Law:

Section:

Section 11, read with section 2(15), of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under - Assessment year 1962-63 - Whether a property held under trust includes even a business undertaking so held - Held, yes - Whether when an object seeks to promote or project interest of particular trade or industry that object becomes an object of public utility but not so if it seeks to promote interest of those who conduct said trade or industry - Held, yes - Objects of assessee-association as found in rule 3 of its rules and regulation were (a) protection of interests of millowners and users of motive power of any description; (b) promotion of good relations between persons and bodies using such power; (c) doing of all those acts and things by which these objects may be attained; (d) promotion and protection of trade, commerce and manufactures of India in general and of cotton trade in particular; (e) to establish or aid in creation of funds to benefit employees of association or dependants of such persons and to subscribe, donate or guarantee for charitable or benevolent purposes at discretion of association; and (f) promotion of good relations between employers and employees - Rules of assessee also authorised members of its managing committee to spend funds of assessee for any of objects mentioned in rule 3 - During course of assessment, assessee offered amount earned from coal business and claimed exemption under section 11 on remaining amount earned by way of interest on securities, property income and income from other sources - ITO, however, assessed both amounts to tax holding that since during accounting period, association was found to have carried on activity for profit even if it was believed that object of association was to serve purpose of general public utility, therefore, it would not be entitled for deduction - Whether all objects which were mentioned in rule 3 were of equal importance and, it was not possible to say that anyone of these objects was primary and others were merely incidental to it - Held, yes - Whether objects mentioned in clauses (a), (b) and (c) of rule 3, which sought to protect…

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