Law:

Section:

JUDGMENT Raghavan, CJ.-The questions referred to us in the reference are : "1.Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in holding that the income derived by the assessee is exempt under section 11(1)(a) of the Income-tax Act, 1961 ? 2.Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that setting apart reserves under article 39 of the assessee's memorandum did not vitiate the charitable purpose of the institution ?" The assessee is a company which was originally registered under the Cochin Companies Act and later on under the Indian Companies Act of 1956. It was allowed to be registered with limited liability without the addition of the word "limited" to its name by the Dewan of Cochin; and the registration was followed under the Indian Companies Act too. The sources of income of the company are interest on securities, income from property and business of conducting kuries (chit funds). In a previous reference, viz., Dharmodayam Co. v.Commissioner of Income-tax [1962] 45 ITR 478 (Ker.), a Division Bench of this court had occasion to consider the position relating to the kuries conducted by the company under section 4(3)(i) of the Indian Income-tax Act of 1922 ; and the court held that the business of conducting kuries was held by the company under trust for religious or charitable purposes and proviso (b) to section 4(3)(i) was not attracted. The memorandum of association of the company had as its objects : "(a)To raise funds by conducting kuries with the company as the foreman ; receiving donations and subscriptions ; and by such other means as the company deems fit. (b)To do the needful for the promotion of charity, education and industry." It was in construing this portion of the memorandum of association that this court held that the business of conducting kuries was held by the company under trust for religious or charitable purposes, namely, "the promotion of charity, education and industry". The matter was taken in appeal to the Supreme Court by the revenue; but the appeal was withdrawn, with the result that the decision of this court became final.…

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