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PETITIONER: COMMISSIONER OF INCOME-TAX, MADRAS

       Vs.

RESPONDENT: ANDHRA CHAMBER OF COMMERCE

DATE OF JUDGMENT: 01/10/1964

BENCH: SHAH, J.C. BENCH: SHAH, J.C. SUBBARAO, K. SIKRI, S.M.

CITATION:  1965 AIR 1281            1965 SCR  (1) 565  CITATOR INFO :  R          1972 SC 273  (5)  RF         1972 SC 763  (23)  RF         1974 SC1527  (12)  R          1975 SC 506  (3,4,5)  D          1976 SC  10  (26,43)  F          1976 SC 348  (4,8)  R          1976 SC1836  (18)  R          1980 SC 387  (5,6,40,83)  RF         1981 SC1408  (6,7)  R          1981 SC1462  (7)  APL        1981 SC1765  (1)  RF         1986 SC1054  (1,17)

ACT: Indian   Income  Tax  Act,  1922  (11  of  1922),  s.   4(3) (i)--Charitable  purpose,  meaning of--Company’s  object  to promote  trade, commerce and industry,  whether  charitable- Urging or opposing legislation affecting trade etc.   Object whether political.

HEADNOTE: The  assessee company--Me Andhra Chamber of Commerce-had  as its  main object the promotion, protection, and  development of  trade,  commerce  and industry in  India.   It  owned  a building where it had its offices, and those parts of it not in  the  company’s  own use were let  out  to  tenants.   In income-tax  proceedings  the company  claimed  exemption  in respect of the rental income under- s.4(3) (i) of the Indian Income-tax  Act,  1922.   The claim  was  negatived  by  the assessing  and  appellate  authorities.   The  High   Court, however, held that the company was a charitable  institution and  its income from property was exempt under s. 4(3)  (i). The Revenue appealed to the Supreme Court by special leave. It was contended by the appellant that the property was  not held  by  the company for a charitable  purpose  within  the meaning of s. 4(3) (i), that the objects of the company were vague,  that the benefit contemplated by the  Memorandum  of Association  was  not  to the public generally  but  to  the members  of  the company only, and that the objects  of  the company  were political it being open to it  to  appropriate the entire income for political purposes.

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HELD:     (i) The term charitable purpose as defined in  the Act was inclusive and not exclusive.  It included objects of general public utility.  The object of the assessee company- promotion of trade and commerce in the country-was an object of general public utility, as not only the trading class but the whole country would benefit by it.  It is not  necessary that the benefit must include all mankind.  It is sufficient if  the intention be to benefit a section of the  public  as distinguished from specified individuals. [571 F-H]. Commissioners  of Inland Revenue v.  Yorkshire  Agricultural Society,  [1928]  1 K.B. 611 and The  institution  of  Civil Engineers  v. Commissioners of Inland Revenue, 16 T.C.  158, relied on. Commissioner  of  Income-tax  Bombay  Presidency,  Sind  and Baluchistan v. The Grain Merchants’ Association of Bombay, 6 I.T.R. 427, disapproved. (ii)  There was nothing vague about the company  of  general public  utility  such as promotion, protection,  aiding  and stimulation of trade, commerce need not to be valid, specify the modus or the steps by which the objects may be  achieved or secured. [573 A-B]. Runchordas  Vandrawandas  v. Parvati Bai L.R.  26  I.A.  71, Commissioners of Inland Revenue v. National Anti-Vivisection Society,  28 T.C. 311 and Baddeley and others  (Trustees  of the  Newtown Trust) v. Commissioners of Inland  Revenue,  35 T.C. 661, distinguished. (iii)     The  argument that it was only for the benefit  of the  trading classes ,in Andhra Desa that the funds  of  the company could be utilised did not stand scrutiny. [574 D-E].                             566 (iv) It  cannot  be said that a purpose would  cease  to  be charitable even if public welfare is intended to be  secured thereby if it includes the taking of steps to urge or oppose legislation  affecting commerce, trade or  manufacture.   If the  primary  Purpose be advancement of objects  of  general public  utility,  it  would remain  charitable  even  if  an incidental  entry  into the political domain  for  achieving that purpose e.g. promotion of or opposition to  legislation concerning   that  purpose  is  contemplated.   The   object mentioned  in  the Memorandum of Association  was  that  the assessee  may  take steps to urge or oppose  legislative  or other  measures affecting trade, commerce,  or  manufacture. Such  an  object  must be regarded as  purely  ancillary  or subsidiary and not the primary object. [575 G-H; 580 B-C]. In  re  the Trustees of the Tribune, 7 I.T.R.  415  and  All India  Spinnere Association v. Commissioners of  Income-tax, Bombay, 12 I.T.R. 482, relied on. Pemsel  v. Commissioner for special Purposes of Income  Tax, [1891]  A.C. 531 and Bowman v. Secular Society Ltd.,  [1917] A.C. 406, referred to. Rex v. The Special Commissioners of Income-tax (ex-parte The Incorporated .Association of preparatory schools) 10 T.C 73, The Commissioners of Inland Revenue v.The temporance council of the Christian Churches of England and Wales, 10 T.C. 748, and  Laxman Balwant Bhopatkar by Dr.  Dhananjaya  Ramachndra Charity  commissioner, Bombay, [1963] 2 S.C.R. 625,

