TMI Blog2016 (10) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... h nonprofit making company gets its origination. We further observe that the working of assessee company is for the member industries of GIDC Industrial Estate and the public at large is not coming in the picture nor is there any indication in the objects which says that any specific activity for the objects to general public utility will be carried out rather the contention of assessee is indicating about remote and dim effect on the general public will be there with the attainment of main objects but we do not find it so. Therefore, respectfully following the decision of Hon. High Court in the case of Ahmedabad Mill Owners’ Association (1975 (11) TMI 27 - GUJARAT High Court) and looking to the facts and objects of the case before us, we are of the view that main objects of the assessee company are not covered under the provisions of section 2(15) of the Act and are not charitable in nature as they are confined to a special class of member industries of GIDC Industrial Estate, Panoli. Accordingly, we find no reason to interfere with the order of ld. CIT and dismiss the appeal of assessee. - ITA No. 469/Ahd/2014 - - - Dated:- 23-5-2016 - Shri Kul Bharat, JM And Shri Manish Bora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which do not restrict the activity to the members only. Your honor may please refer particularly Clause 5,6,7,8,9,10......... to Clause 16,17,18,19,20 which do not speak of the members of the company but vastly extend to benefit the mankind and therefore satisfies the condition of General Public Utility as envisaged in section 2(15) of the Income Tax Act. Ld. AR further submitted that, it should be construed that if a benefit is obtained by a section of public even though it amounts to benefit to General Public in order to serve a charitable purpose. It is not necessary that the object should be to benefit the whole mankind or even all persons living in a particular country or province. It is sufficient if the intention is to benefit a section of the public as distinguished from specified individual [CIT vs. Andhra chamber of Commerce 1965] ACR 565. An object of general public utility meant that public utility which is available to the general public as distinct from any section was upheld by the Supreme Court. Public, is meant not for humanity as a whole but some indefinite class of persons, across section of the community. The Supreme Court decision in case of Ahmedabad Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore satisfies the condition of General Public Utility as envisaged in sec.2(15) of the I.T. Act. The learned counsel for the assessee further submitted that it should not be construed that if a benefit is obtained by a section of public even though it amounts to benefit of General Public in order to serve a charitable purpose. It is not necessary that the object should be to benefit the whole mankind or even all persons leaving in a particular country or province. It is sufficient if the intention is to benefit a section of the public as distinguished from specified individual. According to hi, an object of general public utility meant that public utility which available to the general public as distinct from any section was approved by the Hon. Supreme Court. Public is meant not a humanity as a whole but some indefinite class of persons, a cross section of the community. In support, he relied on the decision of the Allahabad High Court in the case of CIT vs. Radha Swami Satsang Sabha (1964) 25 ITR 472 (All). Further to substantiate the expression object of general public utility in section 2(15) would include only those objects which promote welfare of the general publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of High Court of Gujarat/High Court of Punjab Haryana the main object of assessee cannot be said to be for charitable purpose within the purview of section 2(15) of IT Act. Accordingly, registration u/s 12AA of the Act cannot be granted and is refused. 8. Now as far as comparison of the objects of the assessee and that of Nandeswari Water Utilities Ltd. (supra) let us examine the main objects of both the companies registered u/s 25 of the companies Act as non-profit making organization. Main Object of the assessee company are as under :- 1. To build, construct, operate and maintain water supply scheme, drainage scheme, storm water drainage scheme, gas Utility Services, Power Utility, Road Network, Rainwater harvesting, artificial recharging and other utilities of Panoli GIDC Industrial Estate for the benefit of member industries and the doing of all such other lawful things as are incidental or conducive to the attainment of the above objects. Main object of Nandesari Water Utilities Ltd. 1. To build, construct, operate and maintain water supply scheme, drainage scheme, storm water drainage scheme, Gas Utility Services, Power Utility, Road Network, Rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blic is meant not a humanity as a whole but some indefinite class of persons, a cross section of the community. In support, he relied on the decision of the Allahabad High Court in the case of CIT vs. Radha Swami Satsang Sabha (1964) 25 ITR 472 (All). Further to substantiate the expression object of general public utility in section 2(15) would include only those objects which promote welfare of the general public and not the personal and individual interest of some one. In this regard he relied on the decision of the Gujarat High Court in the case of ACIT vs. Ahmedabad Mill Owners Association (1977) 106 ITR 725 (Guj). He also contended that general means pertaining to a whole class public means the body of people at large including any class of the public and utility means usefulness. Therefore, the advancements of any object beneficial to the public or a section of the public as distinguished from an individual or group of individual would be a charitable purpose. In support, he relied on the decision of the Bombay High Court in the case of Bar Council of Maharashtra vs. CIT (1980) 126 ITR 27 (Bom). The ld. counsel for the assessee accordingly submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Andhra