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Issues Involved:
1. Whether the beneficiaries of the trust are a definite and identifiable section of the public and whether the trust is not for private religious purposes, thus qualifying for exemption under section 11 of the Income-tax Act, 1961. 2. Whether the contributions made to the assessee-association by the member mills are voluntary and not of income character, thus qualifying for exemption under section 12 of the Income-tax Act, 1961. Issue-wise Analysis: 1. Definite and Identifiable Section of the Public and Trust for Private Religious Purposes: The primary issue revolves around whether the beneficiaries of the trust, as defined in clause 3(a) of the memorandum of association, constitute a definite and identifiable section of the public, and whether the trust is for private religious purposes or public benefit. The Tribunal held that the beneficiaries, namely the European employees of the jute, cotton, paper, and other industrial establishments in Bengal, and the European officers and crews of vessels visiting the Port of Calcutta, are a definite and identifiable section of the public. The Tribunal emphasized that these beneficiaries are identifiable by a common quality of an impersonal nature, namely, the common quality of belonging to the European stock and being European employees of the industrial establishments in Bengal and European crew and officers of ships calling at the Port of Calcutta. The Tribunal rejected the contention that the trust was for private religious purposes, noting that the trust's objects were clearly religious in character and there was no vagueness about these objects. The Tribunal also dismissed the argument that the beneficiaries were a fluctuating or floating mass of individuals, thereby not constituting a definite section of the public. The Tribunal's decision was supported by the Supreme Court's ruling in Ahmedabad Rana Caste Association v. CIT [1971] 82 ITR 704, which established that an object beneficial to a section of the public is an object of general public utility. The Tribunal applied this test and concluded that the beneficiaries specified in clause 3(a) of the memorandum of association were a definite and identifiable section of the public. 2. Voluntary Contributions and Income Character: The second issue concerns whether the contributions made to the assessee-association by the member mills are voluntary and not of income character, thus qualifying for exemption under section 12 of the Income-tax Act, 1961. The Tribunal found that there was no legally enforceable obligation on the part of the subscribing mills to make the contributions. It was noted that several mills had stopped making contributions, indicating the non-recurring and voluntary nature of these payments. The Tribunal referred to section 12 of the Income-tax Act, which exempts the income of a charitable or religious trust derived from voluntary contributions. The Tribunal concluded that the association's receipts by way of contributions from the mills were not of income character and, therefore, not assessable to tax. Even if these receipts were considered of income character, they would still be exempt under section 12 of the Act. Conclusion: The High Court affirmed the Tribunal's findings on both issues. The Court agreed that the beneficiaries of the trust were a definite and identifiable section of the public and that the trust was not for private religious purposes, thus qualifying for exemption under section 11 of the Income-tax Act, 1961. The Court also upheld the Tribunal's decision that the contributions made to the assessee-association by the member mills were voluntary and not of income character, qualifying for exemption under section 12 of the Income-tax Act, 1961. Consequently, both questions referred to the Court were answered in the affirmative and in favor of the assessee.
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