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 941. 946 of 1963. Appeals  from  the judgment dated February 22, 1961  of  the Madras High Court in Case Referred No. 121 of 1956. K.   N.  Rajagopal Sastri, R. H. Dhebar and R. N.  Sachthey,

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for the appellant (in all the appeals). A.   V.  Viswanatha Sastri, K. Rajendra Chaudhuri and K.  R. Chaudhuri, for the respondent (in all the appeals). The Judgment of the Court was delivered by - Shah  J. The Andhra Chamber of  Commerce-hereinafter  called the  assessee’s  a  Company incorporated  under  the  Indian Companies  Act 7 of 1913.  The assessee was permitted  under S. 26 of the Act to omit the word "Limited" from its name by order of the Government of Madras. The following are the principal objects of the Memorandum of Association of the assessee : (a)  To  promote and protect trade, commerce and  industries of India, in the Province of Madras and in particular in the Andhra country. (b)  To aid, stimulate and promote the development of trade, commerce and industries in India, or  567 any  part  thereof  with  capital  principally  provided  by Indians or under the management of Indians. (c)  To  watch  over  and  protect  the  general  commercial interests of India or any part thereof and the interests  of the  Andhras  in particular engaged in  trade,  commerce  or manufacture -in India and in particular the Andhra Desa. (y)  To do all -such other things as may be conducive to the preservation  and extension of trade,  commerce,  industries and  manufactures  or incidental to the  attainment  of  the above objects or any of them. Clauses (d) to (x) are incidental to the principal objects. By  cl. 4 of the Memorandum of Association it  was  provided that  the  income  and property of  the  assessee  shall  be applied  solely towards the promotion of its objects as  set forth  therein  and  no portion thereof  shall  be  paid  or transferred,  directly or indirectly, by way  of  dividends, bonuses  or  otherwise  howsoever by way of  profit  to  its members. On  December 2, 1944 the assessee purchased a  building  and made  substantial  alterations, additions  and  improvements therein.   The  assessee then moved its  offices  into  that building on May 14, 1947 and let out to tenants the  portion not  required  for its use.  The income of the  assessee  is obtained from subscriptions and donations collected from its members and rent received from the building.  The  following table sets out in columns 3 & 4 the net annual value of  the property less -the statutory deductions permissible under S. 9  of  the  Income-tax  Act, 1922  and  the  net  excess  of expenditure over the income of the assessee (other than  the rental   income)  incurred  in  connection  with   all   its activities  for  the  assessment  years  relating  to  which dispute arises in this group of appeals ----------------------------------------------------------- Previous year      Assessment      Amount       Net excess (calendar year)     year              Rs.              Rs. ----------------------------------------------------------- (1)                  (2)              (3)             (4) ----------------------------------------------------------- 1947                 1948-49          3,400          7,431 1948                 1949-50          6,154          7,139 1949                 1950-51          6,928          5,266 1950                 1951-52          5,740          10,173 1952                 1953-54          8,072          13,672 1953                 1954-55          8,072          17,397 ----------------------------------------------------------- In  proceedings for assessment before the Second  Additional Income-tax Officer, City Circle 1, Madras, it was  contended that

