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Issues Involved:
The judgment addresses the following Issues: 1. Whether the assessee qualifies as a charitable institution under section 2(15) of the Income-tax Act, 1961. 2. Interpretation of the memorandum of association regarding the predominant object of the trust. 3. Examination of rule 1(f) of the Rules governing the association in determining the predominant object of the trust. 4. Eligibility of the assessee for exemption under section 11 of the Income-tax Act, 1961. Issue 1: Charitable Institution Status The court deliberated on whether the assessee is a charitable organization with charitable activities as its primary focus, emphasizing that profit-making is merely incidental. The Appellate Tribunal highlighted the objects of the association, which include welfare programs for women, children, and the handicapped, training facilities, and encouragement of the cooperative movement. The association, registered under section 12A of the Income-tax Act, received grants for setting up ancillary units to provide employment to economically disadvantaged women. The Tribunal referenced a letter recommending the establishment of an ancillary unit, leading to the employment of women from weaker sections of society. Citing precedents, the court affirmed that the dominant purpose of the assessee is charitable in nature, not profit-oriented. Issue 2: Interpretation of Memorandum of Association The court examined clause 4(j) of the memorandum of association, which grants wide discretion to the assessee to carry out various objects. Despite the existence of non-charitable and non-religious purposes, the Tribunal concluded that the predominant object of the trust is charitable, focusing on the rehabilitation of destitute and handicapped women. The court analyzed the interplay between the memorandum of association and rule 1(f) of the Rules governing the association to ascertain the primary objective of the trust. Issue 3: Rule 1(f) Analysis The Tribunal's decision regarding the application of rule 1(f) of the Rules governing the association was scrutinized by the court. Although the rule pertains to the rehabilitation of destitute and handicapped women, it was debated whether this rule modifies the memorandum of association's clause 4(j) or supports the inference that the trust's primary object is charitable. The court assessed the legal implications of rule 1(f) in determining the predominant purpose of the trust. Issue 4: Exemption under Section 11 Lastly, the court considered whether the assessee is entitled to exemption under section 11 of the Income-tax Act, 1961. By analyzing the nature of the activities undertaken by the assessee and the overarching objective of charitable pursuits, the court affirmed the Tribunal's decision that the assessee qualifies for exemption under the specified section. In conclusion, the court ruled in favor of the assessee, affirming its status as a charitable institution primarily engaged in charitable activities, with profit-making being secondary and incidental.
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