1989 (9) TMI 83

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....ion of law raised in this reference at the instance of the Department is : "Whether, on the facts and in the circumstances of the case, the tribunal was right in law in holding that the income of the assessee company is exempt under section 11 of the Income-tax Act, 1961?" The assessee is a company. The proceedings relate to its assessment years 1971-72 and 1972-73. The company was incorpora....

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....rising therefrom in trust with an obligation on the company to apply the same wholly for the following purposes :-" By clauses (r), (s), (t) and (u) inserted in article 3, the utilisation of income for distribution of dividends, etc., was prohibited. The entire income of the assessee-company, after the amendment of the objects, it was ensured, was to be utilised for the purpose of charity only.....

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....ip Dwarkadas, learned counsel for the assessee-company, on the other hand, stated that the other clauses in article 3 of the memorandum of association such as clauses (a) to (d) and (f) to (q) empowered the company to carry on its business activities properly and efficiently. They did not deal with the utilisation of income. Clause (e), on the other hand, clearly and categorically provided that th....

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....(o) prohibit the utilisation of the assessee's income for any other purpose, the other clauses in article 3 merely empower the assessee-company to carry on its activities most efficiently. It is, therefore, not possible to appreciate as to what exactly was meant by Dr. Balasubramanian when he stated that the clauses in article 3 being independent, income could be applied for one or the other objec....