TMI Blog1981 (2) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... heir dealings. (iii) To handle and undertake on behalf of members the booking and delivery of goods for their mutual benefit. (iv) To secure amicable settlement of disputes of members referred to the Union. (v) To raise funds for the betterment of the needy and deserving members and for the education and upliftment of their children. (vi) To help the transporters in their trade by making representations to the Transport Authorities, Provincial and Central Governments and undertake all possible steps to redress their grievances. Rule 16 of the constitution may also be here referred to which reads as follows: " The executive committee shall call a meeting of the general body for dissolution of the union and if such action is approved by two-thirds majority of the members present the union shall be dissolved. The remaining funds after defraying all due expenditure and liabilities, shall be distributed and in the case of loss, the amount of loss is to be realised from all members of the union. The general body shall firstly appoint committee of members to either distribute or to realise the loss from members before the dissolution takes place." For the assessment year 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustee, Loka Shikshana Trust [1970] 77 ITR 61, that since the object of the trust provided for carrying on a business undertaking, it involved the carrying or, of an activity for profit and, therefore, ceased to be a charitable purpose under the Act. The Tribunal, therefore, reversed the order of the AAC and restored the order of the ITO. The assessee filed a miscellaneous application before the Tribunal some time after its claim was rejected. In this application, inter alia, the assessee contended that the observations of the learned Tribunal that outsiders also contributed to the funds of the union by paying percentage against goods arranged to be carried by a member transport carrier through the union were absolutely erroneous in point of fact and that there was no evidence, data or material on the record to prove these assertions of the departmental representative. The Tribunal dismissed this application. It pointed out that it had given its finding on the basis of the statement made by the departmental representative at the time of the hearing which had not been challenged by any supporting evidence at the time of the hearing. On the other hand, when the customers paid certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a concern where there was no identity between the participants and the contributors to the common funds. The Tribunal, therefore, was right in holding that it was not a mutual concern, and so the income was not exempt from tax. The first question is, therefore, answered in the negative and against the assessee. In regard to the claim under s. 11 of the Act, Shri Ahuja challenges the finding of the Tribunal that the objects of the present union involve an activity for profit. He contended that the observations of the Supreme Court in the case of Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234, have been disapproved by a larger Bench of the Supreme Court in the recent decision in the case of Addl. CIT v. Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1. He contended that the facts of the present case and particularly the objects of the present Trade Union are on all fours with those considered by the Supreme Court in Surat Art Silk Cloth Manufacturers Association's case [1980] 121 ITR 1. He, therefore, urged that the Tribunal's finding that the assessee was not entitled to exemption under s. 11 is erroneous and should not be accepted. In the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(i) of the Indian I.T. Act, 1922, was upheld by the Calcutta High Court (vide Indian Sugar Mills Association v. CIT [1970] 77 ITR 90) but was rejected by the Supreme Court in the decision above referred to. The Supreme Court rejected the claim on two primary considerations: (i) that r. 54, which permitted distribution of profits among the members on resolution being passed for the purpose introduced an element of private gain which was inconsistent with the object of general public utility and it could not be said that the association held the income derived from its business of export of sugar wholly for charitable purposes; and (ii) that all the clauses of the objects of the association of the said assessee fell in the category of primary purposes of the association and it was not possible to treat some of them as ancillary or incidental to the main objects set out in cls. (a) and (b) of r. 3 as contended by the assessee. It is sufficient for the present case to refer to the first ground on which the claim of the assessee was rejected. Shri B. B. Ahuja contended that the decision in the Indian Sugar Mills Association's case [1974] 97 ITR 486 (SC) will not apply to the present ..... 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