R.B. Lal, J.
1. The Income-tax Appellate Tribunal, Allahabad Bench, has referred the following questions under Section 256(1) of the I.T. Act, 1961 (briefly 'the Act'), for the opinion of this court at the request of the assessee :
'(1) Whether, on the facts and in the circumstances of the case, the assessee is a taxable entity under the provisions of the Income-tax Act, 1961?
(2) Whether, on the facts and in the circumstances of the case, the principle of mutuality could be invoked in the case of the assessee ?
(3) Whether, on the facts and in the circumstances of the case, on a reading of the provisions contained in Section 2(15), Section 11 and Section 10(23A) together, is the assessee an institution for charitable purpose or is it covered by Section 10(23 A) ?
(4) Whether, on the facts and in the circumstances of the case, the interest income derived by the assessee from securities and other investments is liable to tax under Section 28(1) of the Act ?
(5) Whether, on the facts and in the circumstances of the case, Sections 70 and 71 of the Act could be held to be applicable ?
(6) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in allocating the expenses to the extent of 25% as attributable to the earning of interest income from securities and in directing the deduction of the same from such income ?
(7) Whether, having regard to the finding that the whole activity of the Bar Council being indivisible, the Income-tax Appellate Tribunal was right in holding that the total expenses were to be divided against the assessable and non-assessable income in respect of which only one set of accounts had been maintained on estimated basis '
2. The material facts are these. The Bar Council of Uttar Pradesh, the assessee, is a body corporate established under the Advocates Act, 1961. Its sources of income are enrolment fee, proceeds of sale of enrolment application forms and rules, interest on Government securities, fixed deposits and post office savings account, examination fees and miscellaneous receipts. In'response to a notice under Section 148 of the Act, the assessee filed an income-tax return for the assessment year 1967-68. The assesses also filed income-tax returns for the assessment years 1968-69, 1969-70, 1970-71 and 1971-72. The assessee claimed that it was an institution for charitable purposes and, therefore, its income was not liable to payment of income-tax. The ITO did not accept this contention and made assessments for all the five years treating the assessee as an association ,of persons. The assessee appealed to the AAC and reiterated its stand that it was an institution for 'charitable purpose' and, therefore, not liable to pay income-tax. It also urged that the income was not taxable on the principle of mutuality. Its activities were not for earning profits. Its entire expenses were liable to be adjusted against income from interest. The assessee contended that in fact it had not earned any income but was running in loss. The loss worked out by it could not be ignored on the ground that certain receipts were not taxable. The AAC did not accept any of these contentions of the assessee and confirmed the assessments for all the five years.
3. The assessee preferred an appeal to the Income-tax Appellate Tribunal. Before the Appellate Tribunal all those points were reagitated which were taken up before the AAC. It was also urged that the assessee did not fall within the category of taxable entity. The Tribunal held that the assessee came within the purview of the expression' artificial juridical person' and was, as such, a taxable entity. It did not accept the submission that the assessee was not liable to assessment on the principle of mutuality. It also held that the assessee could not be treated as an institution for charitable purpose within the meaning of Section 2(15) of the Act. Only Section 10(23A) of the Act could apply to the case of the assessee and, in view of this provision, income from sale of enrolment forms and rules, holding of examination, training fee and miscellaneous receipts was exempt from tax liability. The interest income accrued on the stamp duty realised by the assessee was also held exempt because such income did not belong to it. The interest earned by the assessee on securities and other investments was taxable in view of the provisions of Section 10(23A) of the Act. The Tribunal, therefore, directed the ITO to work out the income of the assessee afresh in the light of its findings.
4. The assessee did not feel satisfied and, therefore, made a request to the Tribunal to refer the question of law to the High Court.
5. The submission of the learned counsel for the assessee is that the Bar Council of Uttar Pradesh is clearly a body constituted for the advancement of an object of general public utility and is an institution for 'charitable purpose' as defined in Section 2(15) of the Act and, therefore, its entire income is entitled to exemption under Section 11 of the Act. The functions of a State Bar Council as enumerated in Section 6 of the Advocates Act, 1961, make it amply clear that the Bar Council is a body for the advancement of an object beneficial to the public or a section of the public as distinguished from an individual or group of individuals. In support of his submissions, the learned counsel: has placed reliance on the decisions in Bar Council of Maharashtra v. CIT : 126ITR27(Bom) and CIT v. Bar Council of Maharashtra : 130ITR28(SC) .
