1984 (1) TMI 57 - HC - Income Tax

Summary

Issues:
1. Whether the assessee-council could be considered a body intended to advance any object of general public utility.
2. Whether the income from interest of the assessee-council was exempt under section 11 of the Income-tax Act, 1961.

Analysis:
The judgment pertains to a reference made by the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur regarding the Bar Council of Rajasthan. The Bar Council claimed exemption for its interest income under section 11 of the Income-tax Act, 1961, contending that it was a body intended to advance objects of general public utility. The Income Tax Officer (ITO) had taxed the interest income from securities received by the assessee-council. The Appellate Authority Commissioner (AAC) and the Income-tax Appellate Tribunal affirmed the decision, stating that the council's functions were not of general public utility but served the interests of its members. The Tribunal referred two questions to the High Court for opinion.

The High Court noted that similar questions were decided by the Supreme Court in the case of Bar Council of Maharashtra. The Supreme Court had held that the primary purpose of such bodies is the advancement of the object of general public utility, making income from securities exempt from tax under section 11 of the Act. The High Court, following the Supreme Court's decision, answered both questions in favor of the assessee-Bar Council, affirming that the council's primary purpose aligns with the advancement of general public utility, thus exempting its income from tax liability under section 11.

In conclusion, the judgment establishes that bodies like the Bar Council, constituted under the Advocates Act, serve the general public utility, making their income from securities exempt from tax under section 11 of the Income-tax Act, 1961. The decision aligns with the Supreme Court's interpretation and sets a precedent for similar cases involving such entities.