be evident from a reading of section 34 which, in so far as it is relevant, reads thus :

The next decision relied upon by learned counsel is in Dharmaposhanam Company v. CIT . That was a case where certain objects of a trust were charitable while others were not charitable, all of them enjoying equal status; it was open to the trustees to apply the trust income on those objects in such proportion or measure as they thought appropriate. In such circumstances, it was held that the entire trust is liable to be treated as not for charitable purposes and will not be entitled to claim exemption under section 11 of the Income-tax Act. During the course of discussion, the court observed that it would be a different case where one or more of the objects in the memorandum and articles of association, although included therein, were never intended to be undertaken and observed that if there is evidence pointing too that conclusion, the court may ignore those objects and proceed to consider the case as if those objects did not exist in the memorandum. We see no room for applying the said principle in the facts of this case.