TaxTMI 
TaxTMI 
1981 (4) TMI 8
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....est on securities Other income Rs. Rs. 1962-63 3,779 28,035 1963-64 8,629 3,04,103 1964-65 9,356 96,322 The ITO subjected to tax the income from both the sources for all the three years. In appeals preferred to the AAC, it was contended by the assessee that its other income by enrolment fees was exempt under s. 10(23A) and interest on securities was exempt from tax under s. II of the I.T. Act, 1961. The AAC negatived the exemption claimed under s. 10(23A) in the absence of the Central Govt.'s notification according approval to the association and with regard to the claim for exemption in respect of the interest on securities he held that it was not established that the securities were held on trust for any charitable purpose. He took the view that the main object of the assessee-council was to benefit the legal profession (its members) and, therefore, the object was not one of general public utility. Accordingly, he confirmed the assessment orders for the three years. The matter was carried in further appeal to the I.T. Appellate Tribunal and since by that time the Central Govt. had accorded approval to the assessee for the purpose of s. 10(23A) by a notification ....
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....me of an association or institution established in India having as its object the control, supervision, regulation and encouragement of the profession of law, medicine, accountancy and any other profession as the Central Govt. may specify, has expressly excluded from exemption such association's or institution's income chargeable under the head "Interest on securities" or "Income from house properties " or " Any income received in rendering any specific service ", etc., and, therefore, what has been expressly excluded from exemption under this provision could not be or was not intended to be exempt under S. 11 of the Act. In other words, the assessee-council's claim for exemption in respect of interest on securities under s. 11 was ruled out by reason of s. 10(23A) of the Act. Secondly, counsel contended that, on merits, the High Court's view that the assessee-council was a body constituted for advancement of an object of general public utility was erroneous inasmuch as it was a body established principally for the purpose of safeguarding the rights, privileges and interests of the advocates on its roll and since such objective merely served to benefit the members of the profession....
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.... We, therefore, proceed to deal with the second contention which was principally argued before us in these appeals. Under s. 11 of the I.T. Act, 1961, subject to the conditions therein specified, income derived from property held under trust wholly for charitable or religious purposes to the extent to which such income is applied to such purposes in India is exempt from the tax liability under the Act and s. 2(15) gives an inclusive definition of the expression "charitable purpose " thus: " ' Charitable purpose ' includes relief of the poor, education, medical relief and the advancement of any other object of general public utility not involving the carrying on of any activity for profit. " It may be noticed that whereas any object of general public utility was included in the definition of " charitable purpose " in the 1922 Act, the present definition has inserted the restrictive words " not involving the carrying on of any activity for profit " which qualify or govern the last head of charitable purpose. In CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722, a case decided by this court under the 1922 Act, where the restrictive words were absent, this court laid down that if ....
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....Eliz. ch. 4) and all objects of general public utility are not necessarily charitable, some may or some may not be depending upon whether they fall within the spirit and intendment of the statute of Elizabeth. Under our definition every object of general public utility would be charitable subject only to the condition imposed by the restrictive words inserted in the 1961 Act. It is because of this basic difference between Indian law and English law of charity that Lord Wright in All India Spinners' Assn. v. CIT [1944] 12 ITR 482 (PC) uttered a warning against blind adherence to English decisions oil the subject thus (p. 486): " The Indian Act gives a clear and succinct definition which must be construed according to its actual language and meaning. English decisions have no binding authority on its construction and though they may sometimes afford help or guidance, cannot relieve the Indian courts from their responsibility of applying the language of the Act to the particular circumstances that emerge under conditions of Indian life." Having regard to the aforesaid manner in which the definition of " charitable purpose " given in s. 2(15) has been interpreted by this court the qu....
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....he purpose of (a) giving financial assistance to organise welfare schemes for the indigent, disabled or other advocates ; (b) giving legal aid or advice in accordance with the rules made in this behalf. " Sections 9, 9A and 10 of the Act provide for the constitution of various committees for the purposes mentioned therein. Section 15 confers power on the Bar Council to make rules to carry out the purposes of this chapter. The rest of the provisions of the Act are not material for the purpose of the issue under consideration. Counsel for the revenue contended that the primary object or purpose with which the Bar Council of a State is constituted is to benefit the members of the legal profession in as much as under s. 6(1)(d) it is an obligatory function of the State Bar Council to safeguard the rights, privileges and interests of the advocates on its roll and that other functions like promotion of law reform, conducting law seminars, etc., are incidental objects and the benefit to the public is remote or indirect or incidental and" therefore, the assessee-council could not be regarded as a body intended to advance the object of general public utility. It is impossible to accept th....
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....sistance to organise welfare schemes for the indigent, disabled or other advocates; but it is an optional or discretionary function to be undertaken by the council. Apart from that, admittedly, the assessee-council has not so far constituted any such fund for the purpose specified in the instant case. As and when such a fund is constituted, question may arise for consideration and the court may have to decide whether the function so undertaken by a State Bar Council has become the dominant purpose for which that council is operating. Having regard to the preamble of the Act and the nature of the various obligatory functions including the one under cl. (d) enjoined upon every State Bar Council under s. 6(1) of the Act, it is clear that the primary or dominant purpose of an institution like the assessee-council is the advancement of the object of general public utility within the meaning of S. 2(15) of the Act, and as such the income from securities held by the assessee-council would be exempt from any tax liability under s. 11 of the Act. Having come to the aforesaid conclusion on applying the language of our Act to the nature of functions undertaken by a State Bar Council under th....