Charitable purpose must be in India for wealth-tax exemption; situs of trust property alone does not satisfy the statute.

Exemption under section 5(1)(i) of the Wealth-tax Act depends on the charitable or religious purpose being in India; the mere fact that the trust property is situated in India is insufficient where the income is directed to be spent outside India. The statutory words "in India" qualify the purpose, not the property, so situs alone does not create eligibility. A civil court order passed under section 34 of the Indian Trusts Act, in proceedings relating to a private trust, did not validly alter the objects of a public charitable and religious trust or attract cy pres. The trust therefore remained outside the exemption.

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Issues: (i) Whether exemption under section 5(1)(i) of the Wealth-tax Act, 1957 is available merely because the trust property is situated in India, even though the charitable or religious purposes are to be carried out outside India; (ii) Whether the civil court's order on the trustees' application altered the trust so as to make the property held for charitable or religious purposes in India.

Issue (i): Whether exemption under section 5(1)(i) of the Wealth-tax Act, 1957 is available merely because the trust property is situated in India, even though the charitable or religious purposes are to be carried out outside India.

Analysis: The provision grants exemption only where the property is held under trust for a public purpose of a charitable or religious nature in India. The location of the property is not the determinative factor; the decisive factor is the place where the charitable or religious purpose is to be served. Since the words "in India" qualify the purpose and not the property, a trust directed to spend its income for purposes outside India does not satisfy the statutory requirement.

Conclusion: The exemption was not available on the basis of the situs of the trust property, and the contention of the assessee failed.

Issue (ii): Whether the civil court's order on the trustees' application altered the trust so as to make the property held for charitable or religious purposes in India.

Analysis: The order was passed under section 34 of the Indian Trusts Act, a provision dealing with private trusts, whereas the trust had become a public charitable and religious trust. The proceedings could not be treated as a suit under section 92 of the Code of Civil Procedure, and the order did not effect any legally operative alteration of the trust objects. The doctrine of cy pres was not attracted on the nature of the proceedings.

Conclusion: The civil court's order did not change the trust objects or convert the holding into property for charitable or religious purposes in India.

Final Conclusion: The assessee was not entitled to exemption under section 5(1)(i) of the Wealth-tax Act, 1957, and the assessment view in favour of the Revenue was sustained.

Ratio Decidendi: For exemption under section 5(1)(i) of the Wealth-tax Act, 1957, the charitable or religious purpose must be in India; the situs of the property alone is insufficient, and an order that does not validly alter the trust objects cannot convert an excluded foreign-purpose trust into an exempt Indian-purpose trust.

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