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TMI Blog1983 (3) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of the society by the Government, one of the issues framed was : " Whether, on the facts and in the circumstances of the case, and on proper interpretation of sections 11, 12 and 13 of the Income-tax Act, the interest income of Rs. 1,98,791 is exempt from income-tax ? " Inasmuch as the Tribunal decided the said I.T.A. on an entirely different aspect, viz., as to whether the amount of Rs. 56,97,657 collected out of a raffle conducted on behalf of the society, was actually conducted by the society or by the State Government, eventually the decision was that the raffle was conducted by the State Government and, therefore, the question of the said corpus being exigible to income-tax did not arise. Consequently, the question of the society being considered whether a charitable trust or not, did not arise. In view of those circumstances, the above referred issue escaped the adjudication of the Tribunal as it was not necessary in the facts and circumstances of the case. Hence, the Appellate Tribunal, dealing with this question in M.P. No. 63/79, held as under "From the foregoing discussion it is clear that the policemen would constitute a section of the public or appreciably an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lice Welfare Society, Andhra Pradesh, should not be given the same benefit. Before adverting to the arguments and counter-arguments, certain relevant material and statutory provisions may be noticed. The assessee-society styled " The Andhra Pradesh Police Welfare Society " is the successor body to the Police Welfare Society under H.E.H. the Nizam's Rules, governed by certain bye-laws which came into effect from November 1, 1956. The objects of the society, as per the rules, are as follows: " The Society will initiate and undertake all social and economic welfare measures aimed at the improvement of the conditions of the members of the A. P. Police and their families to provide suitable amenities to them and to afford relief in all deserving cases where such help is not forthcoming from other governmental and non-governmental agencies, it will administer the following non-governmental funds." As per cl. (4) of the Rules, the funds of the Society are to be spent on the following programmes: "1. To enquire into the living conditions of policemen and their families with a view to promptly arranging for such relief or amelioration as lies within the capacity of the Society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of raffle is not one of the modes prescribed under r. 9. Section 2(15) of the Income-tax Act defines " Charitable purposes " as under : " charitable purpose " includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility not involving the carrying on of any activity for profit." Section 10(23C) of the Act exempts in computing the total income, " any income received by any person on behalf of . ...... (iv) any other fund or institution established for charitable purposes which may be notified by the Central Government in the Official Gazette, having regard to the objects of the fund or institution and its importance throughout India or throughout any State or States; or" Section 11 of the Act excludes the income from property held for charitable or religious purposes, from being included in the total income of the assessee for the purpose of assessment. The chief question, therefore, that falls for determination is whether the income of interest arising out of the principal, in the case before us, is held by the charitable trust so as to be exempted from being subjected to income-tax. Therefore, to determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Lord Hardwicke, Lord Chancellor's observation in regard to the definition of " charity ", viz., " Definition of charity; a gift to a general public use, which extends to the poor as well as to the rich ", observed (p. 33): " It is a clearly established principle of the law of charity that a trust is not charitable unless it is directed to the public benefit. This is sometimes stated in the proposition that it must benefit the community or section of the community. " In the same decision, Lord Normand observed (p. 36): " These are private rights and duties and have no public element, except the interest that the community has in the harmonious and efficient operation of its industries and commerce and in the securing of good and safe conditions of labour." Further observed (p. 37) : " If there is no public element to be found in the bare nexus of common employment, all attempts to build up the public element out of circumstances which have no necessary relation with it, but are adventitious, accidental and variable, must be unavailing when the truster has chosen to define the selected class solely by the attribute of common employment.'. Also observed (p. 37) : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperties of the Rana caste or community of the city of Ahmedabad, for improving the education of the community, extending medical help and so on. Under the constitution, the beneficiaries were members of the Rana caste or community, who were natives of Ahmedabad and other members of the community accepted by the caste according to its old custom and usage and staying in Ahmedabad. In CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722, the Supreme Court, explaining the meaning of the expression " object of general public utility " and the expression " charitable purpose ", held (at pp. 728-729): "...the expression 'charitable purpose'... Even if the object or purpose may not be regarded as charitable in its popular signification as not tending to give relief to the poor or for advancement of education or medical relief, it would still be included " within that expression . ..... if it advances an object of general public utility. The expression 'object of general public utility is not restricted to objects beneficial to the whole of mankind. An object beneficial to a section of the public is an object of general public utility. To serve a charitable purpose, it is not necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the people is the employer, even if it is to be taken in a restrictive sense, and the employer is the representative of the public or the people. In the ultimate analysis, it is the public that is the employer ; qui facit per alium facit Per se and so, to the services rendered by the employees in the public employment, the beneficiaries are the public. Testing, therefore, from that angle, the nexus which exists in case of private employment and which is of personal nature, cannot be said to be so in case of public employment. If that be so, in our judgment, the nexus in the case of public employment is its impersonal nature. In fact, we derive considerable assistance in this conclusion from the fact that the armed personnel, who form part of the Government, have been given the benefit under s. 10(23C) of the Act. If, in cases where a fund has been constituted for the benefit of either such armed personnel or their children or their wives, the Central Government has chosen to give expansive definition to s. 10(23C), we see no reason to adopt a restrictive interpretation of the words " charitable trust " vis-a-vis the personnel in the police department. From the foregoing, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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