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Issues Involved:
1. Whether the Rubber Board is entitled to exemption u/s 4(1)(b) of the Kerala Agricultural Income-tax Act, 1950, read with sections 4(6)(a) and 4(6)(c). Summary: Issue 1: Exemption Entitlement u/s 4(1)(b) of the Kerala Agricultural Income-tax Act, 1950 The assessee, the Rubber Board, Kottayam, constituted u/s 4 of the Rubber Act, 1947, claimed exemption for income from rubber estates for the assessment years 1977-78, 1978-79, and 1979-80. The assessing authority rejected the claim due to lack of evidence, leading the assessee to appeal. The Appellate Assistant Commissioner noted that the Rubber Board's income is utilized for the development of the rubber industry, but held that it does not fall u/s 4(1)(b) of the Act, which exempts income derived from property held under trust wholly for charitable or religious purposes. The Kerala Agricultural Income-tax Appellate Tribunal, however, accepted the assessee's plea, holding that the Rubber Board functions under a legal obligation for the advancement of public utility, thus qualifying for exemption u/s 4(1)(b) read with sections 4(6)(a) and (c). The Tribunal's decision was challenged by the Department, arguing that the Rubber Board benefits only a section of the public, not qualifying as a charitable institution. Legal Provisions and Interpretation: Section 4(1)(b) of the Kerala Agricultural Income-tax Act, 1950, exempts agricultural income derived from property held under trust wholly for charitable or religious purposes. Section 4(6)(a) includes "any other legal obligation" within the definition of "trust," and section 4(6)(c) includes "advancement of any other object of public utility" within "charitable purposes." The Supreme Court in CIT v. Andhra Chamber of Commerce [1966] 55 ITR 722 held that advancement of trade, commerce, and industry for economic prosperity benefits the entire community, qualifying as an object of general public utility. This principle was reiterated in subsequent cases. Application to the Rubber Board: The Rubber Act, 1947, aims for the development of the rubber industry under Union control, constituting the Rubber Board with functions including promoting research and providing technical advice to rubber-growers. The Board's funds are utilized for public purposes as mandated by the Act. The Karnataka High Court in Coffee Board v. Deputy Commissioner of Agrl. I.T. [1964] 52 ITR 126 held that the Coffee Board's income from research stations is exempt as it serves an object of public utility, benefiting both producers and consumers. Conclusion: The court concluded that the Rubber Board's activities constitute a legal obligation for the advancement of the rubber industry and public interest, qualifying as an object of public utility. The Tribunal's decision to grant exemption was upheld. The question referred was answered in the affirmative, in favor of the assessee and against the Revenue.
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