B.P Jeevan Reddy, J.:— These two references—one under the Wealth-tax Act and the other under the Income-tax Act—arise on the same facts. R.C No. 192 of 1980 is a reference under section 27(1) of the Wealth-tax Act, 1957, and the question referred is:

“Whether, on the facts and in the circumstances of the case and on a proper construction of the scope and effect of the judgment of the Chief Judge of the City Civil Court, Hyderabad, in the proceedings under section 34 of the Indian Trusts Act, the Tribunal is correct in holding that as on the relevant valuation dates corresponding to the assessment years 1974-75 and 1975-76, the corpus of the trust fund cannot be said to have been held in trust for charitable or religious purposes in India and the assessee-trust is, therefore, not entitled to exemption under section 5(1)(i) of the Wealth-tax Act, 1957, in respect of the corpus of the trust fund?”

2. R.C No. 139 of 1980 is a reference under section 256(1) of the Income-tax Act, 1961, and the question referred herein is:

“Whether, on the facts and in the circumstances of the case, the assessee's income for the assessment year 1974-75 is not liable to be taxed in view of the provisions of section 11 of the Income-tax Act, 1961?”

3. Late H.E.H the Nizam had created a number of trusts, one of which is “H.E.H the Nizam's Pilgrimage Money Trust”, constituted under a deed of trust dated November 2, 1950, settling securities of the value of Rs. 22,20,000 as the corpus of the trust. The object of the trust was to provide for the expenses of Haj pilgrimage for himself and members of his family accompanying him and for other charitable or religious purposes after his lifetime. It is necessary, to notice the relevant recitals in the trust deed. The settlor recited in the first instance that he had, during the last 35 years, set apart 30,000 gold sovereigns “to form a fund for providing thereout the expenses of the settlor for visit and pilgrimage to various Mahomedan shrines and other holy places in Hedjaz and Iraq and for making religious offerings and expending money's for charitable purposes at such places”, and that taking advantage of the rise in the price of gold, he had sold the said sovereigns and invested the sale proceeds in 3% Government of India Conversion Loan, 1946, of the total face value of Rs. 22,20,000 yielding an annual income of Rs. 66,600 specified in the schedule to the deed. He expressed his desire of making and declaring a trust of the said securities. Paragraph 3 of the trust deed contains several clauses and sub-clauses. Clauses (a) and (b) of paragraph 3 empower the trustees to manage the trust fund and do all other things and take all necessary steps in that behalf. Clauses (e), (d) and (e) read as follows:

“(c) During the lifetime of the settlor to defray the expenses of Haj of the settlor and of such of the members of his family as he may take with him and of their visit and pilgrimage to various Mahomedan shrines and holy places in Hedjaz and Iraq and for making religious offerings and expending monies for charitable purposes at such places and for such other religious or charitable purposes as the settlor in his absolute discretion may from time to time think fit and require out of the income as well as the corpus of the trust fund in such manner and to such extent as the settlor may from time to time direct and for all or any of such purposes as aforesaid to pay such monies out of the income or the corpus of the trust fund as the settlor may from time to time require.

(d) During the lifetime of the settlor and so long as the income of the trust fund or any part thereof is not required for the purposes mentioned in the preceding sub-clause (c), to accumulate such income or part thereof not required for such purposes and to invest the same and all resulting produce thereof in authorised securities and to use such accumulations and investments or any part thereof or the income thereof or any part thereof for the purposes mentioned in the said sub-clause (c) whenever so required by the settlor.

(e) 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 net 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) for making silver Zari at Surra-mun-Zaa;

(ii) for supplying or donating carpets for the Holy Mosque at Madina called ‘Masjid-e-Nabavi’;

(iii) for installing electric fittings in the prophet's Mosque at Madina;

(iv) for constructing and maintaining Inns or Sarais and for keeping in good repair and condition the Inns or Sarais already constructed by the ancestors of the settlor;

(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, madrasahs and other educational institutions and otherwise for advancement of education;

(vii) for making religious offerings and expending monies for charitable purposes at any of the said holy places; and

(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…”