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Sup./65-11 568 the  annual value of the building was not assessable in  its hands  as the assessee was a charitable  institution  within the meaning of s. 4(3) (i) of the Income-tax Act, 1922.   In the  alternative,  it  was  contended  that  the  excess  of expenditure  over  income  should be set  off  against  such income if the annual value is held assess,able.  The Income- tax  Officer  rejected the contentions of the  assessee  and assessed its income from property on the basis of net annual value  in  the  six assessment years  without  debiting  the -expenditure  in excess of income (other than rent)  against the net annual value. The  assessee  appealed to the Appellate  Assistant  Commis- sioner against all the orders of assessments.  The Appellate Assistant  Commissioner held that the assessee not  being  a charitable institution the income in question was not exempt under  s.  4(3)  (i).   He  also  rejected  the  alternative contention,  for in his view, there was no specific  profit- making activity of the assessee the loss from which could be set off against its other income. Appeals  were then taken to the Income-tax Appellate  Tribu- nal.   The  Tribunal held that the assessee was  not  exempt within  the  meaning of s. 4(3) (i) from  liability  to  pay income-tax,  because  the activities of  the  assessee  were intended  for  the  benefit primarily  of  its  members  and "embraced  only  collective  action on  behalf  of  all  its constituent  members"  which "could not be said  to  be  the result  of any trade or business or vocation carried  on  by it". At  the instance of the assessee the Tribunal  referred  the following questions to the High Court :               "(1)   Whether  the  aforesaid   income   from               property owned by the assessee is exempt under               S.  4 (3) (i) for the aforesaid six  years  of               assessment ?               (2)   If  the answer to the above question  is               in the negative, whether the activities of the               assessee  amount to a trade or  business,  the               profit or loss from which is assessable  under               S. 10 ?" The   High  Court  answered  the  first  question   in   the affirmative and did not record a formal answer on the second question.   Against  the  order of  the  High  Court,  these appeals  are preferred by the -Commissioner  of  Income-tax, with certificate granted by the High Court under S. 66A  (2) of the Indian Income-tax Act. We  are concerned in this group of appeals with the  assess- ment of income of the assessee in the years 1948-49 to 1954- 55  569 with  the omission of the assessment year 1952-53.   Between the  years 1948-49 to 1952-53 there has been some change  in s.  4(3) (i) which before it was amended by Act 25  of  1953 with effect from April 1, 1952 read as follows :               "Any  income, profits or gains falling  within               the following classes shall not be included in               the total income of the person receiving  them               :               (i)   Any  income derived from  property  held               under  trust or other legal obligation  wholly               for  religious or charitable purposes, and  in               the case of property so held in part only  for               such purposes, the income applied, or  finally               set apart for application thereto."

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By the last paragraph of sub S. (3) "charitable purpose" was defined as including relief of the poor, education,  medical relief,  and the advancement of any other object of  general public utility, but nothing contained in cl. (i) or cl.  (i) or  cl.(i.a)or  cl. (ii) shall operate to  exempt  from  the provisions  of the Act that part of the income of a  private religious trust which does not enure for the benefit of  the public.  By the amendment made by S. 3 of the Indian Income- tax  (Amendment) Act 25 of 1953, cls. (i) and (i-a) as  they originally stood were amalgamated.  It is common ground that by the amendment, no alteration which has a material bearing on  the  question to be decided in these  appeals  has  been made. Income  from property qualifies for exemption under S.  4(3) (i)  if  two conditions co-exist (i) the  property  is  held under  trust  or other legal obligation; and (ii) it  is  so held   wholly  or  in  part  for  religious  or   charitable purposes-.   The  building  which the assessee  owns  is  by virtue of cl. 4 of the Memorandum of Association held  under a legal obligation to apply its income to purposes specified in the Memorandum of Association.  It is not the case of the assessee that the objects of incorporation are relief of the poor,  education  or medical relief, and the  only  question canvassed  at the Bar is whether the purposes for which  the assessee  stands incorporated are objects of general  public utility,  within the meaning of the  expression  "charitable purpose" in S. 4(3). 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 570 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 public utility.  It  may  be remembered that promotion and protection of trade,  commerce and industry cannot be equated with promotion and protection of  activities  and interests merely of persons  engaged  in trade, commerce and industry. In Commissioners of Inland Revenue v. Yorkshire Agricultural Society(1) an association called the Yorkshire  Agricultural Society  was  formed  with  the  object  of  holding  annual meetings  for  the exhibition of farming  stock,  implements etc.,  and  for the general promotion of  agriculture.   All prizes  were open to competition in the United Kingdom,  but certain  privileges  were  attached  to  membership  of  the Society.   The income of the Society was derived from  entry fees  and  gate receipts, local  subscriptions  for  prizes, interest  on investments, and subscriptions of members.   It was  held by the Court of Appeal that on the facts found  by the   Commissioners  the  Society  was  established  for   a charitable    purpose    and    that    purpose    continued notwithstanding  the incidental benefits enjoyed by  members of the Society; and that those benefits did not prevent the. Society  from  being established for a  "charitable  purpose only". In  Halsbury’s Laws of England, 3rd Edn., Vol. 4 at p.  236, Art 517, it is stated               "An association or institution may benefit its               members in the course of carrying out its main

