TMI Blog1976 (8) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary to refer in great detail to the provisions contained in the memorandum of association of the assessee. It is enough to mention that the assessee is M/s. Madras Kirana Merchants Association, and it was incorporated in 1940 under section 25 of the Companies Act, with the liberty to omit the word " Limited ". For the assessment years 1965-66 and 1966-67, the assessee filed returns showing incomes of Rs. 1,598 and Rs. 2,040 respectively from a property. Interest incomes of Rs. 667 and Rs. 686 were also shown for the two years respectively. The total receipts thus amounted to Rs. 2,265 and Rs. 2,726 in these two years. Deducting loss from business at Rs. 859 and Rs. 19, respectively, the net assessable incomes were shown at Rs. 1,406 and R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome was exempt. Against this decision also, the department preferred an appeal. Therefore, there were three appeals before the Tribunal relevant to the assessment years 1965-66, 1966-67 and 1967-68. The Tribunal held that the number of members of the assessee in this case was very small, that, in addition, the judgment of the Supreme Court in Commissioner of Income-tax v. Andhra Chamber of Commerce [1965] 55 ITR 722 was rendered with reference to the provisions contained in the Indian Income-tax Act, 1922, that the amendment effected to the relevant provisions in the Income-tax Act, 1961, made all the difference, and that the decision in Commissioner of Income-tax v. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC) did not support the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 2(15) of the Income-tax Act, 1961, reads : " ' Charitable purpose ' includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility not involving the carrying on of any activity for profit. " The difference between the two provisions is the addition of the words " not involving the carrying on of any activity for profit " at the end of the definition as given in the Indian Income-tax Act, 1922. In Sole Trustee, Loka Shikshana Trust v. Commissioner of Income-tax [1975] 101 ITR 234 (SC) the question came to be considered whether these ten words at the end of the definition in section 2(15) of the Income-tax Act, 1961, qualified every one of the objects which preceded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the law laid down by the Supreme Court in the decisions referred to already. In the present case also, the objects of the assessee will not come within the scope, of the advancement of education, or medical relief or relief of the poor, but only within the scope of the " object of general public utility ". Consequently, if the assessee is to satisfy the test of " charitable purpose " as defined in section 2(15) of the Income-tax Act, 1961, as clarified by the Supreme Court in the two decisions referred to above, it could not involve in any activity for profit. The Tribunal, in this case, has not rendered any finding on this part of the case. All that the Tribunal stated in its order is : " In view of this definition of charitable purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use in the memorandum of association is an indispensable requirement to satisfy the test of charitable purpose. At page 809, the following passage occurs, on which Mr. Jayaraman relied : " The objects of the chamber include settlement of disputes among traders by arbitration. This is undoubtedly a service of general public utility--preventing protracted commercial litigation. If the fee charged for doing so is more or less commensurate with the expense the chamber has to incur, a minor surplus will not attract tax. But no such restriction is written into the rules governing the chamber. It may charge a heavy sum and spend much less for hiring experts to decide the dispute. There is no magna carta binding the Indian or Cochin or Bengal Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derived by rendering some service or other ......... We may wind up with a brief rounding off and indication on the approach. A pragmatic condition, written or unwritten, proved by a proscription of profits or by long years of invariable practice or spelt from strong surrounding circumstances indicative of anti-profit motivation--such a condition will qualify for ' charitable purpose ' and legitimately get round the fiscal hook. Short of it, the tax tackle holds you fast." (Underlining is ours). Thus, the sentence underlined in the above extract will clearly negative the indispensability of a written condition and all that the judgment requires is a condition which may be written or unwritten, and if it is unwritten, to be gathered from l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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