Law: Income Tax Act, 1922

Section: 4,4(3)(i),Explanation

(a) Income Tax Act (XI of 1922)--S. 4(3)(i)---Income derived by assessee (Merchant Navy Club) from business carried out by same in the course of carrying out its charitable purpose---Order-in-original denying the exemption from tax to assessee -Club was upheld by Appellate Authority, but was set aside by the Appellate Tribunal---Validity---Object of establishing assessee-Club had fulfilled requirement of charitable purpose---Officers and sea-men of assessee-Club constituted sufficient segment of society, so as to bring beneficiaries within purview of general public---Purpose would be fulfilled, where a sufficient segment of society was beneficiary, without any distinction of religion, caste, creed or sect---Admission to. Assessee -Club was without any distinction on account of nationality or religion, thus, amenities offered would be deemed to be for general public utility---Mere ancillary and incidental activity of performance of dancing and supplying of wine to sea-men (who were mostly non -Muslims) would not take out activities of assessee-Club from ambit of charitable purpose---Authority and Appellate Authority had ignored main object of establishing assessee-Club as contained in Memorandum of Association, Rules and Regulations---High Court answered the question in the affirmative by upholding findings of Appellate Tribunal. (b) Income Tax Act (XI of 1922)--- ----S. 4(3)(i) & Expln.---Expression "charitable purpose" as used in S.4(3)(i) of Income Tax Act, 1922---Connotation. The expression "charitable purpose' carries a broader and extended connotation. The definition given in the explanation to section 4(3) of Income Tax Act, 1922 to the effect that it included relief to the poor, education, medical relief and the advancement of any other object of general public utility, is inclusive and is not exhaustive, conclusive or exclusive. The words "advancement of any other object of general public utility" are of very wide amplitude, which have to be interpreted liberally when examined in its true spirit. The expression "charitable purpose" as used, in a statute shall always be susceptible to the extended meaning from time to time and shall always be open to…

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