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             charitable  purpose  and this alone  will  not               prevent  it  from being a charity.   It  is  a               question  of  fact whether there  is  so  much               personal     benefit,     intellectual      or               professional,  to the members of a society  or               body  of persons as to be incapable  of  being               disregarded." In  The Institution of Civil Engineers v. The  Commissioners of  Inland Revenue (2) it was held that the  Institution  of Civil  Engineers founded and incorporated by  Royal  Charter for the general advancement of mechanical science, and  more particularly  for promoting the acquisition of that  species of  knowledge  which constitutes the profession of  a  civil engineer  was a body of persons established  for  charitable purposes  only.  The Special Commissioners having regard  in particular to the provisions of the supplemental charter  of 1922, by which the corporate members (1) [1928] 1 K.B. 611. (2) 16 T.C. 158.  571 of  the  Institution  were authorised to use  the  title  of member,  or  associate member, as the case might  be,  found that  a substantial part of the objects of  the  Institution was  to benefit the member-& and rejected the claim  of  the Institution  for  exemption.   The  Court  of  King’s  Bench disagreeing  with the Special Commisssioners held  that  the benefit of members was purely incidental to the main purpose of  the  Institution which was  established  for  charitable purposes  only.   The Court of Appeal found  that  the  only purpose  for which the Institution was established  was  the promotion  of science and that purpose had never been  added to  or  varied  by any of the  supplemental  charters  :  it followed therefore that the Institution was established  for charitable  purposes  only, notwithstanding that  it  is  of advantage  to  a civil engineer in his profession  to  be  a member  of the Institution, this result not being a  purpose for  which  the  Institution  was  established,  but   being incidental  to  and  consequent upon the way  in  which  the Institution  carries  out the charitable purpose  for  which alone it was established. In the promotion of trade, commerce and industries of  India the public is vitally interested and if by the activities of the assessee that object is achieved, it would be within the meaning  of  S.  4(3) (1) of the Act an  advancement  of  an object  of  general public utility.  In  enacting  the  last paragraph  of S. 4(3) the legislature has used  language  of great  amplitude.   "Charitable purpose" includes  not  only relief of the poor, education and medical relief alone,  but advancement  of other objects of general public  utility  as well.   The  clause  is  intended  to  serve  as  a  special definition  of the expression "charitable purpose"  for  the Act : it is again inclusive and not exhaustive or exclusive. Even  if  the  object  or purpose may  not  be  regarded  as charitable  in its popular signification as not  tending  to give relief to the poor or .for advancement of education  or medical relief, it would still be included in the expression "charitable  purpose"  if it advances an object  of  general public  utility.  The expression "object of  general  public utility" however is not restricted to objects beneficial  to the whole mankind.  An object beneficial to a section of the public  is an object of general public utility.  To serve  a charitable  purpose,  it is not necessary  that  the  object should  be  to  benefit the whole of  mankind  or  even  all persons  living in a particular country or Province.  It  is sufficient  if the intention be to benefit a section of  the

