2007 (12) TMI 7

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....ble to income-tax under Section 10(20) of the Income-tax Act, 1961. 4. By Finance Act, 2002, an Explanation was added in Section 10(20) by which "Local Authority" was defined. It gave a restricted meaning to the word "Local Authority". By reason of the said Explanation, the expression "Local Authority" was confined to panchayats, municipality, municipal committee, district board and cantonment board. Thus, Maritime Board did not come within the definition of the expression "Local Authority". 5. Under the circumstances, Gujarat Maritime Board made an application to the Commissioner for registering it (Board) as a "Charitable Institution" as defined under Section 2(15) of the Income-tax Act, 1961 (hereinafter for the sake of brevity as "1961 Act"). Accordingly, they claimed exemption as Charitable Institution in respect of income derived from their property/business under Section 11 of the 1961 Act. This has been denied by the Department. 6. The short controversy which we are required to decide in this case is: whether the Maritime Board is entitled to the status of a Charitable Institution under Section 11 of the 1961 Act. We may clarify that in this case we are concerned w....

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.... (e) the contributions, if any, duly authorized to be made by regulations made under this Act to any such fund as is referred to in clause (d); (f) such sums as may, from time to time, be agreed upon by the Board and the State Government or the Central Government or any other authority, as a reasonable contribution payable by the Board towards the expenses in connection with the watch and ward functions of the Police Force or the Central Industrial Security Force or any other Force which the State Government or the Central Government or any other authority, as the case may be, may establish and maintain for the protection of the port and the docks, warehouses and other property of the Board; (g) the cost of repairs and maintenance of the property belonging to or vested in the Board and all charges upon the same and all working expenses; (h) the cost of the execution and provision of any new work or appliance specified in section 25 which the Board may determine to charge to revenue; (i) any expenditure incurred under section 26; (j) any other expenditure which may be incurred by the Board generally for the purposes of this Act; ....

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.... such income is applied to such purposes in India; and, where any such income is finally set apart for application to such purposes in India, to the extent to which the income so set apart is not in excess of twenty five per cent of the income from such property; (c) income derived from property held under trust-- (i) created on or after the 1st day of April, 1952, for a charitable purpose which tends to promote international welfare in which India is interested, to the extent to which such income is applied to such purposes outside India, and (ii) for charitable or religious purposes, created before the 1st day of April, 1952, to the extent to which such income is applied to such purposes outside India : Provided that the Board, by general or special order, has directed in either case that it shall not be included in the total income of the person in receipt of such income; (d) income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution... 11.(4) For the purposes of this section "property held under trust" includes a business undertaking so hel....

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....ht of the above case of the Department, we are required to consider the expression "any other object of general public utility" in Section 2(15) of the 1961 Act. 13. At the outset, we may point out that Section 10(20) and Section 11 of the 1961 Act operate in totally different spheres.  Even if the Board has ceased to be a "Local Authority", it is not precluded from claiming exemption under Section 11(1) of the 1961 Act. therefore we have to read Section 11(1) in the light of the definition of the words "charitable purposes" as defined under Section 2(15) of the 1961 Act. 14. We have perused number of decisions of this Court which have interpreted the words, in Section 11(15), namely, "any other object of generally public utility". From the said decisions it emerges that the said expression is of the widest connotation. The word "general" in the said expression means pertaining to a whole class. Therefore, advancement of any object of benefit to the public or a section of the public as distinguished from benefit to an individual or a group of individuals would be a charitable purpose (CIT,  v. Ahmedabad Rana Caste association ­ [1983] 140 ITR 1 (SC)). The said e....