TMI Blog1979 (11) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the income derived by the assessee-chamber by way of services rendered by it to its members is not liable to be charged to tax under section 28(iii) of the Income-tax Act, 1961, for the assessment years 1968-69, 1970-71 and 1971-72 ? " The assessee-chamber is a society formed and registered under the Societies Registration Act, 21 of 1860. Film producers, studio owners, film exhibitors, film distributors and others connected with the film industry are the members of this assessee-chamber. Its objects as set out in para. 3 of the memorandum of association have been set out in the statement of the case. In brief, they are to encourage and develop the film industry in all its branches in South India and so far as possible to work i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he objects could not be said to constitute " charitable purpose " within the meaning of the said expression as defined in s. 2(15) of the I.T. Act, 1961. The assessments were completed accepting the income shown in the returns filed as correct. The assessee appealed to the AAC. He held that the activity of the society could not be brought within the scope of "charitable purpose ". He, however, accepted the contention of the assessee that it was entitled to the benefit under s. 44A of the I.T. Act. Section 44A is a special provision for deduction of expenditure in the case of trade, professional or similar associations, under certain conditions. The assessee appealed to the Appellate Tribunal. It held that the income of the assessee-chambe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se [1975] 101 ITR 796, 808 (SC)): " The above passage appears to us to show that if the assessee itself indulges in an activity and that if profits arise from it, it could be legitimately said that the activity was adapted to such profit. But that is not the case here. The assessee was an instrument of the Government for the purpose of ensuring certain standards in the matter of storage of films or distribution thereof. We are unable to infer on the facts that these activities were for profit so as to be hit by the last portion of the definition in section 2(15). " Therefore, the question whether the assessee was entitled to exemption was answered in its favour. For the same reasons, we answer the first question in the affirmative and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be liable to tax accordingly. " It may be seen that under this section, a statutory fiction is attributed to remuneration received in consideration of specific services rendered to its members so as to treat it as business income. Such remuneration would, in other words, be deemed to have been derived from a business. There is no such deeming provision in the present Act. We may consider the claim of the revenue even on the basis that attribution of statutory fiction was unnecessary, and that s. 28(iii) brings into charge any income derived by a trade, professional or other association from specific services rendered for its members. Section 2(24)(v) of the Act provides that income includes any sum chargeable to income-tax under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not by itself solve the problem. The profit-making was only an incident and not the means of achieving the object of public utility. So long as the object was charitable and so long as the income was not earned from an activity which was by itself designed to achieve the object of general public utility, the exemption cannot be denied. As the facts show, the assessee was actually required by the Government to take up some of the activities as result of which it had received certain amounts from the members. In such a case, we do not consider that there can be any scope for the view that there is any activity for profit. This view of ours is reinforced by reference to s. 10(23A). Section 10 is also an exemption provision so that any inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 11(4) provides that for the purpose of this section " Property held under trust " includes a business undertaking so held. Therefore, even if there is a business, which yields income, so long as the business is held under trust, its income would be exempt from tax. It is not suggested that the properties were held otherwise than under trust. Section 28(iii) would not apply, to tax income from such a business, as otherwise, the benefit sought to be conferred under s. 11 would be destroyed, and the exemption provision would be stultified. Having regard to all these aspects, we consider that the assessee was rightly held by the Tribunal as not being liable to tax with reference to the income under consideration. The second question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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