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public   as   distinguished  from   specified   individuals. Observations  to  the  contrary made by  Beaumont  C.J.,  in Commissioner of Income-tax Bombay Presi- 572 dency,   Sind  and  Baluchistan  v.  The  Grain   Merchants’ Association  of Bombay(1) that "an object of general  public utility means an object of public utility which is available to  the general public as distinct from any section  of  the public" and that objects of an association "to benefit works of public utility confined to a section of the public,  i.e. those  interested  in commerce" are not objects  of  general public  utility, do not correctly interpret  the  expression "objects  of  general public utility".  The section  of  the community sought to be benefited must undoubtedly be  suffi- ciently defined and identifiable by some common quality of a public  or  impersonal  nature: where  there  is  no  common quality  uniting the potential, beneficiaries into a  class, it may not be regarded as valid. It  is true that in this case there is in fact no  trust  in respect of the income derived from the building owned by the assessee.  But the property and the income therefrom is held under a legal obligation, for by the terms of the permission granted  by the Government to the assessee to  exclude  from its  name the use of the word "limited", and by the  express term,%  of  cl.  4  of the  Memorandum  of  Association  the property  and its income are not liable to be utilised  only for the purposes set out in the Memorandum of Association. Counsel  for the revenue submitted that the purposes of  the assessee  are vague and indefinite.  He submitted that if  a competent  Court were called upon, as it may be called  upon to  administer the obligation imposed by the  Memorandum  of Association, the Court would on account of vagueness of  the objects decline to do so, and therefore the purposes  cannot be  regarded  as charitable.  In  the  alternative,  counsel contended  that  the benefit which is  contemplated  by  the Memorandum of Association was not the benefit to the  public generally, but the benefit to its members to carry on  their business  more  profitably.   In  the  further  alternative, relying  upon  cl. 3(g) of the  Memorandum  of  Association, counsel  contended  that the objects of  the  assessee  were political, it being open to the assessee to appropriate  the entire income for political purposes. But  the primary 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  and  to  watch  over  and  protect  the  general commercial  interests of India or any part  thereof.   These objects are not vague or inde- (1)  6 I.T.R. 427.  573 finite  as objects of general public utility.  An object  of general  public  utility,  such  as  promotion,  protection, aiding  and  stimulation of trade, commerce  and  industries need  not,  to be valid specify the modus or  the  steps  by which the objects may be achieved or secured.  It cannot  be said  that  if called upon to administer an  institution  of which the objects are of the nature set out, the Court would decline  to  do so merely on the ground that the  method  by which  trade,  commerce  or industry is to  be  promoted  or protected,  aided  or stimulated or the  general  commercial interests  of India are to be watched over or protected  are not  specified.   Analogy of cases like  Runchordas  Vandra- wandas  v.  Parvati  Bhai(1)  in  which  the  Privy  Council declared  a devise under a will in favour of "dharam"  void, is  misleading.  In that case the devise was declared  void,

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because the expression "dharam" in the view of the  Judicial Committee  being  law, virtue, legal or moral duty  was  too general and too indefinite for the courts to enforce. Observations  by  Lord Simonds in  Commissioners  of  Inland Revenue v. National Anti-Vivisection Society(2) that "One of the tests, and a crucial test, whether a trust is charitable lies  in the competence of the Court to control  and  reform it...........  that it is the King as parens patriae who  is the  guardian of charity, and that it is the right and  duty of  his  Attorney-General to intervenue and to  inform  "the Court  if the trustees of a charitable trust fall  short  of their  duty.  So too it is his duty to assist the Court,  if need be, in the formulation of a scheme for the execution of a  charitable trust.  But......... is it for a moment to  be supposed that it is the function of the Attorney-General  on behalf  of  the Crown to intervene and demand that  a  trust shall  be  established and administered by  the  Court,  the object  of  which  is to alter the law in  a  manner  highly prejudicial,  as he and His Majesty’s Government may  think, to  the welfare of -the State ?" do not assist the  case  of the revenue.  In the view of Lord Simonds the object of  the trust was political and, therefore, void, and not because it was vague or indefinite. In  Baddeley and others (Trustees of the Newtown  Trust)  v. Commissioners  of Inland Revenue(") certain properties  were conveyed  to  trustees by two conveyances, in  one  case  on trust,  inter  alia,  for the promotion  of  the  religious, social  and physical well-being of persons resident  in  the County  Boroughs of West Ham and Leyton by the provision  of facilities for religious (1) L.R. 26 I.A. 71.       (2) 28 T.C. 311, 367. (3)  35 T.C. 661. 574 services  and  instruction and for the social  and  physical training  and recreation of such aforementioned persons  who were  members or likely to become members of  the  Methodist Church  and  of insufficient means otherwise  to  enjoy  the advantages  provided  and by promoting and  encouraging  all forms  of such activities, as were calculated to  contribute to  the  health and well-being of such persons, and  in  the other case on similar trusts omitting reference to religious services and instruction and otherwise substituting  "moral" for  "religious".  These trusts were, it was held,  not  for charitable  purposes only.  The case arose under  the  Stamp Act  of  1891, and it was contended that  the  trusts  being charitable  stamp duty at a lower rate was chargeable.   The House  of Lords held that the trust was not charitable.   It was  observed by Lord Simonds that "the moral,  social,  and physical well-being of the community or any part of it is  a laudable  object  of benevolence and philanthropy,  but  its ambit  is  far too wide to include purposes  which  the  law regards as charitable". These cases have, in our judgment, no bearing on the  inter- pretation of the language used in the Memorandum of Associa- tion of the assessee. The argument that it is only for the benefit of the  members or the trading classes in Andhra Desa that the funds of  the assessee  could be utilised does not stand scrutiny.  It  is clear  from  the  diverse  clauses in  paragraph  3  of  the Memorandum  of Association that the objects were not  merely to  benefit the members of the assessee or even the  trading community  of  Andhra Desa.  Reliance was  placed  upon  the membership clause in the Articles of Association and it  was submitted  that  only persons speaking Telugu  language  and residing  in  Andhra Desa [as defined in cl.  1 (s)  of  the