4. The settlor died on February 24, 1967, without ever having gone on pilgrimage. Consequently, the income of the trust was not utilised for any purpose and was accumulating. The case of the assessee-trust is that on account of the restrictions imposed by the Government of India on remittances abroad, they could not spend any money outside India and, therefore, they passed a resolution dated May 22, 1968, resolving to utilise the income of the trust fund, including the accumulation, only for the objects and purposes specified in sub-clauses (v), (vi) and (vii) of clause (e) of paragraph 3. In the income-tax proceedings for the assessment years 1969-70 and 1970-71, the assessee-trust claimed exemption in respect of the income of the trust in so far as it was applied for charitable or religious purposes within India in terms of the aforesaid resolution, but the same was rejected. Thereupon, the trustees applied to the Chief Judge, City Civil Court, Hyderabad, under section 34 of the Indian Trusts Act, seeking his opinion, advice or directions with respect to the utilisation of the income of the trust fund in terms of the resolution dated May 22, 1968. A public notice was issued, but no one appeared to object. By his order dated September 29, 1973, the Chief judge allowed the petition as prayed for. In the appeals filed against the orders of the Income-tax Officer aforesaid rejecting the claim for exemption under section 11 in respect of the income spent in India, reliance was placed upon the said resolution and the order of the Chief Judge, City Civil Court. The Tribunal held that even if the order of the Chief Judge under section 34 of the Trusts Act is held to be valid and enforceable, it will be operative only from the date of the order, i.e, on and from September 29, 1973, and that it has no retrospective effect. It held that, for the said reason, the order of the Chief Judge cannot be looked into in respect of the assessment years 1969-70 and 1970-71. So far as the resolution of the trustees is concerned, the Tribunal held the same to be unauthorised. The matter was carried to this court in R.C No. 127 of 1976, which was disposed of by this court on April 4, 1979. The view taken by the Tribunal was affirmed. For the assessment years 1974-75 and 1975-76, the same question arose again under the Wealth-tax Act. Under the Income-tax Act too, the very same question was reiterated by the assessee for the assessment year 1974-75. In both these matters, the assessee's contention was that the order of the Chief Judge dated September 29, 1973, is valid and enforceable and by virtue of it the property held in trust is exempt under section 5(1)(i) of the Wealth-tax Act and its income exempt under section 11 of the Income-tax Act. Their contention was that the decision of the High Court in R.C No. 127 of 1976 does not govern the case inasmuch as the assessment years now concerned are subsequent to the order of the learned Chief Judge. The income-tax authorities, as well as the Tribunal, disagreed with the said contention under both the enactments. The Tribunal held that under the Wealth-tax Act the corpus of the trust fund cannot be said to have been held in trust for charitable or religious purposes in India, as contemplated by section 5(1)(i) of the Wealth-tax Act and, therefore, not entrtled to exemption. Under the Income-tax Act, the Tribunal merely chose to follow its earlier decision relating to the assessment years 1969-70 to 1973-74 and negatived the assessee's claim for exemption under section 11 of the Act. Thereupon, the assessee applied for and obtained these references under both the enactments. As would be evident from a reading of the questions, while the reference under the Wealth-tax Act pertains to two assessment years, i.e, 1974-75 and 1975-76, the reference under the Income-tax Act pertains to only one assessment year, i.e, 1974-75.

5. We shall first take up R.C No. 192 of 1980 arising under the Wealth-tax Act. section 5(1)(i) of the Wealth-tax Act reads as follows:

“5. (1) Subject to the provisions of sub-section (1A), wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee—

(i) any property held by him under trust or other legal obligation for any public purpose of a charitable or religious nature in India:

Provided that nothing contained in this clause shall apply to any property forming part of any business, not being a business referred to in clause (a) or clause (b) of sub-section (4A) of section 11 of the Income-tax Act in respect of which separate books of account are maintained or a business carried on by an institution, fund or trust referred to in clause (22) or clause (22A) or clause (23B) or clause (23C) of section 10 of that Act.”

6. It is evident from 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.

7. 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 utilising “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 subclauses (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(])(i) is not available to the trust property.

8. 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 sought are 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:

“34. Any trustee may, without instituting a suit, apply by petition to a principal civil court of original jurisdiction for its opinion, advice or direction on any present questions respecting the management or administration of the trust property other than questions of detail, difficulty or importance, not proper in the opinion of the court for summary disposal…”

9. It would be evident that even the present questions relating to management or administration of the trust property will not be gone into under this section if they are questions of detail, difficulty or importance.

10. It cannot be denied that the amendment of the objects of the trust is a matter of importance and hence cannot be gone into under section 34, even assuming that section 34 applies to a public trusts.

11. Mr. Ratnakar, learned counsel for the assessee, while not disputing the proposition that on the death of the settlor the trust became a public trust, sought to argue that it became a private trust by virtue of section 5(1)(i) of the Act. His argument—which we must frankly say does not appeal to us at all—runs like this: Inasmuch as the property of the trust is not held for a public purpose of a charitable or religious nature within India, it is not a “public purpose” within the meaning of section 5(1)(i) of the Wealth-tax Act. If so, it must be deemed to be a private trust; once it is a private trust, the Trusts Act applies and the order of the Chief Judge under section 34 of the Trusts, Act would be valid. We are unable to understand as to how section 5(1)(i) of the Wealth-tax Act has the effect of converting a public trust into a private trust or how the application of the Trusts Act can depend upon the interpretation of section 5(1)(i) of the Wealth-tax Act. If the trustees wish to have the objects of the trust amended or altered, their remedy lies elsewhere; it may be either by way of a suit under section 92(3) of the Code of Civil Procedure or under any other special enactment as may be applicable to this trust. While it is not necessary for us to say or indicate the procedure for amendment of the objects, it is enough to say that the order of the learned Chief Judge under section 34 of the Trusts Act can in no event have the effect of altering or modifying the objects of the trust concerned herein.

