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TMI Blog1978 (8) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred by the assessee before the AC, exemption was claimed in respect of other income under the provisions of s. 10(23A) of the I.T. Act, 1961, while exemption was claimed in respect of interest on securities under the provisions of s. 11 of the I.T. act, 1961. The AAC however, rejected both the contentions. As regards items of other income, he rejected the claim on the ground that the assessee as not an association approved under s. 10(23A) by the Central Government by general or special order and, therefore, was not entitled to the benefit of s. 10(23A). So far as the claim for exemption of interest on securities was concerned, he held that it was not established that the investment was held under trust for objects of general public utility only.According to him, the investment was for discharging all the functions of the Bar Council which were not all charitable objects. He held that the main object of the Bar Council is to benefit the profession. Accordingly, he confirmed the assessment orders passed by the ITO and dismissed the appeal. In a further appeal before the Tribunal, it accepted the contention of the assessee for exemption in respect of items of other income, as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Under s. 2 (15)the expression " charitable purpose " contains merely an inclusive definition,viz., " 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. He submitted that if regard be had to the relevant provisions of the Act, then it is quite clear that the assessee is a body corporate constituted under the Act simply with the object of general public utility and all income of such body including the income from securities which is being subjected to tax in the assessment years will be exempt from taxation. He relied upon several cases with a view to show that in this country even bodies like Andhra Chamber of Commerce, Hyderabad Stock Exchange and Textile Manufacturers' Association are regarded as having been constituted for charitable purpose and the income of such bodies has been treated as exempt from income-tax. In short, his submission was, bearing in mind the functions and duties of the assessee under the Act, it is wholly for charitable purpose and the entire income derived from its property was exempt from income-tax un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) The functions of a State Bar Council shall be- (a) to admit persons as advocates on its roll; (b) to prepare and maintain such roll; (c) to entertain and determine cases of misconduct against advocates on its roll; (d) to safeguard the rights, privileges and interests of advocates on its roll; (e) to promote and support law reform; (f) to manage and invest the funds of the Bar Council; (g) to provide for the election of its members; (h) to perform all other functions conferred on it by or under this Act ; (i) to do all other things necessary for discharging the aforesaid functions. (2) A State Bar Council may constitute a fund in the prescribed manner for the purpose of giving financial assistance to indigent or disabled advocates." Sections 9 and 10 of the Act provide for the constitution of the various committees for the purposes therein mentioned. Section 15 confers power upon the Bar Council to make rules to carry out the purposes of this chapter. It is urged by Mr. Joshi on behalf of the revenue that the primary object with which the Bar Council of a State is constituted is to benefit the profession of law. He urged that promotion of law reform is one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hra Chamber of Commerce [1965] 55 ITR 722, the Supreme Court had occasion to consider whether a body like chamber of commerce can be regarded as, having been constituted for charitable purposes and the income of such body will be exempt from income-tax under s. 4(3)(i) of the Indian I.T. Act, 1922. The Andhra Chamber of Commerce was a company registered under s. 26 of the Indian Companies Act, 1913, and was permitted by the Government to omit the word" Limited " from its name. Its primary objects were 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 interests of India or any part thereof. In one of the many incidental clauses of the memorandum was specified the object of promotion of or opposition to legislation and to procure change of the law and practice affecting trade, commerce and manufactures. Under cl. 4 of its memorandum of association, it was provided that the income and property of the chamber of commerce shall be applied solely towards the promotion of its objects as set forth therein. The chamber of commerce purchased a building wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs might take steps to urge or oppose legislative or other measures affecting trade, commerce or manufactures. Such an object ought to be regarded as purely ancillary or subsidiary and not the primary object. The Supreme Court took the view that the income of the chamber of commerce from its building was exempt from tax under s.4(3)(i) of the Indian I.T. Act, 1922, as the building was held under a legal obligation wholly for charitable purposes. At page 727,the Supreme Court points out : "The principal objects of the assessee are to promote and protect trade, commerce and industries and to aid, stimulate and promote the development of trade, commerce and industries in India or any part thereof. By the achievement of these objects, it is not intended to serve merely the interests of the members of the assessee. Advancement or promotion of trade, commerce and industry leading to economic prosperity enures for the benefit of the entire community. That prosperity would be shared also by those who engage in trade, commerce and industry but on that account the purpose is not rendered any the less an object of general pubic utility. It may be remembered that promotion and protection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the revenue invited our attention to two decisions of the English courts. But before referring to the said decisions, we would like to point out the difference that exists between India and England on the question of concept of charity or charitable purpose. As pointed out by the Supreme Court in Andhra Chamber of Commerce's case [1965] 55 ITR 722, at page 734, the Indian Legislature has evolved a definition of the expression " charitable purpose " which departs in its material clause from the definition judicially supplied in Pemsel's case [1891] AC 531 (HL) and the decisions of English Courts which proceed upon the interpretation of the language different from the Indian statute, have little value. Same difference between English law and Indian law was emphasized by the Gujarat High Court in the case of CIT v. Ahmedabad Rana Caste Association [1973] 88 ITR 354. The Gujarat High Court points out that there is a fundamental difference between English law and Indian law regarding charity. Under the English law, it is not sufficient if a purpose is beneficial to the community. It must also fall within the spirit and intendment of the preamble to the Statute of Elizabeth (43 Eliz. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able nor otherwise concerned with the advancement of social welfare. Lord Cohen took the view that the organisation had two main objects, the enhancement of the quality and status of nurses and the protection of the public, particularly the sick; the former, which was a main object and not merely ancillary, was not charitable. But both objects were otherwise concerned with the advancement of social welfare. Lord Somervell of Harrow took the view that both the advancement of the care of the sick and the enhancement of the status of nurses as provided by the Act were the advancement of social welfare. One thing is, however, clear that the majority of the law Lords have clearly stated that the organisation was for the purpose of benefiting the public. Lord Morton of Henryton did not express any opinion on the question whether it was for the purpose of benefiting the public. He took the view that having regard to the meaning of the word " charitable " as given in English decisions, the object of the organisation was not a charitable object. So far as the question of advancement of social welfare was concerned, he frankly stated that he was in great doubt and he found it difficult to ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e view that it was fair to say that the main interest, the main object of the council, was to protect the public, and it was only through the fact that the public know they were protected against bad doctors that good doctors got any benefit. With this view of Rowlatt J. Lord Hanworth M.R. concurred in appeal. Sargant L.J. expressed a doubt about the correctness of this view, while Lawrence L.J., did not express any opinion thereon. Thus, this decision does not assist us in deciding the question before us more so when the definition of the expression " charitable purpose " in India is entirely distinct from that understood in England having regard to its historical origin. Reference was also made by Mr. Joshi to a decision of the Supreme Court in the case of CIT v. Indian Sugar Mills Association [1974] 97 ITR 486. This case, in our opinion, is of no assistance to Mr. Joshi because the object with which the respondent-association was formed permitted, inter alia, to declare dividends and distribute profits. We are not concerned with a case of this type and there is no similarity whatsoever between the facts of that case and the facts with which we are concerned. In our opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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