TaxTMI 
TaxTMI 
1972 (10) TMI 30
X X X X Extracts X X X X
X X X X Extracts X X X X
....lowed under the Indian Companies Act too. The sources of income of the company are interest on securities, income from property and business of conducting kuries (chit funds). In a previous reference, viz., Dharmodayam Co. v. Commissioner of Income-tax a Division Bench of this court had occasion to consider the position relating to the kuries conducted by the company under section 4(3)(i) of the Indian Income-tax Act of 1922 ; and the Court held that the business of conducting kuries was held by the company under trust for religious or charitable purposes and proviso (b) to section 4(3)(i) was not attracted. The memorandum of association of the company had as its objects : "(a) To raise funds by conducting kuries with the company as the foreman ; receiving donations and subscriptions ; and by such other means as the company deems fit. (b) To do the needful for the promotion of charity, education and industry. It was in construing this portion of the memorandum of association that this court held that the business of conducting kuries was held by the company under trust for religious or charitable purposes, namely, "the promotion of charity, education and industry". The mat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny, it is clear that the raising of funds is by conducting kuries, by receiving donations and subscriptions and by such other means as the company deems fit. In other words, in the language of the earlier decision which is binding between the parties, the business of conducting kuries was held under trust by the company : conducting kuries was not itself a purpose or object of the company : it was a property of the company. Therefore, we do not think that the Mysore decision has any application to the case ; and, on the strength of that decision, the revenue cannot also contend that the answers to the questions referred should be in its favour. In this connection, the counsel for the revenue has brought a few other decisions also to our notice. The first decision is Commissioner of Income-tax v. Krishna Warriar, wherein the same Division Bench of this court which decided the earlier Dharmadayam Co. case had occasion to consider a similar case. There also the Division Bench held that Arya Vaidyasala at Kottakkal was a charitable institution and thus came within the purview of section 4(3)(i) of the Indian Income-tax Act of 1922. The matter was taken in appeal before the Supreme C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....try, the business of conducting kuries being only a property held in trust by the company. We may also refer to the other two or three decision cited by the counsel for the revenue. One of them is the decision of the Supreme Court in East India Industries (Madras) Private Ltd. v. Commissioner of Income-tax This decision, in our opinion, cannot give any assistance to the revenue, because one of the clauses in the trust deed that was considered by the Supreme Court contained as a purpose of the trust :- "to manufacture, buy, sell and distribute pharmaceutical, medicinal, chemical and other preparations and articles such as medicines, drugs, medical and surgical articles, preparations and restoratives of food." This is evidently not a charitable trust ; and we cannot apply this decision to the case before us, where conducting kuries was really not a purpose of the company but was only a property held in trust by the company. The three other decisions brought to our notice are the decisions of our High Court in Commissioner of Income-tax v. Indian Chamber of Commerce and Commissioner of Income-tax v Cochin Chamber of Commerce and Industry and the decision of the Calcutta High ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ity for profit; to that extent, we need not even disagree with that decision. Therefore that decision cannot also be applied to the case before us." An attempt has been made by the counsel for the revenue to contend that, in the case before its, one of the purposes is promoting industry and that promoting industry is an activity for profit. There is no case that Dharmodayam Company ever started any industry; there is also no ground for saying that the object, of the company was to start an industry for the purpose of making profit. The mere promotion of industry cannot be said to be starting an industry for profit. Therefore, this contention cannot also avail to the revenue. Lastly, the counsel for the revenue has argued on the second question that, under article 39 of the memorandum of association of the company, the entire profit for a year might be a set apart as reserve under this article and that provision would, therefore, vitiate the charitable nature of the company. In the view we have taken that the income has been spent only on charitable purposes (this is not disputed either) and that conducting kuries is not a purpose of the company as such, this contention cannot....