9911796707
TMI Blog1980 (3) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961 ? " For the subsequent assessment years 1967-68 to 1973-74, a similar question has been posed, though worded slightly differently. It reads: " Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the income of the assessee is exempt under section 11(1)(a) of the Income-tax Act, 1961 ?" We propose to deal with the matter by a common order. The respondent-assessee is M/s. Delhi Brick Kiln Owners Association, Jhandewalan, New Delhi. The respondent obtained a licence from the Central Govt. for its registration under s. 26 of the Indian Companies Act, 1913. The objects of the company are contained in cl. 3 of the memorandum of association and are similar to those of the cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served that as the association was confined to brick kiln owners, it could not be said to have been formed for the benefit of the general public. It was, therefore, not entitled to exemption. On appeal, the AAC, relying on cls. 3, 4 and 8 of the memorandum of association and on the decision of the Supreme Court in CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722 and the decision of the Kerala High Court in CIT v. Indian Chamber of Commerce [1971] 80 ITR 645, held that the assessee was entitled to exemption. The AAC came to the conclusion that the assessee fulfilled the conditions is required under S. 11(1)(a) of the Act. The department went up in appeal to the Income-tax Appellate Tribunal. It contended, on the basis of the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embership subscription and rent. With regard to the year 1965-66, it considered the object clauses and examined whether the purchase and sale of coal was the business of the assessee. It held that the fact that the assessee had purchased the coal and sold it at the same price to its member, was an indication that there were no rational activities or reasonable connection with the nature of business. There was no intention to earn profit. Further, the object clauses did not suggest that the assessee wanted to engage itself in activities involving profit or business. The objects indicated that the assessee only wanted to do such things as would be conducive to the development of the brick kiln trade. The Tribunal, having regard to the circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive, each and every one of the objects must be charitable in order that the trust or institution be upheld as a valid charity. But if the primary or dominant purpose of a trust or institution is charitable, another object, which by itself may not be charitable, but is merely ancillary or incidental to the primary or dominant purpose, would not prevent the trust or institution from being a valid charity. The fact that the members of the assessee benefited was merely incidental to the carrying out of the main or primary purpose and if the primary purpose was charitable, the subsidiary objects would not militate against its charitable character nor would it make the purpose any the less charitable. The Supreme Court referring to its earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral public utility, and not its accomplishment or carrying out, which must not involve the carrying on of any activity for profit. So long as the purpose does not involve the carrying on of any activity for profit, the requirement of the definition would be met and it is immaterial how the monies for achieving or implementing such purpose are found, whether by carrying on an activity for profit or not. The decision of the Supreme Court in Indian Chamber of Commerce v. CIT [1975] 101 ITR 796 was overruled. It was observed that the decisions of the Kerala High Court in CIT v. Cochin Chamber of Commerce and Industry [1973] 87 ITR 83 and the Andhra Pradesh High Court in Andhra Pradesh State Road Transport Corporation v. CIT [1975] 100 ITR 39 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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