TaxTMI 
TaxTMI 
1985 (7) TMI 70
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....ight in law in holding that the income of the assessee-trust was not income derived from property held on trust wholly for charitable purpose within the meaning of section 11 of the Income-tax Act, 1961 ? " The assessment years involved are 1972-73 and 1973-74. The previous years for the aforesaid assessment years ended on July 8, 1971, and July 26, 1972, respectively. The assessee's income for the assessment year 1972-73 was Rs. 3,495 whereas so far as the assessment year 1973-74 was concerned, it was nil. The Income-tax Officer disallowed the assessee's claim for accumulation in terms of section 11(2) of the Income-tax Act, 1961 (Act No. XLIII of 1961) (for short "the Act"), for Rs. 20,000 in the assessment for that year (and computed ....
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....oposed by the assessee in its application, to this court for decision, which we have already reproduced hereinabove. We have heard Mr. K.C. Bhandari, learned counsel for the assessee, and Mr. B. R. Arora, learned counsel for the Revenue, and have carefully considered the trust deed dated September 20, 1950, and the order of the Tribunal dated September 29, 1977. Section 11 of the Act deals with income from property held for charitable or religious purpose. Section 2(15) defines " charitable purpose ". It is an inclusive definition and, amongst others, includes advancement of any other object of general public utility and not involving any activity for profit. The material clauses in the trust deed dated September 20, 1950, are clauses....
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....l public utility is to subserve the charitable purpose or to earn profit. Where profit-making is the predominant object of the activity, the purpose, though an object of general public utility, would cease to be a charitable purpose. But where the predominant object of the activity is to carry out the charitable purpose and not to earn profit, it would not lose its character of charitable purpose merely because some profit arises from the activity. The exclusionary clause does not require that the activity must be carried on in such a manner that it does not result in any profit....' 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 al....
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.... the nature and width of the powers as evidence of the charitable or non-charitable nature of the purpose. " With respect to Indian Chamber of Commerce's case [1975] 101 ITR 796 (SC), it was observed by his Lordship Pathak J. as follows ([1980] 121 ITR at p. 35) : "........ I am compelled, with respect, to hold that the observations of Krishna Iyer J., speaking for the court, in Indian Chamber of Commerce v. CIT [1975] 101 ITR 796 (SC), do not accord with what I believe to be true construction of s. 2(15). If that decision can be justified, it can be only on the basis that in the opinion of the court, the true purpose of the trust or institution was not essentially charitable. I am unable to accept the proposition that if the purpose ....
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....ral public utility as envisaged by section 2(15) of the Act. Mahakoshal Shaheed Smarak Trust v. CIT [1983] 140 ITR 795 (MP), is an authority nearer home. In that case, after holding that the trust was of general public utility within the meaning of section 2(15) and it was charitable trust, it was observed as under (headnote): " It was true that under the terms of the deed, the trustees had the power to see that sufficient income accrued to the trust from rents by letting out its premises and from fruits and flowers, swimming pool and literary and other publications, but it was clear from the other clauses of the deed that the trustees had to do all acts which were reasonable and proper for the realisation, protection, and benefit of ....