Law:

Section:

JUDGMENT Bhagwati, J.- This reference raises an interesting question of law relating to the construction of section 4(3)(i) of the Income-tax Act, 1922, and section 11 of the Income-tax Act, 1961. Though the question refers both to section 4(3)(i) of the Income-tax Act, 1922, and section 11 of the Income-tax Act, 1961, it would be sufficient to make reference only to section 4(3)(i) of the Income-tax Act, 1922, since section 11 of the Income-tax Act, 1961, is in material respects identical with section 4(3)(i) of the Income-tax Act, 1922, and what we say in regard to section 4(3)(i) of the Income-tax Act, 1922, will apply equally in regard to section 11 of the Income-tax Act, 1961. The reference relates to the assessment years 1960-61, 1961-62 and 1962-63, the relevant accounting years being the financial years ending 31st March, 1960, 31st March, 1961 and 31st March, 1962. During the relevant account years the assessee, which is an association of persons, held diverse properties under legal obligation for the purposes set out in its constitution. The purposes, in so far as they are material for the purpose of the present reference, were as follows and here we are giving an English translation of the relevant clauses of the constitution: "3. The objects and purposes of this institution are as under : (1)To manage the immovable and movable properties of the Rana community of the City of Ahmedabad. (2)To do such acts so that the education be increased in the community and to give necessary help for that. (3)To give medical help to the community. (4)To do other acts beneficial to the community. (5)To do all acts, according to the capacity, so that unity and brotherhood is increased in the community and life of every member-brother and sister-of the community is developed fully and satisfactorily,,.. 8. (4) The Vahivat and management of the properties, etc., of the whole community will be done as profitably as can be done in the interest of the community. And in the month of Chaitra Havan and Bhandaro and every alternate year in Shravan procession and Bhandaro and the Sangh going to Bahucharaji Mata every three years and the Bhandaro taking place there at that time…

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