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Issues Involved:
1. Whether the objects of the assessee-society fall within the purview of section 2(15) of the Income-tax Act. 2. Whether the assessee-society's income is exempt u/s 11 and 12 of the Income-tax Act. Summary: Issue 1: Objects of the Assessee-Society under Section 2(15) of the Income-tax Act The court examined whether the objects of the assessee-society fall within the definition of "charitable purpose" u/s 2(15) of the Income-tax Act. The definition 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 court noted that the definition is inclusive and not exhaustive, emphasizing that the Legislature intended to restrict the meaning to exclude commercial activities and personal enjoyment. The court referred to various judgments, including Addl. CIT v. Ahmedabad Millowners' Association [1977] 106 ITR 725 (Guj) and CIT v. Andhra Pradesh Police Welfare Society [1984] 148 ITR 287 (AP). In Ahmedabad Millowners' Association's case, the court held that objects serving personal interests do not fall within the scope of "charitable purpose" u/s 2(15). The court concluded that the respondent-association's objects aimed at protecting personal interests rather than public interests, thus not qualifying as charitable. Issue 2: Exemption under Sections 11 and 12 of the Income-tax Act The court analyzed whether the assessee-society's income is exempt u/s 11 and 12 of the Income-tax Act. Section 11 provides exemption to income from property held for charitable or religious purposes, subject to conditions specified u/s 12, 12A, and 13. The court emphasized that the assessee must prove that the property is held under trust or other legal obligation and is used wholly or in part for religious or charitable purposes. The court examined the aims and objects of the respondent-association, which included providing financial assistance to members and their families. The rules indicated that the benefits were confined to subscribed members and their dependents, suggesting that the association was formed for personal benefits rather than charitable purposes. Consequently, the court held that the assessee-society was not entitled to exemption u/s 11 of the Act. Conclusion: The court answered the question of law in the negative and against the assessee, concluding that the objects of the assessee-society do not fall within the purview of section 2(15) of the Income-tax Act and its income is not exempt u/s 11 and 12 of the Act. No costs were awarded.
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