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Commissioner of Income-tax Vs. Indian Sugar Mills Association - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 301 of 1970
Judge
Reported in[1978]111ITR429(Cal)
ActsIncome Tax Act, 1961 - Sections 2(15), 10(24), 11(1) and 256; ;Income Tax Act, 1922 - Section 4(3)
AppellantCommissioner of Income-tax
RespondentIndian Sugar Mills Association
Appellant AdvocateB.L. Pal and ;Ajoy Mitra, Advs.
Respondent AdvocateR. Murarka, Adv.
Excerpt:
- .....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.' 6. while considering the meaning and import of the above definition, p. b. mukharji c.j. in the case of commissioner of income-tax v. indian chamber of commerce : [1971]81itr147(cal) observed that : 'the expression 'the advancement of any other object of general public utility not involving the carrying on of any activity for profit' plainly indicates that it is not the object of general public utility which would involve the carrying on of any activity for profit but the ' advancement' of that object. otherwise, it will lead to a self-contradictory situation because the reason for including the object of general.....
Judgment:

R.N. Pyne, J.

1. In this reference under Section 256(1) of the Income-tax Act, 1961, the following question of law said to arise out of the Tribunal's order dated February 27, 1970, has been referred for this court's opinion :

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the income of the assessee-association derived from the business of export of sugar and interest from current and fixed deposits were exempt from tax subject to verification by the Appellate Assistant Commissioner of the facts with reference to the provisions of section 11(1)(a) of the Income-tax Act, 1961 ?'

2. This reference relates to the assessment year 1965-66, the relevant previous year being the calendar year 1964.

3. The controversy in this reference is whether the income derived by the assessee-association from the business of export of sugar and interest from current and fixed deposits is exempt from income-tax under section 11(1)(a) of the Act.

4. It may be noted that the assessee made similar claim in the assessment years 1958-59 to 1961-62 under Section 4(3)(i) of the Indian Income-tax Act, 1922. Regarding the assessee's claims in the aforesaid years the Supreme Court in its decision in the case of Commissioner of Income-tax v. Indian Sugar Mills Association : [1974]97ITR486(SC) , construing the relevant rules of the assessee-association, held that the income of the association derived from the business of export of sugar and interest from current and fixed deposits were not exempted from tax under Section 4(3)(i) of the Indian Income-tax Act, 1922.

5. Section 11(1)(a) of the 1961 Act is corresponding to Section 4(3)(i) of the 1922 Act and the former section is in pari materia with the latter section. Therefore, in our opinion, the present case is fully covered by the aforesaid decision of the Supreme Court. In this connection, we may also note Section 2(15) of the 1961 Act, which defines 'charitable purpose' as follows :

''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.'

6. While considering the meaning and import of the above definition, P. B. Mukharji C.J. in the case of Commissioner of Income-tax v. Indian Chamber of Commerce : [1971]81ITR147(Cal) observed that :

'The expression 'the advancement of any other object of general public utility not involving the carrying on of any activity for profit' plainly indicates that it is not the object of general public utility which would involve the carrying on of any activity for profit but the ' advancement' of that object. Otherwise, it will lead to a self-contradictory situation because the reason for including the object of general public utility as a charitable purpose was that it was not a charitable purpose with a blanket cover for any object of general public utility but with the severe limitation that the advancement of an object of general public utility would not involve the carrying on of any activity for profit or else it would not be a charitable purpose within the meaning of Section 2(15) of the Income-tax Act, 1961. That, in our view, is the true import, meaning and significance of this new definition with the expression 'the advancement of any other object of general public utility not involving the carrying on of any activity for profit'. In other words, the advancement of any other object of general public utility would be a charitable purpose provided that its advancement does not involve the carrying on of any activity for profit. The wisdom behind this limitation is plain. The expression 'object of general public utility' is an expression of wide import and it was, therefore, thought necessary by Parliament in its wisdom to impose certain restrictions on the area of the object of general public utility and the area selected is that its advancement must not involve the carrying on of any activity for profit.'

7. Therefore, in our opinion, in view of the present definition of 'charitable purpose' in the 1961 Act, the income of the assessee from business of export of sugar and interest from current and fixed deposit cannot also be said to be the income derived from charitable purpose.

8. Mr. Murarka, learned counsel for the assessee, however, contended that in this case we are really concerned with the question whether the income of the assessee from the source as mentioned aforesaid is exempt from income-tax. He has drawn our attention to Section 10(24) of the Income-tax Act, 1961, and has argued that since the assessee is a registered trade union and the sources of its income in respect whereof exemption has been claimed, are income from other sources, the assessee is entitled to exemption under the said section.

9. We are, however, unable to entertain this contention of Mr. Murarka. It will appear from the records that the claim of exemption was not made on the basis of Section 10(24) of the 1961 Act at any stage by the assessee and it is only after the said decision of the Supreme Court, it has now been contended by the assessee for the first time that it is entitled to be exempted under Section 10(24) of the 1961 Act.

10. In our opinion, this is a new point and it was neither urged nor considered at any stage before the revenue authorities and, therefore, it is not open to the assessee to raise this point at this stage. This point would also involve consideration of fresh facts which cannot be allowed at this stage. Further, the question referred to by the Tribunal as set out earlier will show that in this reference we are only concerned with the question of exemption under Section 11(1)(a) of the Income-tax Act, 1961, and not with the question of exemption under any other section, now raised in this reference for the first time by the assessee and, therefore, in our opinion, this question cannot be said to be covered by the question referred by the Tribunal. In the aforesaid view of the matter and following the decision of the Supreme Court noted earlier, we answer the question in the negative and in favour of the revenue. In the facts and circumstances of this case, we, however, do not make any order as to costs.

Deb, J.

11. I agree.


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