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Articles  of  Association]  could  be  members.   But   that argument  is wholly unfounded.  By sub-cl. (iii) of cl. 5  a Chamber  of  Commerce or Trade  Association  protecting  and promoting  Indian trade, commerce and industry  is  eligible for   election   as  a  member  of  the  Chamber   and   the representative of such a Chamber of Commerce or Trade  Asso- ciation  need  not necessarily be able to  speak  and  write Telugu.  Similarly by sub-cl. (iv) a Company or  Corporation having  its principal office or registered office in  Andhra Desa  or  a branch in Andhra Desa is eligible  to  become  a member  in  its  conventional  or  corporate  name  and  the representative  of  such a Company or Corporation  need  not necessarily  be able to speak or write Telugu.  Again  under sub-cl.  (v) a Partner of a Firm of a  "Private  Partnership Concern" or a Joint Family Business  575 concern, or a Sole Proprietory concern having its  principal office  or registered office in Andhra Desa or a  branch  in Andhra  Desa is eligible for membership of the  Chamber  and the representative of such a member need not necessarily  be able to speak or write Telugu.  Finally, by sub-cl. (vi)  an individual  residing anywhere in India and connected in  any manner  with  trade, industry and commerce is  eligible  for membership  of  the Chamber provided his  mother  tongue  is Telugu  or he can both speak and write Telugu.  There is  no geographical  limitation upon the membership  qualification, nor is there limitation about the capacity to speak or write Telugu.   We  should not be taken as holding that  if  there were such restrictions, the character of the assessee as  an institution  for  promotion  of  charitable  objects   would thereby be necessarily effected.  Clause  3(g)  of  the Memorandum of  Association  on  which strong reliance was placed reads as follows :               "To  urge  or  oppose  legislative  and  other               measures   affecting   trade,   commerce    or               manufactures and to procure change of law  and               practice   affecting   trade,   commerce   and               manufactures and in particular those affecting               trade,   commerce  and  industries  in   which               Andhras  are  concerned  and  obtain  by   all               acknowledged  means  the removal,  as  far  as               possible,   of   all   grievances    affecting               merchants  as a body and mercantile  interests               in general." But cl. 3(g) is not the primary object of the assessee :  it is merely incidental to the primary objects of promotion  or protection  of  trade, commerce and industries, or  to  aid, stimulate and promote the development of trade, commerce and industries  or  to  watch  over  and  protect  the   general commercial interests. The expression "object of general public utility" in s. 4(3) would  prima  facie include all objects  which  promote  the welfare  of  the  general public.  It cannot  be  said  that merely a purpose would cease to be charitable even if public welfare is intended to be served thereby if it includes  the taking  of  steps to urge or  oppose  legislation  affecting trade,  commerce or manufacture.  If the primary purpose  be advancement  of objects of general public utility, it  would remain  charitable  even  if an incidental  entry  into  the political  domain for achieving that purpose e.g.  promotion of or opposition to legislation concerning that purpose,  is contemplated.  In In re The Trustees of the Tribune(1) the (1)  7 I.T.R. 415. 576 Judicial  Committee of the Privy Council was called upon  to

