Tuizapurkar, J. - (1.) THE Judgment of the court was delivered by -
(2.) THESE appeals by special leave raise the question : "whether on the facts and in the circumstances of the case the assessee- council could be taken to be a body intended to advance any object of general public utility falling within S. 2(15) for purposes of S. 11 of the Income Tax Act, 1961?" The facts giving rise to the aforesaid question may briefly be stated. The respondent-assessee - Bar council of Maharashtra - is a body corporate established under the Advocates Act, 1961 (25 of 1961) which came into 310 force on 28/12/1961. During the accounting periods relevant to the assessment years 1962-63, 1963-64 and 1964-65 the assessee derived income from securities (interest) and other income by way of enrolment fees particulars whereof, are as follows: JUDGEMENT_308_3_1981Html1.htm The Income Tax Officer subjected to tax the income from both. the sources for all the three years. In appeals preferred to the Appellate. Assistant Commissioner it was contended by the assessee that its other income by enrolment fees was exempt under S. 10(23-A) and interest on securities was exempt from tax under S. 11 of the Income Tax Act, 1961. The Appellate Assistant Commissioner negatived the exemption claimed under S. 10(23-A) in the absence of the central government's notification according approval to the association and with regard to the claim for exemption in respect of the interest on securities he held that it was not established that the securities were held on trust for any charitable purpose. He took the view that the main object of the assessee-Gouncil was to benefit the legal profession (its members) and, therefore, the object was not one of general public utility. Accordingly he confirmed the assessment orders for the three years.
(3.) THE matter was carried in further appeal to the Income Tax Appellate tribunal and since by that time the central government had accorded approval to the assessee for the purpose of S. 10(23-A) by a notification dated 5/08/1966 with effect from 28/12/1961, the tribunal held that the assessee-Gouncil was entitled to exemption under S. 10(23-A) in respect of its income by way of enrolment fees. In regard to the income by way of interest on the securities the tribunal observed that the character of the body holding the securities was not by itself decisive, that safeguarding the rights, privileges and interest of advocates on its roll could not be said to be an object of general public utility, that the real question to be considered under S. 11 was whether the securities were held for any charitable purpose or not and the tribunal found that there was no evidence or material on record touching this aspect. It, therefore, remanded the case back to the Appellate Assistant Commissioner and directed him to dispose of the case by examining the question as to the purpose for which the securities were held by the assessee-Council. It observed that if the said securities were held for educational purpose or for any other charitable purpose then the exemption under S. 11 would be admissible to the extent available under the law. At the instance of the assessee-Gouncil the question set out at the commencement of this judgment was referred to the High court for its decision under S. 256(1) of the Act. THE High court took the view that having regard to the obligatory 311 functions enjoined upon a State Bar council under S. 6 of the Advocates Act the aasessee-Council could be regarded as a body constituted for general public utility and that the entire income of the body would be exempt from tax under S. II of the Income Tax Act, 1961. In its view the advancement of any object beneficial to the public or a S. of the public as distinct from an individual or a group of individuals would be a charitable purpose as defined in S. 2 (15) of the Income Tax Act and in this view of the matter the High court answered the question in the affirmative and against the Revenue. It is this view of the High court that is being challenged by the Revenue before us in these appeals. In support of the appeals counsel for the Revenue sought to raise two contentions. First, he urged that the relief claimed under S. 11 was ruled out by reason of relief having been obtained by the assessee-Gouncil in respect of its income from enrolment fees under S. rO(23-A) of the Act. According to him S. 10(23-A), while exempting from tax any income of an association or institution established in India having as its object the control, supervision, regulation and encouragement of the profession of law, medicine, accountancy and any other profession as the central government may specify, has expressly excluded from exemption such association's or institution's income chargeable under the head "interest on securities" or "income from house properties" or "any income received in rendering any specific service", etc., and, therefore, what has been expressly excluded from exemption under this provision could not be or was not intended to be exempt under S. 11 of the Act. In other words, the assessee-Council's claim for exemption in respect of interest on securities under S. 11 was ruled out .by reason of S. 10(23-A) of the Act. Secondly, counsel contended that on merits the High court's view that the assessee-Council was a body constituted for advancement of an object of general public utility was erroneous inasmuch as it was a body established principally for the purpose of safeguarding the rights, privileges and interest of the advocates on its roll and since such objective merely served to benefit the members of the profession it was no charitable purpose as defined by S. 2(15) for purposes of S. 11 of the Act. In support of this contention counsel placed reliance on some English decisions.;