TMI Blog1972 (10) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case, the Tribunal was right in holding that setting apart reserves under article 39 of the assessee's memorandum did not vitiate the charitable purpose of the institution ? " The assessee is a company which was originally registered under the Cochin Companies Act and later on under the Indian Companies Act of 1956. It was allowed to be registered with limited liability without the addition of the word " limited " to its name by the Dewan of Cochin; and the registration was followed under the Indian Companies Act too. The sources of income of the company are interest on securities, income from property and business of conducting kuries (chit funds). In a previous reference, viz., Dharmodayam Co. v. Commissioner of Income-tax a Division Bench of this court had occasion to consider the position relating to the kuries conducted by the company under section 4(3)(i) of the Indian Income-tax Act of 1922 ; and the Court held that the business of conducting kuries was held by the company under trust for religious or charitable purposes and proviso (b) to section 4(3)(i) was not attracted. The memorandum of association of the company had as its objects : "(a) To raise funds b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lved any activity for profit is confined only to the last part of the definition, namely, the advancement of any other object of general public utility. This the Mysore decision has also noted ; but the Mysore decision appears to have gone a little further and said something regarding the last part of the definition, which might not arise in this case, in view of what we are going to hold presently. From the statement of the case and also from the memorandum of association of the company, it is clear that the raising of funds is by conducting kuries, by receiving donations and subscriptions and by such other means as the company deems fit. In other words, in the language of the earlier decision which is binding between the parties, the business of conducting kuries was held under trust by the company : conducting kuries was not itself a purpose or object of the company : it was a property of the company. Therefore, we do not think that the Mysore decision has any application to the case ; and, on the strength of that decision, the revenue cannot also contend that the answers to the questions referred should be in its favour. In this connection, the counsel for the revenue has bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d should also pay the other bequests to the "tavazhies" of the testator ; it was thus a trust with mixed objects of charitable and non-charitable purposes, and, therefore, it fell outside the ambit of the definition in section 2(5) of the Act. We do not think that this decision can advance the case of the revenue in the reference before us. As we have already indicated, the position here is that the purpose of the institution was to promote charity, education, medical relief and industry, the business of conducting kuries being only a property held in trust by the company. We may also refer to the other two or three decision cited by the counsel for the revenue. One of them is the decision of the Supreme Court in East India Industries (Madras) Private Ltd. v. Commissioner of Income-tax This decision, in our opinion, cannot give any assistance to the revenue, because one of the clauses in the trust deed that was considered by the Supreme Court contained as a purpose of the trust :- "to manufacture, buy, sell and distribute pharmaceutical, medicinal, chemical and other preparations and articles such as medicines, drugs, medical and surgical articles, preparations and restoratives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Measurers by the two chambers of commerce; and this view concern was doing the business of weighing , and issuing certificates. During the relevant year, the Indian Chamber of Commerce, the assessee before the Calcutta High Court received a sum of Rs. 1,69,779 as its share of the income from the Calcutta licensed Measurers. It may, therefore, be possible to explain, the decision of the Calcutta High Court that starting a, partnership concern and taking a share therein was an activity for profit; to that extent, we need not even disagree with that decision. Therefore that decision cannot also be applied to the case before us." An attempt has been made by the counsel for the revenue to contend that, in the case before its, one of the purposes is promoting industry and that promoting industry is an activity for profit. There is no case that Dharmodayam Company ever started any industry; there is also no ground for saying that the object, of the company was to start an industry for the purpose of making profit. The mere promotion of industry cannot be said to be starting an industry for profit. Therefore, this contention cannot also avail to the revenue. Lastly, the counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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