Charitable trust status preserved where a preference for relatives did not defeat the deed's broader public charitable purpose.

A trust remains wholly charitable where the deed's primary objects are charitable and of public utility, and a preference for poor and indigent relations operates only as a selection mechanism within that broader class. Such a preference does not convert the arrangement into an independent family trust or destroy its public charitable character. The trust property was therefore held to be for religious or charitable purposes, and the income was exempt under the statutory provision in favour of the assessee.

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Issues: Whether the trust property was held wholly for religious or charitable purposes within the meaning of section 4(3)(i) of the Indian Income-tax Act.

Analysis: The trust deed conferred authority to apply the income for several purposes which, standing alone, were charitable and of public utility. The provisos granting preference to poor and indigent relations of the settlor's family operated only within the class of beneficiaries already covered by the principal charitable purpose in clause 13(a) and did not create an independent family trust. The preference clause affected selection among beneficiaries but did not destroy the public charitable character of the primary trust, which remained open to a wider charitable class.

Conclusion: The trust property was held wholly for religious or charitable purposes and the income was exempt under section 4(3)(i); the answer is in favour of the assessee.

Ratio Decidendi: A preference in favour of a limited class of persons does not invalidate a trust as charitable where the primary trust is otherwise for a public charitable purpose and the preferred class is selected only from within that broader charitable class.

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