A colony in the modern sense is a territory outside, but under direct rule of, another nation. Usually as part of an empire.

Through the Peace Treaty of Versailles (Article 22) Germany and Turkey lost their empires outside their own territories. The thus liberated peoples on the other hand were deemed to be unable to care for themselves (on a divergent level) and thus needed the guiding hand of a benevolent mandatory power to reach said ability, so League of Nations Mandates were introduced.

http://net.lib.byu.edu/~rdh7/wwi/versa/versa1.html

Mandatory powers were usually France and Britain, but also South Africa, New Zealand and Australia in conjunction with Britain, and moreover Japan and Belgium.

India was a colony of Britain, Palestine was a League of Nations Mandate