TMI Blog1944 (6) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... other poor people for hand-weaving into cloth. The cloth so produced for the appellant was then sold by the appellant. During the relevant accounting year these activities resulted in a profit to the appellant. The appellant also had income from interest during the same year and the appellant was assessed to income-tax and super-tax for the year 1936-37 on the whole of such profit and income. The question at issue in this appeal is whether the appellant was for the year 1936-37, exempt from liability to income-tax and super-tax under Section 4 (3)(i) of the Act, on the ground that the whole of the profit and income in question was income derived from property held under trust or other legal obligation wholly for charitable purposes. This depends on the true construction as applied to the facts of the case of Section 4(3)(i) of the Act which is as follows:- (3) This Act shall not apply to the following classes of income: (i) Any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied, or finally set apart for application thereto. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ans, gifts or bounties, to help or establish schools or institutions where hand-spinning is taught, to help and open khaddar stores, to establish a khaddar service, to act as agency on behalf of the Congress to receive self-spun yarn as subscription to the Congress and to issue certificates and to do all the things that may be considered necessary for the furtherance of its objects, with power to make regulations for the conduct of affairs of the Association of the Council and to make such amendments in the present constitution, as may be considered necessary from time to time. Later clauses of the constitution stated the conditions under which persons could become members of the Association. In particular they were to be over 18 years of age, habitually wearing khaddar, and depositing regularly with the Council each month 1000 yards of self-spun yarn well twisted and uniform. The method by which the appellant worked, and the manner in which its profits were earned were as follows: Out of the funds in its hands which have mostly been contributed by donations from the public and subscriptions from the members of the Association, the Association buys charkhas and hand looms, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e carried out and the purpose for which its funds are applied, the income of the Association is liable to income-tax and/or super-tax. His opinion was in substance that the dominant purpose of the Association was political and therefore not charitable and that it was in any event not a charitable purpose, the object of the Association being the promotion and organisation of the hand-spinning and weaving industry which was carried out on a strictly trading basis and was in no way different from the activity of a trading concern. The wages paid to the workers were based on the work they did and not on their needs. The object he thought was not the relief of the poor, nor was the object one of general public utility. At most only a section of the general public could benefit from it. On the reference coming before the High Court in Bombay, constituted by the Chief Justice and Wadia, J., they answered the question in the affirmative. They based their decision on the ground that assuming as they did for the purpose of the case that the object was the relief of the poor, it still did not fall within Section 4(3) of the Act, because the income was not derived from property held under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular; the words of the section are for the advancement of any other object of general public utility whereas Lord Macnaghten's words were other purposes beneficial to the community. The difference in language, particularly the inclusion in the Indian Act of the word public is of importance. The Indian Act gives a clear and succinct definition which must be construed according to its actual language and meaning. English decisions have no binding authority on its construction and though they may sometimes afford help or guidance, cannot relieve the Indian Courts from their responsibility of applying the language of the Act to the particular circumstances that emerge under conditions of Indian life. The judgment appealed from treated the problem under two main headings: (1) was there a trust or other legal obligation under which the property from which the income was derived was held; (2) was that trust a legal obligation for the relief of the poor or for any other object of general public utility? In dealing with these questions it is in their Lordships' opinion necessary to examine the constitution of the appellant Association. It is true that it is an uninco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stioned that the practice has been to use the surplus income for the purposes of the Association and that the business has been carried on in pursuance of the primary purpose in addition mainly by beneficiaries of the Association. The practice however is not enough. The purpose is to be ascertained from the constitution. In their Lordships' judgment its provisions already quoted show a trust or binding obligation so to carry it on. The constitution is a written instrument, the terms of which bind not only the trustees and Council, but the members who by their application for membership accept its rules. Any departure either by the trustees or Council or members from the rules would be a breach of trust or legal obligation which the Court could restrain. A formal deed is not necessary to constitute a trust, still less to constitute a legal obligation on binding the trustees, the Council and the members inter se. Their Lordships hold that there is such a trust or at least that there is a legal obligation, which is all that the section requires. It is true that the rules may be altered by the unanimous agreement of all the members. But that is immaterial so long as the rules remai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural operations. The Judges in India with their knowledge of Indian conditions are peculiarly qualified to form an opinion on these matters. But their Lordships see no sufficient reason to doubt the conclusion that the primary object of the Association was the relief of the poor. That would be enough prima facie to satisfy the statute. But there is good ground for holding that the purposes of the Association included the advancement of other purposes of general public utility. These last are very wide words. Their exact scope may require on other occasions very careful consideration. They were applied in the Tribune Press case* without any very precise definition to the production of the newspaper in question under the conditions fixed by the testator's will. The Board stated (at p. 256) that the object of the paper might be described as the object of supplying the province with an organ of educated public opinion and that it should prima facie be held to be an object of general public utility. These words, their Lordships think, would exclude the object of private gain, such as an undertaking for commercial profit though all the same it would subserve general ..... X X X X Extracts X X X X X X X X Extracts X X X X
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