12. Learned counsel for the assessee sought to rely upon the decision of Mulla J. in P.D De Souza…Plaintiff v. K.R Daphtary…Defendant ., AIR 1924 Bom 252, on the scope of section 34 of the Trusts Act. We have perused the said decision but we do not find anything therein which supports the contention of learned counsel. Mulla J. stated that section 34 does not enable the court to sanction a sale of the trust property by the trustees where no power of sale is given by the trust deed but held that the High Court of Bombay has extraordinary civil jurisdiction to sanction such a sale in an emergency, and that, under certain circumstances, the court has the power to go even beyond the terms of the trust deed.

13. Mr. Y. Ratnakar next relied upon the decision of the Delhi High Court in Jagdamba Charity Trust v. Commissioner Of Income-Tax, Delhi (Central), [1981] 128 ITR 377; but that was a case where the objects of the trust deed as originally executed were found to be non-charitable, whereafter a suit was filed in the civil court for rectification of the trust deed by deleting the offending provisions. The civil court ordered retrospective rectification under section 26 of the Specific Relief Act. The Delhi High Court, while observing that the power of the court to order such retrospective rectification under section 26 of the Specific Relief Act is of doubtful validity, held that inasmuch as the trustees themselves have voluntarily applied to the court and obtained the order, they have to act in accordance therewith. We are, however, unable to read the said judgment as laying down the proposition that even where the order of the court is without jurisdiction, it still binds the petitioner. Under section 44 of the Evidence Act, an order or judgment of the court without jurisdiction is irrelevant and void. Once we hold that the Trusts Act does not apply to the trust concerned herein and further that, in any event, section 34 does not authorise or contemplate the amendment of the objects of the trust, the order of the Chief Judge cannot be read as changing the objects of the trust.

14. The next decision relied upon by learned counsel is in Dharmaposhanam Company, Kerala v. Commissioner Of Income Tax, Kerala [(1978) 114 ITR 463 (SC). 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 to 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.

15. We are, therefore, of the opinion that the claim for exemption of the trust property under section 5(1)(i) of the Wealth-tax Act is liable to fail. Indeed, this is the opinion of a Bench of this court with regard to a similar trust created by the Nizam. In CWT v. Trustees of H.E.H The Nizam's Religious Endowment Trust, [1977] 108 ITR 229 (AP), it was observed that for claiming exemption under section 5(1)(i), the property must be held under trust for religious or charitable purposes and that such purposes must be confined in their scope to the taxable territories. For the above reasons, we answer the question referred to us in R.C No. 192 of 1980 in the affirmative, i.e, in favour of the Revenue and against the assessee. There shall be no order as to costs.

16. R.C No. 139 of 1980: Now coming to R.C No. 139 of 1980, the position is slightly different. Section 11(1)(a) of the Income-tax Act, 1961, which is the only relevant provision for our purposes, reads thus:

“11. Income from property held for charitable or religious purposes.— (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income—

(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of twenty-five per cent, of the income from such property;…”

17. It would immediately be noticed that in clause (a), the words “in India” are not there after the words “income derived from property held under trust wholly for charitable or religious purposes”, which means that it is immaterial for the purpose of section 11(1)(a) whether the charitable or religious purposes are confined to taxable territories or not. It is sufficient if the income is spent within India and, to that extent, that income will be exempt under the said provision. This is also the view expressed by the Bench in CWT v. Trustees of H.E.H the Nizam's Religious Endowment Trust, [1977] 108 ITR 229, referred to above. It was observed by the Bench that under the Income-tax Act, it is immaterial whether the charitable or religious purposes for which the trust is created are confined to the taxable territories, what is required is that the income must be applied or accumulated for application or set apart for application within the taxable territories. It was further observed that what is relevant under the Income-tax Act is the area of application of income and not the objects. Indeed, the Bench pointed out the distinction between the language employed in section 5(1)(i) of the Wealth tax Act and section 11(1)(a) of the Income-tax Act on this score. We respectfully agree with the said view. We, therefore, hold that even though the objects of the trust do not empower the trustees to spend any part of the income of the trust property in India, still, if they do spend any part of the income in India, or accumulate or set it apart for application, for charitable or religious purposes in India, it would be entitled to exemption under section 11(1)(a) for that year. It may be that the trustees would be acting contrary to the terms of the trust deed, but that may not be a relevant circumstance under section 11(1)(a), since under this provision what is relevant is the application of the income and not the objects.

18. For the above reasons, we answer the question referred in this referred case in the following terms: If any part of the income of the trust has been applied to charitable or religious purposes in India in the assessment year 1974-75 or is accumulated or is set apart for application to such purposes in India, the income to that extent is entitled to be dealt with under section 11(1)(a) and exemption granted in accordance with the said section. The Tribunal shall verify the necessary facts and pass appropriate orders in this matter under section 260 of the Act. Reference ordered accordingly. No costs.