Law: Income Tax Act, 1961

Section: 11

Law: Indian Companies Act, (I of 1956)

Section: 13

JUDGMENT Govindan Nair, CJ. -This reference is at the instance of the department and the question referred to us for the year 1969-70 by the Income-tax Appellate Tribunal, Cochin Bench, reads as follows: "Whether, on the facts and in the circumstances of the case, the assessee is entitled to exemption under section 11 of the Income-tax Act, 1961, for the assessment year 1969-70?" The relevant objects of the company are detailed in clauses 3(a ), 3(b)( iv), 3(c), 4(iii ) and 4(iv) and they read as follows: "3. (a) The main objects to be pursued by the company on its incorporation are: (i)to give charity. (ii)to promote education. (iii)to establish or aid in the establishment of associations, institutions, funds, trusts with the object of promoting charity and/or education provided that the company shall not support with its funds or endeavour to impose on, or procure to be observed by, its members or others any regulation or restriction which, if an object of the company, would make it a trade union. (b) The objects incidental or ancillary to the attainment of the above main objects are: . . . . (iv) to run chitties (kuries) . . . . . (c) The other objects for which the company is established are: (i) to establish, promote and carry on any other business which may seem to the company profitable or advantageous and to establish offices and other places of business in this State or anywhere in India, as the directors deem necessary. 4. The objects of the company extend to all the States and Union Territories of the Indian Union: . . . . . (iii) the income and property of the company whencesoever derived shall be applied solely for the promotion of its objects as set forth in this memorandum. (iv) no portion of the income or property aforesaid shall be paid or transferred, directly or indirectly by way of dividend, bonus or otherwise by way of profit to persons who at any time are or have been members of the company or to any person claiming through any one or more of them." The assessee contended that no business activities as envisaged by clause 3(c) describing "other objects" in the memorandum as required by section 13 of the Companies Act, 1956, had been…

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