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TMI Blog1972 (10) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle 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 kurie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In appeal, the Appellate Assistant Commissioner came to a different conclusion. He held that the earlier decision of this court applied to the case and the alteration in the definition of "charitable purpose" in section 2(15) of the new Act did not bring about any alteration in the position of the company. This view was accepted by the Appellate Tribunal as well. Thereafter, at the instance of the revenue, the questions mentioned at the commencement of the judgment have been referred to us. The counsel for the revenue has referred mainly to the decision of the Mysore High Court in Commissioner of Income-tax v. Sole Trustee, Loka Shikshana Trust In that decision, the Mysore High Court was considering the scope of section 2(15) of the Act of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 brought a few other decisions also to our notice. The first decision is Commissioner of Income-tax v. Krishna Warriar, wherein the same Division Bench of this court which decided the earlier Dharmadayam Co. case had occasion to consider a similar case. There also the Division Bench held that Arya Vaidyasala at Kottakkal was a charitable institution and thus came within the purview of section 4(3)(i) of the Indian Income-tax Act of 1922. The matter was taken in appeal before the Supreme Court by the revenue ; and the Supreme Court confirmed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urvedic medicines, which, though might have as its object "public utility", still involved the carrying on of an activity for profit. And the Bench went on to old that the intention of the testator was that the Vaidyasala must apply its financial resources for the maintenance of the three institutions, namel, the vaidyasala, the hospital and patasala, and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its activity of issuing certificates for weighment and survey involved no activity for profit. The Division Bench observed that, if the fee received for these services by the chamber of commerce was ultimately found to be in excess of the expenses and resulted in profit, the excess of the income over the expenditure could not be brought in as income liable to tax under the Act of 1961 by virtue of section 11(1)(a). Then came the decision of the Calcutta High Court ; and the Calcutta High Court appears to have taken a different view on a similar question. That decision was brought to the notice of another Division Bench of this court in the next decision in the Cochin Chamber of Commerce and Industry case The Division Bench considered th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 the revenue has argued on the second question that, under article 39 of the memorandum of association ..... X X X X Extracts X X X X X X X X Extracts X X X X
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