TaxTMI 
TaxTMI 
1977 (12) TMI 16
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....itable purpose as defined in section 2(15) of the Income-tax Act of 1961, and that consequently its income was exempt under the provisions of section 11(1) of the said Act ? " T. C. No. 188 of 1974 relates to the assessment years 1967-68 to 1970-71 and T.C. Nos. 176 to 178 of 1975 relate to the assessment years 1971-72 to 1973-74. In response to the notices issued to the assessee under section 148 of the Income-tax Act, 1961, hereinafter referred to as the Act, the assessee filed returns admitting a total income of Rs. 5,706 in the assessment year 1967-68 and nil income in the assessment year 1968-69. The assessee filed a nil return for the assessment year 1969-70. For those three years and for the assessment years 1971-72 to 1973-74,....
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....1965-66 dated June 16, 1967, that the assessee's income is exempt under section 4(3)(i) of the Indian Income-tax Act, 1922, as also the corresponding provision in the Act of 1961 and allowed the appeals holding that the income was exempt from tax under section 11 of the Act. The revenue took the matter in appeal to the Tribunal. Following the decision in Commissioner of Income-tax v. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC), the Tribunal held that the object in these cases would fall under the head " Advancement of the other objects of general public utility ". The Tribunal further found that " involving the carrying on of any activity for profit " would mean that the very object of the assessee should be the carrying on of any ....
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....use (1) of paragraph III of the memorandum of association of the appellant-association, the object is to promote and protect the trade in vegetable oil seeds and vegetable oils and oil cakes of all kinds and the trade, commerce and industry of vegetable oil manufacturers and allied products. Clause (3) says that the object of the association is to control and regulate and to make rules and bye-laws for the control and regulation of the business of sale and purchase of vegetable oils and vegetable oil seeds and oil cakes of all kinds, to open and close markets, fix brokerage for the periodical settlement of contracts and differences, pass on delivery orders, hold surveys of goods, etc. Clause (45) authorises the association to enter into par....
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....includes "relief of the poor", " education medical relief " and "advancement of any other object of general public utility not involving the carrying on of any activity for profit". Section 11(1)(a) of the Act exempts 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. In Sole Trustee, Loka Shikshana Trust v. Commissioner of Income-tax [1975] 101 ITR 234 (SC) it is observed : " The position as it existed under the Act of 1922 was that once the purpose of the trust was relief of the poor, education, medical relief or the advancement of any other object of general public utility, the trust was considered to be for a charitable pu....
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....not be a charitable purpose if it appears that the above purpose involves the carrying on of any activity for profit. The fact that in the assessment years 1968-69 no profit was realised and that in all the other assessment years, namely, 1967-68 and 1969-70 to 1973-74, the assessee suffered loss from the business would not affect the position, for, what we have to determine is whether the object of the assessee involves the carrying on of any activity for profit. The Tribunal has found that the object of the assessee involves the carrying on of activity for profit. But relying upon the earlier decisions of the Kerala High Court in Commissioner of Income-tax v. Indian Chamber of Commerce [1971] 80 ITR 645 and Commissioner of Income-tax v. C....
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....s much of its significance. We say so because we conceive that even in cases where a business is conducted not in carrying out the objects of the company but only in aid of achieving the objects of the company if that business is so linked or connected with the objects of the company, and, if the objects are such that it will fall only under ' objects of general public utility ', the charitable purpose will cease to be a charitable purpose as defined in the Act. And if the incidental object or even the purpose of the company is business, as conducting kuries is, the income or at least a specified part of it must be exclusively applicable to charitable purposes in order that income or the specified part thereof could be exempted from tax. A ....