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consider whether a trust created under a will to maintain  a printing press and newspaper in an efficient condition,  and to keep up the liberal policy of the newspaper, devoting the surplus  income of the press and newspaper  after  defraying all current expenses in improving the newspaper and  placing it on a footing of permanency and further providing that  in case  the paper ceased to function or for any  other  reason the surplus of the income could not be applied to the object mentioned  above,  the  same  should  be  applied  for   the maintenance  of a college which had been established out  of the funds of another trust created by the same testator, was a  charitable  purpose within the meaning of S.  4(3).   The Judicial Committee expressed the view that the object of the settler was to supply the province with an organ of educated public opinion and this was prima facie an object of general public utility, and observed               "These  English decisions-are in point  in  so               far  only  as they illustrate  the  manner  in               which  political  objects, in the  wide  sense               which includes projects for legislation in the               interests  of  particular causes,  affect  the               question whether the Court can regard a  trust               as  being one of general public  utility.   In               the  original letter of reference it  was  not               suggested   by  the  Commissioner   that   the               newspaper was intended by its founder to be  a               mere  vehicle of political propaganda, and  in               the case of Sardar Dyal Singh it seems  unrea-               sonable  to  doubt  that  his  object  was  to               benefit the people of Upper India by providing               them    with    an    English    newspaper-the               dissemination  of news and the ventilation  of               opinion  upon all matters of public  interest.               While  not perhaps impossible it is  difficult               for a newspaper to avoid having or acquiring a               particular political complexion unless  indeed               it  avoids all reference to the activities  of               Governments or legislatures or treats of  them               in  an eclectic or inconsistent  manner.   The               circumstances  of  Upper  India  in  the  last               decade   of  the  nineteenth   century   would               doubtless make any paper published for  Indian               readers  sympathetic to various movements  for               social   and  political  reform.   But   their               Lordships  having before them  material  which               shows the character of the newspaper as it was               in fact conducted in the testator’s  lifetime,               have arrived at the conclusion that  questions               of politics and legislation                577               were discussed only as many other matters were               in  this  paper discussed and that it  is  not               made  out  that a political  purpose  was  the               dominant purpose of the trust." In  All  India  Spinners’  Association  v.  Commissioner  of Incometax,   Bombay(1)  the  assessee  was  formed   as   an unregistered  association by a resolution of the  All  India Congress  Committee for the development of village  industry of  hand-spinning  and hand-weaving.   The  Association  was established   as   an   integral  part   of   the   Congress Organisation,  but it had independent existence  and  powers unaffected and uncontrolled by politics.  The objects of the Association,   amongst  others,  were  to   give   financial assistance  to khaddar organisations by way of loans,  gifts or  bounties, to help or establish schools  or  institutions

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where  handspinning  is  taught, to help  and  open  khaddar stores, to establish a khaddar service, to act as agency  on behalf  of  the  Congress  to  receive  self-spun  yarn   as subscription  to the Congress and to issue certificates  and to  do all the things that may be considered  necessary  for the   furtherance  of  its  objects,  with  power  to   make regulations for the conduct of affairs of the Association of the  Council  and  to make such amendments  in  the  present constitution,  as may be considered from time to time.   The funds  of the Association consisted mostly of donations  and subscriptions,  and out of the funds charkas  and  handlooms were  purchased  and  supplied to the  inhabitants  free  of charge.   Raw cotton was supplied to the poor people  to  be spun  into  yarn  and the yam so spun  along  with  the  yam acquired  by  the Association were supplied  to  other  poor people for hand-weaving.  The income of the Association  was treated by the Commissioner of Incometax as not exempt under s. 4(3) (i) of the Indian Income-tax Act inasmuch as (i) the dominant purpose of the Association was political, (ii) even assuming it was not political, the dominant purpose was  not in  any event a valid charitable purpose in law,  and  (iii) some  of  the objects were not clearly  charitable  objects. The   Judicial  Committee  held  that  the  income  of   the Association  was derived from property held under  trust  or other  legal obligation wholly for charitable  purposes  and the English decisions on the law of charities not based upon any  definite  and  precise statutory  provisions  were  not helpful  in construing the provisions of S. 4(3) (i) of  the Indian  Income-tax Act.  The words of S. 4(3)  were  largely influenced  by  Lord Macnaghten’s definition of  charity  in Pemsel  v. Commissioners for Special Purposes of  Income-Tax (2) , but that definition had no statutory (1) 12 I.T.R. 482.           (2) [1891] A.C. 53 578 authority  and  was  not  precisely  followed  in  the  most material  particulars; the words of the section  being  "for the  advancement  of  any other  object  of  general  public utility"  and  not as Lord Macnaghten said  "other  purposes beneficial  to  the  community".   The  Judicial   Committee observed  that  the primary object of  the  Association  was relief of the poor and apart from that ground there was good ground  for  holding that the purposes  of  the  Association included  advancement  of other purposes of  general  public utility.  The Judicial Committee then held :               "These  words,  their Lordships  think,  would               exclude the object of private gain, such as an               undertaking  for commercial profit though  all               the  same it would sub-, serve general  public               utility.  But private profit was eliminated in               this case.  Though the connexion in one  sense               of the Association with Congress was relied on               as   not  consistent  with   ’general   public               utility’   because   it  might  be   for   the               advancement  primarily of a particular  party,               it is sufficiently clear in this case that the               Association’s purposes were independent of and               were   not   affected  by  the   purposes   or               propaganda of Congress."  The Indian legislature  has evolved a definition of the ex- pression "charitable purpose" which departs in its  material clause  from the definition judicially supplied in  Pemsel’s case(1), and decisions of English Courts, which proceed upon interpretation of language different from the Indian statute have  little value.  We, therefore, do not propose  to  deal with  the  large number of English cases cited at  the  Bar,

