TaxTMI 
TaxTMI 
1997 (3) TMI 11
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....or charitable purposes. The appeals relate to the assessment years covering the period prior to December, 1973. The assessee is a company limited by shares. It was incorporated in the year 1947 with a view to acquire and take over, as a going concern the activities, functions and business of the Delhi Stock and Share Exchange Limited and the Delhi Stock and Share Brokers' Association Ltd. The object for which the assessee was established was generally that of conducting a stock exchange and thus to promote and regulate the business in stocks, shares, debentures and other securities, to frame rules and bye-laws for regulating the conditions subject to which business on the stock exchange could be transacted and the like. The assessee deri....
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....employees or their relations clearly showed that the surplus of the activity carried on by the assessee was definitely for the benefit of the shareholders, employees or their relations and could not by any manner or means be treated as held for charitable purpose. According to the Tribunal, the mere fact that no dividends were declared or that the assessee did not carry on an object of general public utility, did not in any manner establish the trust for using the income for charitable purpose inasmuch as the income could be used for distribution as dividends or for creating funds for the benefit of shareholders, employees and their dependents. The High Court has agreed with the said view of the Tribunal. Proceeding on the assumption tha....
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....elp to the assessee as the requirement for the purposes of exemption is not the factual position, but whether in law the company is under any obligation to devote its profits only to religious or charitable purposes. Referring to the letters of the Central Government dated August 28, 1963, and March 1, 1973, wherein objection had been taken to presents being given by the assessee to its members on the ground that such presents amounted to distribution of dividends in specie, the High Court has observed that the said letters were merely advisory in nature and that they contained nothing more than a mere suggestion for implementation and that they had no compulsive or legal overtones. Shri Harish N. Salve, learned senior counsel appearing ....
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....[19751 101 ITR 234 (SC), has been approved : " Does the purpose of a trust restrict spending the income of a profitable activity exclusively or primarily upon what is 'charity' in law ? If the profits must necessarily feed a charitable purpose, under the terms of the trust, the mere fact that the activities of the trust yield profit will not alter the charitable character of the trust. The test now is, more clearly than in the past, the genuineness of the purpose tested by the obligation created to spend the money exclusively or essentially on 'charity'. " What is, therefore, required is, that there must be an obligation created to spend the money exclusively and essentially on charity. In the present case, as found by the High Court,....
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....amenities to the passengers using the road transport services, welfare of labour employed by the Corporation and for such other purposes as may be prescribed with the previous approval of the Central Government, (and out of the balance such amount as may, with the previous approval of the State Government and the Central Government, be specified in this behalf by the Corporation, may be utilised for financing the expansion programmes of the Corporation and the remainder, if any, shall be made over to the State Government for the purpose of road development). " It was contended that the Road Transport Corporation could issue shares even to members of the public and that dividend would be paid to the shareholders and, therefore, profit wou....