A.D.V. Reddy, J. -
(1.) THE Andhra Pradesh Road Transport Corporation established by a notification under the Road Transport Corporations Act, 1950 (Central Act LXIV of 1950), has been functioning with effect from January 11, 1958, providing road transport facilities to the general public in the State with a net work of bus routes and a fleet of buses plying thereon, with depots, workshops, equipment, tools, accessories, etc., for its maintenance. For the assessment years 1960-61, 1961-62 and 1962-63, the income of the Corporation was subject to tax under the relevant provisions of the Income-tax Acts of 1922 and 1961. On appeal the Appellate Assistant Commissioner held that the assessee could claim the benefit of the provisions of Section 4(3Xi) of the. Indian Income-tax Act of 1922 for the assessment years 1960-61 and 1961-62 and under Section 11 of the Income-tax Act of 1961 for the assessment year 1962-63 and their income will be exempt from the tax. On appeal, the Tribunal held that the dominant motive of the assessee was to trade by running the transport service on business lines just as any other owner of a road transport service would do and, therefore, they would not attract the provisions of Section 4(3)(i) of the Indian Income-tax Act, 1922, and Section 11 of the Income-tax Act, 1961. Hence this reference.
(2.) THE question referred to us for our decision is as follows:
" Whether, on the facts and in the circumstances of the case, the assessee's income for the assessment years 1960-61 and 1961-62 was exempt from income-tax under Section 4(3)(i) of the Indian Income-tax Act of 1922, and for the assessment year 1962-63, under Section 11 of the Income-tax Act, 1961 ? "
Though the assessee is the same, the question whether the assessee's income is exempt from tax for the assessment years 1960-61, 1961-62 and for assessment year 1962-63 have to be considered separately, as there has been a change in the law applicable to the assessments. The assessment for the first of the two years 1960-61 and 1961-62 is governed by the provisions of Section 4(3)(i) of the Indian Income-tax Act, 1922, which reads as follows:
" 4. (3) Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them :
(i) subject to the provisions of Clause (c) of Sub-section (1) of Section 16 any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, in so far as such income is applied or accumulated for application to such religious or charitable purposes as relate to anything done within the taxable territories, and in the case of property so held in part only for such purposes, the income applied or finally set apart for application thereto......"
In the closing part of Section 4(3) it was provided that "'charitable purposes' includes relief of the poor, education, medical relief and the advancement of any other object of general public utility......"
It has, therefore, to be seen for the first two years, viz., 1960-61 and 1961-62, whether the income of the assessee'-Corporation falls under this provision.
(3.) UNDER the Income-tax Act of 1961, Section 11(1) provides that the income of the assessee shall not be included in the total income of the previous year if its income is derived from property held under trust " wholly for charitable or religious purposes......" and the definition which was formerly found in Section 4(3)(i) of the 1922 Act regarding charitable trusts and institutions has not been included in Section 11(1) of 1961 Act, but finds a place in Section 2 of the Act among the definitions. UNDER Section 2(15) of the 1961 Act " charitable purposes " includes relief of the poor, education, medical relief and the advancement of any other object of general public utility, not involving the carrying on of any activity for profit (the words newly added being those extracted by us in italics). Therefore, on account of this difference, the assessment for the year 1962-63, has to be considered separately from the assessment for the years 1960-61 and 1961-62.
We have, however, first to consider whether the assessee is an institution created for any charitable purpose, which includes the advancement of any object of general public utility. The assessee in this case has been created under the provisions of a statute, i.e., the Road Transport Corporations Act, 1950. The objects of the assessee are those contained in the said Act. Under Section 3 of the Act, a Road Transport Corporation may be established by the State Government having regard to (a) the advantages offered to the public, trade and industry by the development of road transport ; (b) the desirability of co-ordinating any form of road transport with any other form of transport; (c) the desirability of extending and improving the facilities for road transport in any area and of providing an efficient and economical system of road transport service therein.;