1975 (3) TMI 6 - HC - Income Tax

Fixed Deposit, General Public Utility, Not Involving The Carrying On Of Any Activity For Profit

Summary

Issues:
1. Whether the income derived by the assessee-association from the business of export of sugar and interest from current and fixed deposits is exempt from income tax under section 11(1)(a) of the Income-tax Act, 1961?

Analysis:
The High Court of Calcutta was presented with a reference under section 256(1) of the Income-tax Act, 1961, regarding the exemption of income derived by the assessee-association from the business of export of sugar and interest from current and fixed deposits under section 11(1)(a) of the Act for the assessment year 1965-66. The controversy revolved around the interpretation of whether such income qualifies for exemption under the said provision.

The Supreme Court's decision in the case of Commissioner of Income-tax v. Indian Sugar Mills Association [1974] 97 ITR 486 was crucial in determining the taxability of the income derived by the assessee-association. The Supreme Court held that income from the business of export of sugar and interest from deposits were not exempt under the corresponding provision of the Indian Income-tax Act, 1922. Given the similarity between section 11(1)(a) of the 1961 Act and section 4(3)(i) of the 1922 Act, the High Court concluded that the present case fell within the ambit of the Supreme Court's decision.

The definition of "charitable purpose" under section 2(15) of the 1961 Act was also considered, emphasizing that the advancement of any object of general public utility should not involve the carrying on of any activity for profit to qualify as a charitable purpose. The court referenced the case of Commissioner of Income-tax v. Indian Chamber of Commerce [1971] 81 ITR 147 to elaborate on the interpretation of the term "charitable purpose."

Furthermore, the assessee's argument based on section 10(24) of the Income-tax Act, 1961, claiming exemption as a registered trade union, was dismissed by the court. The court noted that the exemption under section 10(24) was not raised by the assessee during previous stages and could not be introduced at a later stage. The court emphasized that the question referred by the Tribunal solely pertained to exemption under section 11(1)(a) and not under any other section.

In conclusion, the High Court ruled against the assessee, denying the exemption claimed under section 11(1)(a) of the Income-tax Act, 1961, based on the precedent set by the Supreme Court and the limited scope of the question referred by the Tribunal. The judgment was delivered jointly by R. N. Pyne J. and S. C. Deb J., with no costs awarded in the case.