Pathak, J. - (1.) This appeal, by certificate under S. 261 of the Income Tax Act, 1961, is directed against the judgment of the High Court of Kerala disposing of a reference made to it by the Income-tax Appellate Tribunal under S. 256 (1) of the Act.
(2.) The appellant is an association constituted under a licence granted under S. 25 of the Companies Act, 1956 on January 5, 1967. The relevant provisions of its Memorandum of Association are: "3. (a):The main objects to be pursued by the Company on its incorporation are: (i) To give charity. (ii) To promote education. (iii) To establish or aid in the establishment of association, institutions, funds, trusts with the object of promoting charity and/or education provided that the Company shall not support its funds or endeavour to impose on, or procure to be observed by, its members or others any regulation or restriction which if an object of the company, would make it a trade union. (b) The objects incidental or ancillary to the attainment of the above main objects are: (i) To receive donations, subscriptions, or gifts for the furtherance of the purpose of the Company, and to do all such other things as may be considered to be incidental or conducive to the attainment of its objects or any of them, by the Directors. (ii) to (iii) ... ... .... .... (iv) To run Chitties (Kuries). (v) to (vii) ... ... .... .... (c) The other objects for which the Company is established are: (i) To establish, promote and carry on any other business which may seem to the company profitable or advantageous and to establish offices and other places of business in this State or anywhere in India, as the Directors deem necessary."
(3.) The appellant carries on the business of conducting Kuries, and in respect of the income during the calendar year 1968 from that business, it was assessed to tax for the assessment year 1969-70. The Income-tax Officer, rejected the claim that the Kurie business was incidental to the main objects of charity and education and that the income proceeding from it was exempt under S. 11 (1) (a) of the Income-tax Act. The Appellate Assistant Commissioner reversed the order of the Income-tax Officer and held that education constituted the main object of the appellant and, therefore, the income from the Kurie business, even though a profit making activity, being in aid of or incidental to the main object was entitled to exemption. The Income-tax Appellate Tribunal, on further appeal, upheld the view taken by the Appellate Assistant Commissioner. At the instance of the Commissioner of Income-tax, the Tribunal referred the following question to the High Court of Kerala for its opinion:- "Whether on the facts and in the circumstances of the case, the assessee is entitled to exemption under S. 11 of the Income Tax Act, 1961 for the assessment year 1969-70 -;