Decided on June 12,1974



Govindan Nair, C.J. - (1.) THESE income-tax referred cases raise the same question for decision. The assessee is the same company. Income-tax Referred Cases Nos. 52, 53, 54 and 51 refer respectively to the years of assessment 1965-66, 1962-63, 1963-64 and 1964-65. The claim put forward by the assessee before the Tribunal that the income from the kuri (chit funds) and interest income earned by lending money ,are not taxable under the Income-tax Act, 1961 (for short, " the Act "), in view of Section 11 of the Act exempting income derived from property held on trust for a charitable purpose, has been negatived by the Tribunal and these references are at the instance of the assessee and the question referred for our opinion is : " Whether, on the facts and in the circumstances of the case, the income of the assessee for the assessment years 1962-63 to 1965-66 was exempt under the provisions of Section 11 of the Income-tax Act, 1961 ?"
(2.) THE assessee was following the calendar year as its accounting period and on June 7, 1965, the company amended its memorandum of association and articles of association. Because of the amendments the Tribunal held that the income from the same sources (chit funds and interest from lending money), which was held to be taxable for the years 1962-63 to 1965-66, was not taxable for the years 1966-67, 1967-68 and 1968-69. At the instance of the department, the following question has been referred in relation to the years 1966-67 and 1967-68 for our opinion in Income-tax Referred Cases Nos. 55 and 56 of 1972 : "Whether, on the facts and in the circumstances of the case, the assessee is entitled to exemption under Section 11 of the Income-tax Act, 1961, for the assessment years 1966-67 and 1967-68 ?" The same question has been referred to us at the instance of the department for the year 1968-69 in Income-tax Referred Case No. 79 of 1972 The Tribunal dealt with the assessments for all the 7 years by a common order and we propose to answer the questions referred to us for all these years by a common judgment as the point arising for decision in all these years is the same.
(3.) THE relevant " objects of the memorandum of association " of the assessee before its amendment on June 7, 1965, and which applied for the purpose of assessment to tax for the years 1962-63 to 1965-66 are seen from the following clauses in the memorandum of the assessee-company : " 3. THE objects of the company are : (a) to raise funds by conducting kuries with company as foreman, receiving donations and subscriptions, by lending money on interest and by such other means as the company deem fit. (b) to do the needful for the promotion of charity, education, industries, etc., and public good. (c) for carrying on the business of the company and for the advancement of the purpose mentioned above in so far as is appropriate, to construct buildings or to purchase or take on lease or for hire movable or immovable properties. (d) to encourage others to form other institutions with the purpose of acting in accordance with the objects of the company. (e) to do all such things as are conducive to the fulfilment of the above objects. (f) to lend money on interest to one or more solvent persons individually or severally on the security of ornaments, landed properties or other forms of security fixed by the directors and to borrow money to meet the needs of the company and to run other industries." Article 58 of the articles of association provided : "The profit of the company shall not be divided among the members. The profit left after meeting the expenses of the company will be utilised for promoting education, industry, social welfare and such other purposes of common good as are resolved by the general meeting." ;

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