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17. If we carefully notice the above observations, it would appear clear that under the provision as it existed prior to 1.4.1952, there was no difference maintained between application of the income of the trust within or without the taxable territories. The provision as it existed after the amendment made w. e. f. 1.4.1952 makes a reference to application or accumulation for application of the income of the trust "to such religious or charitable purposes as relate to anything done within the taxable territories". Mr. Vohra, learned counsel for the assessee, in an assiduously prepared argument, contended that the words "as relate to anything done within the taxable territories" clearly show that the charitable purposes must be executed within the taxable territories and that it was immaterial where the income is actually applied. It is difficult to conceive of a situation under which the charitable purposes are executed within the taxable territories but the income of the trust is applied elsewhere in the implementation of such purposes. Be that as it may, the position is put beyond doubt by the proviso to Section 4(3)(i) of the old Act. It says that the income of the trust shall stand included in its total income if it is applied to religious or charitable purposes throughout/ within the taxable territories. The proviso is indicative of the object of the main provision. In the main part, it was provided that the income of the trust should be applied within the taxable territories to religious or charitable purposes and in the proviso an exception was carved out to provide that if the income is applied outside the taxable territories, even though to religious or charitable purposes, the trust will not secure the exemption from tax in respect of such income. Two situations were anticipated for which provision was made in the proviso itself. In these two situations, the Central Board of Revenue (CBR, the present CBDT) was empowered to direct by general or special order, that in such cases the income of the trust shall not be included in the total income merely because the income was applied to charitable purposes outside the taxable territories. The first situation was where the property was held under a trust or other legal obligation created before 1.04.1952. The second situation was where the property was held under trust or other legal obligation created after the aforesaid date and the income therefrom is applied outside the taxable territories to charitable purposes as are done to promote international welfare in which India is interested. In these two cases the income of the trust could be applied or spent outside India without losing exemption, provided the CBR passes an appropriate order.

19. We should have thought that the position for which Mr. Vohra contends was quite unarguable after the aforesaid elucidation by the Supreme Court, but with his usual perseverance he claims that the judgment or the observations made therein are not against the proposition canvassed by him. In order to appreciate the argument of Mr. Vohra, it is necessary to refer briefly to the facts of the case cited supra. The Nizam of Hydrabad created a trust for charitable and religious objects, some of which had to be effectuated in the taxable territories and some outside the taxable territories (in Mecca and Madina). The income of the trust properties was directed to be accumulated until the death of the Settler. In the assessment made to income tax for the assessment years 1952-53 and 1953-54, the assessee claimed exemption in respect of the income arising from the trust property as per Section 4(3)(i) of the old Act. The taxing authorities noticed that there were four religious objects enumerated in the trust deed out of which two were to be effectuated in Mecca and Madina. The trust deed also conferred absolute discretion upon the trustees to apply the income of the trust to one or more of the four categories of religious purposes. The Income Tax Officer, on a construction of the trust deed held that so far as the income that was to be applied to religious and charitable purposes situated outside the taxable territories was concerned, since no order had been made by the CBR under clause (a) of the proviso to Section 4(3)(i) of the old Act, the income did not qualify for exemption. His view was upheld by the Appellant Assistant Commissioner on a different ground. The assessee carried the matter in appeal to the Tribunal which affirmed the view taken by the taxing authorities. On a reference to the Andhra Pradesh High Court, it was held by the Division Bench (reported in (1963) 48 ITR 992) that if there is plurality of objects, and the trustees are given an unfettered discretion to apply the income for an object which is not a charitable object, the entire income was outside the scope of exemption. The High Court held that since the trustees of Nizam's Trust had a discretion to apply the trust fund for purposes outside the taxable territories for which the CBR had declined permission, the income did not fall within the scope of Section 4(3)(i) of the old Act. The High Court observed thus: -