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except to mention three, which declared trusts for political purposes invalid. In Rex v. The Special Commissioners of Income-tax  (ex-parte The  Headmasters’  Conference) and Rex v. The  Special  Com- missioners   of  Income  Tax  (ex-parte)  The   Incorporated Association  of  Preparatory School(1) it was  held  that  a conference  of Headmasters incorporated under the  Companies Act  as an Association limited by guarantee, of which  under the  Memorandum  of  Association income was  to  be  applied towards the promotion of its expressed objects, one of which was  the  promotion  of or  opposition  to,  legislative  or administrative   educational   measures,  the   holding   of examinations, etc. was not a body of persons established for charitable  purposes only within the meaning of  the  Income Tax   Acts.   Similarly  an  incorporated   Association   of Preparatory Schools incorporated under the Companies Act  as an Association limited by guarantee, income (1) [1891] A.C. 531. (2) 10 T.C. 73  579 whereof  was to be applied solely towards the  promotion  of its  expressed  objects which included the  advancement  and promotion    of,   or   opposition   to,   legislative    or administrative   educational  measures  etc.  was   not   an association  whose  income  was  applicable  to   charitable purposes  only.  The Court of King’s Bench held in the  case of  each of the two trusts that because the income could  be utilised for promotion of, or opposition to, legislative  or administrative  educational  measures, and those  being  the primary  objects,  the income was not liable to  be  applied solely to charitable purposes. In  The  Commissioners of Inland Revenue v.  The  Temperance Council of the Christian Churches of England and Wales (1) a Council   constituted   by  resolution  at  a   meeting   of representatives  of  the  temperance  Organisation  of   the Christian  Churches  of England and Wales,  the  purpose  of which  being united action to secure legislative  and  other temperance  reform was held not to be a council  established for charitable purposes only, nor was its income  applicable to  charitable purposes only, and that it was therefore  not entitled to the exemption sought. In Bowman v. Secular Society Ltd.(2) Lord Parker observed:               "A  trust  for  the  attainment  of  political               objects  has  always been  held  invalid,  not               because  it is illegal but because  the  Court               has  no  means of judging whether  a  proposed               change -in the law will or will not be for the               public benefit." This Court in a recent judgment, Laxman Balwant Bhopatkar by Dr.  Dhananjaya Ramchandra Gadgil v.  Charity  Commissioner, Bombay (3) considered whether for the purposes of the Bombay Public  Trust  Act  29 of 1950 a  trust  to  educate  public opinion and to make people conscious of political rights was a trust for a charitable purpose.  The Court held (Subba Rao J.,  dissenting)  that the object for which  the  trust  was founded  was  political, and political purpose being  not  a charitable  purpose did not come within the meaning  of  the expression  "for  the  advancement of any  other  object  of general  public  utility" in S. 9(4) of  the  Bombay  Public Trusts Act, 1950.  The definition of "Charitable purpose" in s.  9  of the Bombay Public Trusts Act closely  follows  the language  used in the definition given under the  Income-tax Act s. 4(3).  But in Laxman Balwant Bhopatkar’s case(1),  as in the cases of the Courts in England which we (1) 10 T.C. 748.   (2) [1917] A.C. 406, 442.

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(3)  [1963] 2 S.C.R. 625. 580 have  referred  to,  it was held that  the  primary  or  the principal  object was political and therefore the trust  was not charitable.  In the present case the primary purpose  of the assessee was not to urge or oppose legislative and other measures  affecting  trade, commerce or  manufactures.   The primary  purpose  of  the assessee is, as  we  have  already observed,  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.   It  is  only for the purpose  of  securing  these primary aims that it was one of the objects mentioned in the Memorandum  of Association that the assessee may take  steps to  urge or oppose legislative or other  measures  affecting trade,  commerce  or manufactures.  Such an object  must  be regarded  as  purely  ancillary or subsidiary  and  not  the primary object. - The  appeals  therefore fail and are dismissed  with  costs. One hearing fee. Appeals dismissed. 581