6. In the Bombay case the question for consideration before a Division Bench was whether the Bar Council of Maharashtra was a body intended for the advancement of any object of general public utility within the meaning of Section 2(15) of the Act. The Bench considered the expression 'charitable purpose' as defined in Section 2(15) of the Act and observed that the concept of charitable purpose according to Indian law is much wider than that recognised by English law. Under the Indian Act a purpose would be charitable if it is for the ' advancement of any other object of general public utility '. ' General ' means pertaining to a whole class. ' Public ' means the body of people at large, and ' utility ' means usefulness. Therefore, the advancement of any object beneficial to the public or a section of the public as distinguished from an individual or group of individuals would be a charitable purpose. The Bench considered the preamble of the Advocates Act and also Section 6 of that Act which enumerates functions of a State Bar Council and observed that a State Bar Council is constituted to enrol as advocates persons with particular qualifications who are fit or proper to be advocates on the roll of advocates. Its further object is to see that persons who are enrolled as advocates if they misbehave or misconduct themselves, they are taken to task. It is also one of the essential functions of the Bar Council to support measures for promotion of law reform. It has also to safeguard the rights, privileges and interests of advocates on its roll. It may also take measures for giving financial assistance to indigent or disabled advocates. The Bench concluded that the Bar Council is constituted to benefit the public at large by having on its roll, advocates who are not only competent so far as the law is concerned but who are respectable, fit and proper persons to belong to the noble profession of lawyers. The State Bar Council is thus, constituted primarily with the object of general public utility and the income of such body is entitled to exemption under Section 11 of the Act.
7. The Commissioner appealed to the Supreme Court : 130ITR28(SC) against the above judgment of the Bombay High Court in CIT v. Bar Council of Maharashtra : 126ITR27(Bom) . The Supreme Court also considered the functions of a State Bar Council as enumerated under Section 6(1) of the Advocates Act and held that the primary or dominant purpose of a State Bar Council is the advancement of an object of general public utility within the meaning of Section 2(15) of the I.T. Act, 1961. The Supreme Court upheld the decision of the Bombay High Court.
8. The last head of charitable purpose ' the advancement of any other object of general public utility ' in Section 2(15) of the Act is governed by the words ' not involving the carrying on of any activity for profit'. In order to come within the purview of the last head of charitable purpose it must also be shown that the object of general public utility does not involve the carrying on of any activity for profit. In the instant case, it was not disputed by the Department that there was no profit-earning motive in the activities of the assessee. It has also not been contended before us that the activities of the assessee were with the motive of earning profit.
9. The Bar Council of Uttar Pradesh is also constituted under the provisions of the Advocates Act, 1961, and its functions are also the same as enumerated in Section 6(1) of that Act. The principles enunciated in the aforesaid decisions of the Supreme Court and the 'Bombay High Court have full application to the case of the assessee. The object and activities of the assessee come within the purview of the last head of charitable purpose as mentioned in Section 2(15) of the Act. The assessee is not carrying on its activities with the motive of earning profit. We, therefore, hold that the assessee is an institution for charitable purpose within the meaning of Section 2(15) of the Act.
10. The next point for our consideration is whether the assessee is covered by s. 10(23A) of the Act. In other words, the point is whether the assessee, being an institution for charitable purpose, can claim relief under Section 10(23A) and Section 11 of the Act simultaneously.
11. In the decision in CIT v. Bar Council of Maharashtra : 126ITR27(Bom) , the learned counsel for the Revenue had sought to raise a similar point but their Lordships did not permit him to agitate this point because the Tribunal had decided it against the Revenue and the Revenue had not agitated this point before the High Court. Their Lordships, however, observed : ' we may point out that there are other allied provisions, like for instance Sub-section (23C) in Section 10, which clearly indicate that the Legislature did not intend to rule out Section 11 when exemption was claimable under such specific provision of Section 10'. This observation was an obiter but is entitled to great weight. In our view the provisions of Section 10(23A) and Section 11 are not mutually exclusive and they can have simultaneous application if the necessary ingredients of the provisions are made out. Section 10 enumerates what types of income are not to be included in computing the total income of a previous year of any person. This section is a general provision. Section 11 provides that certain income is not to be included in the total income of the previous year of the person in receipt of income from property held for charitable or religious purposes. There is nothing in Section 10(23A) and Section 11 to suggest that they are inconsistent with each other and cannot operate simultaneously. We are, therefore, clearly of the view that the assessee being an institution for charitable purpose is entitled to claim relief both under Section 10(23A) and Section 11 of the Act.
12. The expression 'person' has been denned in Sub-section (31) of Section 2 of the Act. It, inter alia, includes an association of persons and every artificial juridical person not falling within any other category mentioned in the sub-section. By virtue of Section 5 of the Advocates Act, 1961, the Bar Council of a State is a body corporate having perpetual succession and a common seal, with power to acquire and hold property, both movable and immovable. A Bar Council may sue or be sued by the name by which it is known. Thus, it is clearly a juristic person and would be covered by the expression 'artificial juridical person'. The assessee is, therefore, a person within the meaning of Section 2(31) of the Act and a taxable entity.
13. The remaining questions Nos. 2 and 4 to 7 do not need any answer, in view of our answers to questions Nos. 1 and 3.
14. Our answer to question No. I is in the affirmative, in favour of the Revenue and against the assessee.
15. Our answer to question No. 3 is that the assessee is an institution for charitable purpose within the meaning of Section 2(15) of the Act. The assessee is also entitled to claim relief under Section 10(23A) besides the relief claimable under Section 11 of the Act.
16. Questions Nos. 2 and 4 to 7 need no answer and are hereby returned unanswered.
17. The assessee shall get costs of these proceedings which we assess at Rs. 250.