General public utility exemption applies where an association's dominant trade-promotion objects preclude private benefit and income is dedicated to those purposes.

An association whose dominant objects were to promote and protect sugar trade and industry, and to foster relations among those connected with that industry, was treated as pursuing an object of general public utility. The prohibition on distribution of income or property to members by way of dividend or bonus, and the presence of incidental powers under the Trade Unions Act, did not change that character or create a private benefit. On that basis, the association's income from sugar export business and interest on deposits fell within the exemption under section 4(3)(i) of the Indian Income-tax Act, 1922, because its property was held under a legal obligation for general public utility objects.

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Issues: Whether the association's income from sugar export business and interest on deposits was exempt under section 4(3)(i) of the Indian Income-tax Act, 1922 on the footing that the association's property was held under trust or other legal obligation for objects of general public utility.

Analysis: The decisive inquiry was the true character of the association's dominant objects and the manner in which its income and property were required to be applied. The principal objects were to promote and protect trade, commerce and industries connected with sugar and to foster relations among those concerned with the industry. The remaining clauses, including those relied upon by the revenue, were treated as subsidiary or incidental. Clause 4(a) prohibited distribution of income or property by way of dividend or bonus to members, and the reference to permissible expenditure under the Trade Unions Act did not alter the dominant character of the association's objects. Applying the governing principle that an object beneficial to a section of the public may still be an object of general public utility, the association was found not to be pursuing private gain but to be advancing an object of general public utility.

Conclusion: The association's income was exempt under section 4(3)(i) of the Indian Income-tax Act, 1922; the question was answered in the negative and in favour of the assessee.

Final Conclusion: The reference succeeded for the assessee, and the assessed income from sugar export and deposits was held not liable to tax in the relevant assessment years.

Ratio Decidendi: Where the dominant objects of an association are of general public utility and its income and property are bound to be applied solely to those objects without conferring private benefit on members, the association's income is entitled to exemption under section 4(3)(i) of the Indian Income-tax Act, 1922, even if incidental powers under another statute permit activities not themselves charitable.

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