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Issues involved:
The judgment deals with the interpretation of "charitable purpose" under section 2(15) of the Income-tax Act, 1961, specifically focusing on whether the income of the assessee is exempt under section 11(1)(a) of the Act for the assessment years 1965-66 and 1967-68 to 1973-74. Assessment Year 1965-66: The respondent-assessee, a brick kiln owners association, claimed exemption under section 11(1)(a) of the Income-tax Act, 1961, asserting its formation for charitable purposes. The Income Tax Officer (ITO) initially disallowed the claim, stating the association was not formed for the benefit of the general public. However, the Appellate Assistant Commissioner (AAC) found in favor of the assessee, emphasizing the charitable nature of its objects. The Income-tax Appellate Tribunal upheld the AAC's decision, considering the absence of profit motive in the association's activities and its focus on promoting the brick kiln trade. The Tribunal concluded that the assessee was entitled to exemption under section 11(1)(a) for the assessment year 1965-66. Assessment Years 1967-68 to 1973-74: For subsequent assessment years, a similar question arose regarding the exemption of the assessee's income under section 11(1)(a) of the Income-tax Act, 1961. The Tribunal, after examining the profit and loss accounts of the assessee, reiterated that the association's activities did not involve profit motives and were primarily aimed at promoting the brick kiln trade. Consequently, the Tribunal held that the assessee was entitled to exemption for the years 1967-68 to 1973-74 under section 11(1)(a). Interpretation of "Charitable Purpose": The judgment delves into the interpretation of "charitable purpose" as defined in section 2(15) of the Income-tax Act, 1961. Citing the Supreme Court's decision in Addl. CIT v. Surat Art Silk Cloth Manufacturers Association, the court clarified that as long as the primary purpose of an entity is charitable, subsidiary objects need not be charitable individually. The court emphasized that the advancement of an object of general public utility should not involve the carrying on of any activity for profit. Applying this principle, the court concluded that the assessee's dominant intention to promote the brick kiln trade was charitable and exempt under section 11(1)(a) of the Act. Conclusion: In light of the above analysis, the court answered the questions in favor of the assessee, affirming their entitlement to exemption under section 11(1)(a) of the Income-tax Act, 1961, for both the assessment year 1965-66 and the subsequent years 1967-68 to 1973-74, without any order as to costs.
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