2001 PLP 1762 (PTD)

Charitable purpose

Charitable trust

Trust for formation of trade and commerce

Finding by Tribunal that objects of trusts were for general public utility and that there was no activity for profit

Trust entitled to exemption under S.11

Indian Income Tax Act, 1961, S.11. Held; that on a reading -of the objects of the assessee-company, it appeared, that the company was incorporated for the purposes of general public utility and the main object of the company was to promote and protect trade, commerce and industry of the mercantile community. The Tribunal found that the objects of the assessee were for general public utility and did not involve the carrying on of any activities for profit and the office-bearers of the company were not entitled to get salary. On winding up or dissolution of the company, if there remained after satisfaction of the debt and liabilities, any profit whatsoever, the same was not to be distributed amongst the members of the company but was to be given or transferred to such other company having objects similar to the association. Hence, the assessee was entitled to exemption under section 11 of the Income Tax Act, 1961. The assessee is a charitable institution of Banaras Brass Merchant and Manufacturers Association, Varanasi. They derive their income from donations, selling and manufacturing of the products produced by their members. The assessee-company was incorporated as a limited company in 1961. Prior to that it was a society registered under the Societies Registration Act, 1960. The main objects of the institution are as under:-- (a) To foster and develop friendly relations, mutual help and common understanding among all, who are directly or indirectly or interested in or concerned with the trade, commerce, industry, agriculture or manufacture; (b) To promote and protect the trade, commerce, industry, agriculture and manufacture in which members of the association are engaged or interested, directly or indirectly and to represent and to express on these and connected questions the opinions of the mercantile community of the Indian Union; (c) To consider all questions connected with such trade, commerce, industry agriculture and manufacture and the interests thereof. A reading of the objects of the assessee-company it appears that the company was incorporated for the purposes of general public utility and the main object of the company was to promote and protect trade, commerce and industry of the mercantile community. The assessee claimed exemption under section 11(1)(a) of the Income Tax Act, 1961. The Tribunal on consideration of the aforesaid objects of the assessee-company was pleased to hold that the activities carried on by the assessee-company were of general public utility and as such, the assessee was entitled to exemption under section 11(1)(a) of the Act. The Tribunal further held that the objects of the assessee are for general public utility and did not involve the carrying on of any activities for profit and the office-bearers of the company are not entitled to get their salary. On winding up or dissolution of the company, if there remains after satisfaction of the debts and liabilities, any profit whatsoever, the same shall not be distributed amongst the members of the company but shall be given or transferred to such other company having objects similar to the association to be determined by the assessee on or before dissolution. In that view of the matter, we hold that the assessee-company is a charitable institution. As Question No. l referred by the Tribunal to this Court is answered in the affirmative in favour of the assessee, Question No.2 is also answered in the affirmative in favour of the assessee and against the Department. The reference is disposed of accordingly. There shall be no order as to costs: M.B.A./552/FC Order accordingly