Chamber of Commerce (1965) 55 ITR 722 (SC), that personal welfare of specified individuals would be incidental or consequential to the main purpose of general public utility, but a converse of this proposition is not always true. Now, if we examine the objects contained in els. (a), (b) and (e) from this point of view, it will be at once noticed that these objects seek to protect the interests of millowers and users of motive power and also of those concerned with them. Clause (b) contemplates the promotion of good relations between the Persons and Bodies using such powers and cl. (c), which is consequential to els. (a) and (b), contemplates doing of those aets and things by which the objects covered by cl. (a) and (b) may be attained. Thus, all these three clauses aim at protecting personal interests and not public interests. If this is so, the respondent-association is bound to carry on its activity keeping in mind the narrower concept of promoting the personal mud sellserving interests of individuals who are considered millowners and users of motive power even when their interests are in conflict with the interests of their own trade or industry. If a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the learned Advocate-General that the category of persons covered by the expression millowners and users of motive power constitutes a section of the public, which can legitimately form the object of a charitable purpose. The observations make it clear that the section of the public which is to be benefited to make the purpose a charitable one should have a common quality of either a public nature or an impersonal nature. Can it be said that millowners and users of motive power have a common quality of a public nature ? If they have any common quality the same is obviously of a private nature, as each one of them is concerned with his own interest and shares nothing in common with the public. It was contended that their common quality is the fact that each one of them is either a millowner or a user of motive power. Granting that this is their common quality, it cannot be said that the said common quality possesses the attributes of a public or impersonal nature. If individuals, whose only common quality is their profession or vocation, can legitimately be invested with the attributes of a public nature, then every partnership, company or an AOP can be an objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishment or the creation of funds to benefit employees of the association or the dependants of such persons while the second part contemplates subscriptions, donations or guarantees or charitable or benevolent purposes at the discretion of the association. Now, so far as the first part is concerned, it is covered by the decision in Oppcnhcim vs. Tobacco Securities Trust Co. Ltd. (1951) AC 297 (HL), to which reference is made by the Supreme Court in Ahmedabad Rana Caste Association's case (supra) of the report. The facts of that English decision were that the trustees were directed to apply certain income in providing for the education of children of employees or former employees of a British limited company or any of its subsidiary on ailied companies. The House of Lords held in this case by majority that though the group of persons indicated was numerous, the nexus between them was employment by particular employers and, accordingly, the trust did not satisfy the test of a public benefit requisite to establish; it as charitable. This principle has been approved by our Supreme Court and, therefore, the first part of the object cl. (e) is also not found to be for general publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses of the body of persons and is not merely incidental to the charitable purposes, the body of persons is not a body of persons formed for charitable purposes only, within the meaning of the IT Acts Oxford Group vs. IRC (1949) 2 All ER 537 : 31 TC 221 (CA) (3) If a substantial part of the objects of the body of persons is to benefit its own members, the body of persons is not established for charitable purposes only-IRC vs. Yorkshire Agricultural Society (1928) 1 KB 611 (CA). In our opinion, the present case falls within the second and third categories mentioned by Lord Cohen. Even otherwise it is apparent that different objects contained in r. 3 are mixed objects and it is further clear by reference to rr. 22 and 22(a) that the funds of the association can be spent on any of these objects at the discretion of the managing committee. Hence, the present case is fully covered by the ratio of the Privy Council decision in Mohammad Ibrahim Riza Malak vs. CIT AIR 1930 PC 226, where it is held that where the property is vested in the head of a community under deeds of trust, but the trust property is applicable to purposes, many of which are neither religious nor charitable, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany shall charge the cost of services to the member industries only. This indicates that the objects for which the assessee company is seeking registration u/s 12A, they generally come in the area of work of local authorities or the Government Department which has established the industrial estate but for the better and improved quality of services that too within the control of member industries the concept of formation of such nonprofit making company gets its origination. We further observe that the working of assessee company is for the member industries of GIDC Industrial Estate and the public at large is not coming in the picture nor is there any indication in the objects which says that any specific activity for the objects to general public utility will be carried out rather the contention of assessee is indicating about remote and dim effect on the general public will be there with the attainment of main objects but we do not find it so. Therefore, respectfully following the decision of Hon. High Court in the case of Ahmedabad Mill Owners Association (supra) and looking to the facts and objects of the case before us, we are of the view that main objects of the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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