TMI Blog1978 (3) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... the members could represent to the Central and State Governments of the difficulties experienced by them in the law and Acts passed by the respective Governments. ii) To educate its members in scientific methods of business organisation for the development of tobacco trade on modern lines. iii) To settle disputes that might arise amongst its members; its members and outsiders and the members and their employees amicably. iv) To prevent its members from adopting undesirable and unsocial methods in their trade. v) To help the people in need and in destitute and to render assistance to the poor. To run a free hospital for the benefit of the poor and the members of the staff. vi) For the purpose of achieving the above objects the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Articles of Association which make it clear that the object of the Institution is to help the poor. This apart, there is another aspect to be considered. The Association had accumulated income over the expenditure for the years 1967-68 and 1969-70. According to cl. 11(2)(a) and they have applied to the ITO for permission to accumulate income and carry it forward for 10 years. This is one of the conditions to be satisfied under the main provisions of s. 11 for getting exemption. As these conditions have not been satisfied, the assessee would not be entitled for any exemption under s. 11 for asst. yrs. 1967-68 and 1969-70". He applied more or less the same reasoning for the asst. yr. 1970-71 and negatived the claim for exemption. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to time and helps to rule out a possible challenge on the ground that the company or the association has acted beyond its powers in undertaking a particular form of activity. As stated earlier the entire reasoning for the denial of exemptions for the relevant assessment years was built around the amendment introduced on 19th July, 1970 in the Memorandum and Articles of Association. The question before us is whether this reasoning is sustainable in law. The sources of income for the appellant are: (i) subscriptions from members, (ii) rusum collected by the members from the customers made over to the assessee and (iii) admission fees collected from the individual members. We do not think that the amendment introduced in the Memorandum and Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll of the matter. 3. It was not disputed that the Association had accumulated income over the expenditure for the asst. yrs. 1967-68 and 1969-70. It must be remembered that unlike the 1922 Act, the 1961 Act does not permit unrestricted accumulations of trust income. If accumulation in excess of 25 per cent of the trust-income is made for the purpose of trust, to secure exemption for the excess a written notice should be given to the ITO in the manner prescribed by R. 17, and the accumulated income should be invested or deposited as provided in s. 11(2)(b) of the Act; but in no case the income is allowed to be accumulated for more than 10 years. Learned representative for the Department has contended that since the written notice was not g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at we may he permitted to accumulate the income of our Association as we wish to purchase a building with the accumulated amount where on alteration of the building, we wish to start a free reading room, free medical dispensary as also an Auditorium all for the benefit of the public in general and the members of the staff and their families in particular." It is doubtless that the assessee sent a written notice to the ITO for the relevant asst. yr. 1969-70 and 1970-71. Admittedly the written notice was not in the manner prescribed by r. 17 Learned representative for the Department has contended that these written notices should be treated as honest and the position of the assessee was no better than its position for the asst. yr. 1967-68. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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