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TMI Blog1996 (2) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... 947). Admittedly, the Board is mainly holding research institutions and for the said purpose, rubber estates are maintained. The Board derives income, inter alia, from sale of planting materials and rubber. For the assessment years in question, the assessee claimed exemption in respect of its income from rubber estates under section 4(1)(b) read with sections 4(6)(a) and 4(6)(c) of the Kerala Agricultural Income-tax Act, 1950. The assessing authority rejected the said claim on the ground that the assessee has not adduced any evidence in support of the said claim and assessed the same to tax under the Act. The assessee took up the matter in appeal before the Appellate Assistant Commissioner of Agricultural Income-tax and Sales tax, Kottayam. The Appellate Assistant Commissioner noted that section 2 of the Rubber Act, 1947, declares that it is expedient in the public interest that the Union should take under its control the rubber industry, and that admittedly the income, if any, derived by the Rubber Board is utilised for the development of the rubber industry. The appellate authority further observed that even then it will not fall under section 4(1)(b) of the Act, which states t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per book. Learned counsel appearing for the Department reiterated the contentions which were put forward before the Tribunal and contended that the assessee is not a charitable institution entitled to exemption under section 4(1)(b) of the Act. It was also contended that the Appellate Tribunal erred in its finding that the assessee exists for the advancement of an object of public utility, in that the Rubber Board exists only for the benefit of a section of the public. Learned counsel appearing on behalf of the assessee, on the other hand, contended that going by the provisions of the Rubber Act, 1947, the provisions of which have been set out in detail in the order of the Tribunal it is clear that the Rubber Board is doing its activities under a legal obligation for the advancement of rubber industry in public interest. He also submitted that the decision of the Karnataka High Court in Coffee Board v. Deputy Commr. Agrl. I. T. [1964] 52 ITR 126, had considered the provisions of the Mysore Agricultural Income-tax Act, 1957, which are more or less similar to the provisions of the Kerala Agricultural Income-tax Act in material particulars, in the context of an assessment on the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agricultural income earned by it. Before proceeding to refer to the provisions of the Rubber Act, it is also necessary to understand what is meant by an object of "public utility". The question as to whether the Andhra Chamber of Commerce, a company registered under section 26 of the Indian Companies Act, 1913, formed with the primary object to promote and protect trade, commerce and industries, to aid, stimulate and promote the development of trade, commerce and industries and to watch over and protect the general commercial interest of India or any part thereof was entitled to exemption from payment of tax under section 4(3)(i) of the Indian Income-tax Act, 1922, in respect of its income derived by it from letting out a portion of the building owned by it, came up for consideration before the Supreme Court in CIT v. Andhra Chamber of Commerce [1966] 55 ITR 722. The Supreme Court held that the income of the chamber of commerce from its building was exempt from tax under section 4(3)(i) of the Income-tax Act, as the building was held under a legal obligation wholly for charitable purposes. In that context, the Supreme Court observed that the advancement or promotion of trade, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by notification in the Official Gazette as provided under section 4 of the Act having perpetual succession and a common seal with power to acquire and hold property both movable and immovable. The Board is constituted with a Chairman appointed by the Central Government and 23 members representing rubber-producing interests, small growers, manufacturers and labour, members of Parliament, Executive Director, Ex-officio and the Rubber Production Commissioner (Ex-officio). Section 6A of the Act provides for appointment of an Executive Director to exercise the powers and perform such duties under the direction of the Board. It also provides for appointment of a Rubber Production Commissioner and a Secretary to the Board. The Board is provided with two funds, namely, the general fund and the pool fund, under sections 9A and 9B of the Act. These provisions relating to the general and pool funds are as follows : " 9A General fund.---(1) To the general fund shall be credited--- (a) all sums forming the funds of the Board immediately before the commencement of the Rubber (Production and Marketing) Amendment Act, 1954 ; (b) all amounts paid to the Board by the Central Government und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaking, assisting or encouraging scientific, technological and economic research ; training students in improved methods of planting, cultivation, manuring and spraying; supply of technical advice to rubber-growers ; carrying out any other duties which may be vested in the Board under rules made under this Act. The Rubber Board is also duty bound to give advice to the Central Government on all matters relating to the development of the rubber industry with regard to participation in any international conference or scheme relating to rubber, to submit reports to the Central Government regarding its activities and the working of this Act and also to furnish such other reports relating to the rubber industry as may be required by the Central Government. There are two funds provided for the Board under sections 9A and 9B of the Act, namely : (1) the general fund and (2) the pool fund. All sums realised by sales of rubber imported or purchased under section 8A shall be put in the pool fund and the same shall be utilised only for the rehabilitation of small growers in such manner as may be prescribed. Admittedly, the Board is mainly holding research institutions and rubber estates as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Board is holding the two research stations mentioned earlier under a legal obligation for the purpose of advancing an object of general public utility. The income derived from those stations are credited to the "general fund" which fund is actually spent wholly or partly for the public purposes as envisaged in section 12(f) and the assessee is entitled to the exemption asked for. The Karnataka High Court rejected the contentions made on behalf of the Department that the Board has no legal obligation to maintain the research stations and that the research stations merely benefit the coffee planters and none else and hence section 12(f) is inapplicable and observed as follows : " We feel constrained to say that the Revenue has taken a very narrow view of the matter. Assuming, without deciding, that a section of the public does not come within the scope of the expression "general public" it is wrong to say that the knowledge gained from these research stations merely benefits the planters. It has a wider impact. The knowledge gathered in these stations is bound to improve the quantity and quality of our coffee crop and thereby give the general public, in the sense in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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