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TMI Blog1970 (9) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... y was registered under section 26 of the Indian Companies Act, 1913, and was permitted to omit the word " limited " from its name. The income on which the tax is questioned arises in this case from three different sources. The first is the arbitration fees. The second is the fees for certificate of origin. The third source arises from the share of profit of the assessee which arises in the following way. Formerly, the Chamber had a measuring department where it used to undertake all types of weighment and measurements for the benefit of the traders in general for which it charged fees. The Bengal Chamber of Commerce, a sister concern, had also a similar department. By an agreement dated the 20th March, 1962, the two chambers of commerce agreed to carry on the business formerly carried on by the two chambers in their measuring departments in partnership under the name and style of Messrs. Calcutta Licensed Measurers on and from the 1st April, 1962. The Income-tax Officer found that, apart from receipts by way of admission fees, members' subscription, affiliation and other receipts which were not assessable as no specific services were rendered in respect thereof, the assessee-cham ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haritable purpose, according to the assessee, is " advancement of any other object of general public utility not involving the carrying on of any activity for profit " under section 2(15) of the Income-tax Act, 1961. In support of this contention the memorandum and articles of association were invoked to emphasise that the objects of the Indian Chamber of Commerce, the assessee, are (a) to promote and protect the trade, commerce, and industries of India, and, in particular, the trade, commerce and industries in or with which Indians are engaged or concerned, (b) to aid and stimulate the development of trade, commerce and industries in India with capital principally provided by or under the management of Indians, (c) to watch over and protect the general commercial interest of India, or any part thereof, and the interests of persons, in particular, the Indians, engaged in trade, commerce or industries in India, (d) to consider all questions connected with trade, commerce and industries, and to initiate or support necessary action in connection therewith, and (e) to do all other things as may be conducive to the development of trade, commerce and industries or incidental to the attai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examine in detail these different authorities. They are all to be distinguished on the ground that they did not deal with the new amended law defining " charitable purpose " under section 2(15) of the Income-tax Act, 1961, by the introduction of the expression " not involving the carrying on of any activity for profit ". This is the crucial expression on which the answer to the question depends. It involves a question of interpretation and a construction of that expression in section 2(15) of the Income-tax Act, 1961. The statement of the case and the question raised indicate that the income arising from these three sources in question in this case are described as " activities for profit ". That would indicate that it was common ground between the revenue and the assessee in the proceedings for taxation leading up to the decision of the Tribunal that, (i) these were activities, and (ii) that the incomes taxed were profits as will be evident not only from the statement of the case and the question raised, but also from paragraph 7 of the decision of the Tribunal. It should be noted here that of the three sources from which this income is derived in this case, only one, viz., arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of general public utility would be a charitable purpose provided that its advancement does not involve the carrying on of any activity for profit. The wisdom behind this limitation is plain. The expression " object of general public utility " is an expression of wide import and it was therefore thought necessary by Parliament in its wisdom to impose certain restrictions on the area of the object of general public utility and the area selected is that its advancement must not involve the carrying on of any activity for profit. An appropriate interpretation of section 2(15) of the Income-tax Act, 1961, is to consider the expression " not involving the carrying on of any activity for profit " as qualifying the expression " the advancement of any other object of general public utility " and not the other classes of charitable purpose mentioned in that section like relief of the poor, education and medical relief. That is the only way by which to avoid a conflict between section 11 and section 2(15) of the income-tax Act, 1961, specially with the provisions of sections 11(1)(a) and 11(4) of the Income-tax Act, 1961. This view of the interpretation of the expression the " advancemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself so that income arising from such business undertaking would, subject to the qualifications of section 11, qualify for the exemption. It needs to be remembered that section 11 of the Income-tax Act, 1961, comes under Chapter III of the statute dealing with incomes which do not form part of the total income. The next section to which reference may be made in considering the interpretation of section 2(15) of the Income-tax Act, 1961, is section 28 which comes under Chapter IV of the Income-tax Act dealing with computation of total income and dealing in particular with profits and gains of business or profession. Significantly, section 28 provides inter alia, that the income chargeable to income-tax shall, among other incomes, include " income derived by a trade, professional or similar association from specific services performed for its members ". It illustrates the principle that if " specific services " are rendered by a trade, professional or similar association, then the income derived from it would be chargeable to income-tax. Therefore, we are of the opinion that the interpretation which we have given to section 2(15) of the Income-tax Act, 1961, will be consistent wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrent Cases " appearing in [1970] 76 I.T.R. (Sh. N.) 17. We do not think it is a desirable practice to rely on such short notes of current cases without the full judgment before the court. But we do not think that the view we are taking is in any way inconsistent with such short notes as have been placed before this court. Dr. Pal for the assessee referred to the English cases to explain and illustrate the concept of " activity for profit ". In the first place, he relied on the decision in Trustees of the National Deposit Friendly Society v. Skegness Urban District Council, and specially the observations of Lord Denning at page 612 explaining the field of legal charities. Lord Denning observes there : " In law 'charitable' is a term of art with a technical meaning which is narrower than its popular meaning. That is very well settled in the law of charities today. But there is little application of the English principle here to the facts of the present reference on the ground that the English statute is very different from the Indian statute. The English statute there was concerned with the expression " an organisation not established or conducted for profit " under section 5(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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