TMI Blog1961 (12) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... ceiving donations and subscriptions; and by such other means as the company deems fit. (b) To do the needful for the promotion of charity, education and industry. (c) For carrying on the business and activities of the company, for utilising the funds of the company profitably, and for the advancement of charity, education and industry in so far as is appropriate, to purchase, take on lease or for hire, to sell, to let on lease or for hire movable or immovable properties, to construct buildings, to purchase or assign shares, debentures, bonds and such other rights and securities and security bonds, to join in the kuries conducted by other institutions, to lend the company's funds and its kuri amounts on the security of immovable properties and movable properties such as kuri pass books, etc., to borrow for the requirements of the company on the security of the company's properties, to invest funds of the company in banks or securities, to accept as security for future subscriptions from prized subscribers movable or immovable properties, shares, bonds, debentures, etc. or specific or personal guarantee and accept and administer trust properties which are conducive to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution, referred to therein, but by the assessee itself. 11. For the purpose of a convenient reference, the relevant portion of the section with the proviso as amended by the Income-tax (Amendment Act, 1953), is reproduced below: 4(3) Any income, profits or gains falling within the following classes shall not be included in total income of the person receiving them: (i) Subject to the provisions of clause (c) of sub-section (1) of section 16, any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, in so far as such income is applied or accumulated for application to such religious or charitable purposes as relate to anything done within the taxable territories, and in the case of property so held in part only for such purposes, the income applied or finally set apart for application thereto: Provided that such income shall be included in the total income... (b) in the case of income derived from business carried on behalf of a religious or charitable institution, unless the income is applied wholly for the purposes of the institution and either-- (i) the business is carried on in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er context. In my view under the constitution of the assessee company. a person becomes a beneficiary only when the general body of the company decides to confer some particular benefit on him. As the work in connection with the business of the company is not being carried on by such people, I would find that neither the business of the company is carried on in the course of the actual carrying out of a primary purpose of the institution, nor the work in connection with its business carried on mainly by the beneficiaries of the institution, Therefore, its income from business does not get the exemption contemplated under section 4(3)(1) . 13. On appeal to the Appellate Assistant Commissioner, it was contended that: (a) the company is a public charitable trust, its properties are trust properties, investments whether in the shape of immovable property or movable property, investments on mortgages of landed property, investments in kuri kaipadas were all from savings, the investments of savings have the nature of trust and income therefrom is not liable for assessment under section 4(3)(i) of the Act. (b) The income derived from business was applied wholly for the purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties. The Appellate Assistant Commissioner has gone wrong in finding that the inclusion of the commission in kuries in profits was proper. 15. For the reasons given in its consolidated order in all the appeals, copy whereof is annexed hereto as annexure B and forms part of the case, the Tribunal rejected the assessee's contentions and upheld the order of the departmental officers. 16. On the above facts, the question of law that arises is: Whether the income derived by the assessee trust from business in kuries is exempt from tax under the provisions of section 4(3)(i) of the Act as amended by Act 25 of 1953 for the five years 1952-53 to 1956-57? 17. The departmental representative agrees to the statement. Learned counsel for the assessee, while agreeing that the facts are set out correctly, and that no material fact has been omitted herein, urges that all the questions proposed in his application except those numbered (i) and (ix) should be referred in the same form to the High Court. We are, however, of opinion that the question set forth above is comprehensive enough to cover all the questions proposed in the application for reference. We, therefore, dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (i) of sub- section (3) is: ...any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, in so far as such income is applied or accumulated for application to such religious or charitable purposes as relate to anything done within the taxable territories, and in the case of property so held in part only for such purposes, the income applied or finally set apart for application thereto. The exclusion is subject to clause (c) of sub-section (1) of section 16. We are not concerned with that provision. The relevant portion of the proviso to clause (i) sub-section (3) of section 4 reads as follows: Provided that such income shall be included in the total income-- (b) in the case of income derived from business carried on behalf of a religious or charitable institution, unless the income is applied wholly for the purposes of the institution and either-- (i) the business is carried on in the course of the actual carrying out of a primary purpose of the institution, or (ii) the work in connection with the business is mainly carried on by beneficiaries of the institu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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