TaxTMI 
TaxTMI 
1980 (5) TMI 8
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....ciety. (b) To promote and safeguard the business interests of its members incidental to the production of their publications and to take suitable steps in respect of such business as are affected by the action of legislatures, governments, law courts, municipal and local bodies, and associations or organizations, commercial or formed for any other purpose. (c) To collect information upon all topics having a practical business interest for its members and to communicate the same to them. (d) To promote co-operation in all matters affecting the common business interests of its members. (e) To hold periodical conferences of its members to discuss and determine action on matters of common business interest. (f) To make rules and regulations and bye-laws to govern the conduct of its members in accordance with the decisions of the society, to provide penalties for the infringement thereof and to provide means of determining whether there has been such infringement. (g) To maintain a permanent secretariat in India to watch over the business interests of its members and to permit a constant interchange of information and views. (h) To purchase, take on lease or hire or otherw....
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....under s. 23(3) of the Indian I.T. Act, 1922. The assessee-society owned building on Rafi Marg and the subject-matter of assessment was primarily in respect of the income from this building. It appears that in the original assessment the property income had been assessed under s. 10 of the 1922 Act. The ITO, subsequently, was of opinion that the property income should have been assessed under s. 9 of the said Act and he, therefore, initiated proceedings under s. 147(b) of the I.T. Act, 1961. He completed the reassessment by computing the income from the said property under s. 9 of the Act. For the assessment year 1961-62, when proceedings for reassessment were initiated on like grounds the assessee took up a contention before the ITO that its income was exempt from tax and relied in support of this contention on the decision of the Supreme Court in the case of CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722. But the ITO rejected this contention and completed the reassessment computing the income from property under s. 9, as in respect of the earlier assessment year. The position was the same in relation to the assessment years 1962-63 and 1963-64. For the assessment year 1964-65....
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....of 1976 and 207 & 208 of 1978, the following questions have been referred: " 1. Whether on the facts and in the circumstances of the case, the sole purpose of the society was the advancement of such objects of general public utility as did not at all involve the carrying on of any activity for profit ? 2. If the answer to question No. 1 is in the affirmative, whether, on the facts and in the circumstances of the case, the income of the society was exempt from tax under section 11 (1) of the Income-tax Act, 1961, by reason of it being derived from property held under trust wholly for charitable or religious purposes ? " In I.T.Rs. Nos. 15 & 16 of 1975, 172 & 173 of 1977 and 203 of 1977, the following questions have been referred: " 1. Whether the assessee was liable to pay no tax on its income for the relevant previous year on the ground that the same was derived from property held under trust wholly for charitable purposes within the meaning of section II (1) of the I.T. Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sole purpose of the society was the advancement of such objects of general public ut....
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....ying on the business of publishing newspapers in India could use the said accommodation only for the persons connected with it. There could not be more than one person in the room at a time and no guest was permitted to stay in or use the premises. Except for the portion of the building occupied by the society's guest-room, record room, printing room and the flat allotted to the society's secretary, members of the society were licensed to occupy the various rooms in the building. The society realised subscriptions amounting to Rs, 3,58,500 whereas the licence fee and apartment receipts were only to the extent of Rs. 1,62,362 against which an expenditure of Rs. 82,305 had to be incurred on maintenance, ground rent and tax. The society also published hand-books but the sales were only to the extent of Rs. 8,352. They were exclusively to the members and not to the public. There was actually a loss in this account because the cost of printing itself amounted to Rs. 14,022. Thus, it was contended that the means and the ends of the society fell strictly within the scope of " charitable purpose " as defined in s. 2(15) and that the advancement of the objects of the society did not involve....
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....of commerce in relation to business or commerce in general or to a particular type of trade. We are unable to see any difference in principle between the nature of the activities contemplated by the present society and the nature of the activities contemplated in the Andhra Chamber of Commerce case [1965] 55 ITR 722 (SC) or the Surat Art Silk Cloth Manufacturers' Association case [1980] 121 ITR 1 (SC) except that they have been formed in relation to different types of trades or businesses. We are clearly of opinion that the Tribunal was right in coming to its conclusion that the principal objects of the society are of general public utility within the meaning of s. 2(15) of the Act. Indeed, apart from the argument addressed on the basis of sub-cls. (h), (i) and (k), it has not been seriously disputed by the I.T. authorities that the purposes of the present society fulfil the requirments of s. 2(15) of the Act. The only argument on behalf of the department was based on sub-cls. (h), (i) and (k) and it was suggested that since these clauses enable the society to let out its property and to collect contributions and subscriptions from the members it should be treated as having non-cha....
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....earning profit. It is not enough merely that some activity is being carried on and it results in a profit. In other words, the predominant object of the activity in question should be the making of profit before the inhibition of the last ten words could be attracted. Where an activity is not pervaded by a profit motive but is carried on primarily for serving charitable purpose it would not be correct to describe it as an activity for profit. But, on the other hand, if the activity is carried on with the predominant object of earning profit then it would be an activity for profit though it may be carried on in advancement of the charitable purposes of the trust or institution. Where an activity is carried on as a matter of advancement of the charitable purpose or for the purposes of carrying out the charitable object, while it would be correct to say that the charitable purpose involves the carrying on of such an activity, the predominant object of such activity would be to subserve the charitable purpose and not to earn profit. Differing from the observations in the Loka Shikshana Trust's case [1975] 101 ITR 234 (SC) and the Indian Chamber of Commerce's case [1975] 101 ITR 796 (SC....