TRUSTEES OF H E H THE NIZAMS PILGRIMAGE MONEY TRUST HYDERABAD Vs. COMMISSIONER OF INCOME TAX ANDHRA PRADESH HYDERABAD

JUDGEMENT

(1.) 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 offering 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 to 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:

(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 utlise the income of the Trust fund including the accumulated income for the objects and purposes specified in afotementioned sub-clauses of Clause 3(e) within the territory of India.