Wealth-tax exemption denied where trust objects extended beyond India despite trustees later limiting income use.

Wealth-tax exemption under section 5(1)(i) depends on whether the trust property is held for objects confined to India; a later trustee resolution limiting actual use of income does not change the scope of the trust where discretion to apply it to foreign objects remains. The distinction from income-tax law is material: for wealth-tax, the decisive enquiry is the territorial scope of the trust purposes, not the eventual application or accumulation of income. On that basis, a trust deed authorising objects extending beyond the taxable territories did not qualify for exemption, and the Revenue's view prevailed.

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Issues: Whether the trust property was exempt from wealth-tax under section 5(1)(i) of the Wealth-tax Act, 1957, when the deed of trust authorised application of income to objects some of which extended beyond the taxable territories.

Analysis: Exemption under section 5(1)(i) depends on the nature and extent of the purposes for which the property is held under trust, not on a later resolution of the trustees limiting the actual use of income. Where the settlor has created a trust with mixed objects, including purposes outside India, the trust property remains held for those broader objects so long as the trustees retain discretion to revert to them. The distinction between wealth-tax and income-tax is material: under wealth-tax, the decisive factor is whether the trust purposes are confined to India, whereas under income-tax the relevant enquiry is whether the income is applied or accumulated for application within India. The decisions concerning income-tax exemption did not alter this distinction and did not assist the assessee.

Conclusion: The trust property was not exempt under section 5(1)(i) because the objects of the trust were not confined to India; the answer was against the assessee and in favour of the Revenue.

Final Conclusion: The reference was answered by holding that the trust failed to qualify for wealth-tax exemption, and the Revenue succeeded.

Ratio Decidendi: For wealth-tax exemption under section 5(1)(i), the decisive test is whether the objects of the trust are confined to India; a trustee's later decision to apply income only to domestic purposes does not alter the scope of the trust purposes where discretion to apply the income to foreign objects continues to exist.

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