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TMI Blog1976 (6) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain disputed items of income. The view of the Tribunal was contended by the department to be erroneous in law and applications were made before the Tribunal for a reference to this court and the Tribunal has stated a case and referred the following questions : " 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that the income of the assessee is exempt under section 11 of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in law in holding that the provisions of section 28(iii) are not applicable to the facts of the case ?" The order of the Tribunal is annexure "D" and paragraphs 6, 7 and 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me ruling will apply to the assessee here. We, therefore, have to hold that the Appellate Assistant Commissioner was correct in his conclusion that the assessee is entitled to be considered as a charitable institution. 7. We will now consider the item which have led to the excess of income over expenditure. The first to be considered is the subscription which is payable by the members. The second item to be considered is laga which is collected under bye-law 207. As per this bye-law, a contribution at the rate of 50 paise per unit of 25 quintals of pepper shall be paid to the Association by the seller as well as by the purchaser on all contracts. Now, this laga is being levied to enable the Association to carry on its activities. This is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other object of general public utility" and not "relief of the poor, education and medical relief". It was further held, and that is the more important aspect as far as these references are concerned, in Commissioner of Income-tax v. Indian Chamber of Commerce [1971] 80 ITR 645 (Ker) that : "In order to take an object of general public utility outside the scope of the definition in section 2(15) of the Income-tax Act, 1961, on the ground that it involves the carrying on of an activity for profit, that object must involve the carrying on of any activity for profit. 'Involve' means comprise or imply and the object must, therefore, imply the carrying on of any activity for profit. It is not sufficient, if there is some activity carried on w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ker) and in Commissioner of Income-tax v. Cochin Chamber of Commerce and Industry [1973] 87 ITR 83 (Ker). The matter has now been settled beyond controversy as far as this court is concerned and it is clear that if the advancement of an object of general public utility is connected or linked with an activity for profit, then, the particular charity must be outside the definition of section 2(15) and the profits arising out of that charity will not, therefore, be exempt from tax. The Supreme Court has dealt with various aspects in detail in the judgment of the Supreme Court in Indian Chamber of Commerce v. Commissioner of Income-tax [1975] 101 ITR 796 and there is discussion in the judgment as to when it can be said that there is an activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently of buildings owned by the association and covered by the trust. It is contended by the assessee's counsel that these items of receipts cannot be said to be profits arising from an activity for profit. The other items referred to in paragraphs 7 and 8 are contributions by brokers for licensing them and amounts received on sale of forms. In regard to these also it is contended by counsel that these are very small items and the association was not carrying on any activity for profit in receiving contributions for issuing licences and in selling forms and counsel relied on certain observations of the Supreme Court in Indian Chamber of Commerce v. Commissioner of Income-tax [ 1975] 1 of ITR 796 in support of the contention that these sums ..... X X X X Extracts X X X X X X X X Extracts X X X X
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