C.I.T. BOMBAY versus BAR COUNCIL OF MAHARASHTRA BAR COUNCIL OF INDIA BAR COUNCIL OF GUJARAT

Citation: [1981] 3 S.C.R. 542 · Decided: 22-04-1981 · Supreme Court of India · Bench: V.D. TULZAPURKAR · Disposal: Dismissed

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Judgment (excerpt)

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542 
C. I. T. BOMBAY 
v. 
BAR COUNCIL OF MAHARASHTRA 
BAR COUNCIL OF INDIA 
BAR COUNCIL OF GUJARAT 
April 22, 1981 
[V. D. TULZAPURKAR AND E.S. VENKATARAMIAH, JJ.] 
Income Tax Act, 1961, section 2(15) and 11-Whether the Bar Councils consti-
tuted under the Advocates Act, 1961, are bodies intended to advance any object of 
general public utility falling within section 2( 15) for purposes of section 11 of the 
Act. 
The income derived by the Bar Council of Maharashtra from securities (inte-
rest) and other income by way of enrolment fees during the accounting periods 
relevant to the assessment years 1962-63, 1963-64, 1964-65 was subjected to tax by 
the Income Tax Officer. Since the Central Government had accorded approval 
to the assessee for the purpose of section 10(23A) during the jpendency of the 
appeal before the Tribunal by a notification dated August 5, 1966 with effect from 
December 28, 1961, the Tribunal held that the assessee Council was entitled 
to exemption under section 10(23A) in respect of its income by way of enrolment 
fees. The Tribunal remanded the case oack to the Appellate Assistant Commis-
sioner 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 obser-
ved that if the said securities were held for educational purpose or for any other 
charitable purpose then the exemption under section 11 would be admissible to 
the extent available under the law. The High Court, on a reference made at the 
instance of the assessee-Council, answered 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 
section 2(15) for purposes of section 11 of the Act ?" in favour of the assessee 
and hence the appeals by Revenue after obtaining special leave from the Court. 
Dismissing the appeals, the Court 
HELD : 1. Having regard to the Preamble of the Advocates Act, 1961 and 
the nature of the various obligatory functions including the one under clause (d) 
enjoined upon every State Bar Council under section 6(1) of the Advocates Act, it 
is elear that the primary or dominant purpose of an institution like the assessee-
Council is the advancement of the object of general public utility within the 
meaning of section 2(15) of the Income Tax Act, 1961 and as such the income 
from securities held by the assessee--Council would be exempt from any tax 
liability under section 11 of the Income Tax Act, 1961. [551 E-G] 
C.I.T. V. BAR COUNCIL 
543 
2. If the primary or dominant purpose of a trust or institution was 
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charitable any other 
object which by itself might not be charitable but 
which was merely ancillary or incidental to the primary or dominant purpose 
would not prevent the trust or institution from being a valid charity. The 
restrictive words "not involving the carrying on any activity for profit" in 
section 2(15) of the Income Tax Act, 1961, qualify" object" and not the advance-
ment or accomplishment thereof. In other words, the true meaning of the restric-
tive words is that when the purpose of a trust or institution was the advancement 
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of an object of general public utility it was that object of general public utility 
and not its accomplishment or carrying out which must not involve the carrying 
on of any activity for profit. Here, admittedly, the State Bar Councils are not 
indulging in any activity for profit and hence the question of applying the 
restrictive words in s.2(15) does not arise. [547 C-F, 548 G-H] 
Commissioner of Income Tax, Madras v. Andhra Chamber of Commerce, 55 
ITR 722; Additional Commissioner of Income Tax, Gujarat v. Surat Art Silk Cloth 
Manufacturers Association, 121 ITR 2, reiterated. 
CIVIL APPELLATE JURISDICTION : Civil ·Appeal Nos. 2115 to 
2117of1980. 
Appeals by special leave from the judgment and order dated 
the 8 the August, 1978 of the Bombay High Court in Income Tax 
Reference No. 142 of 1969. 
S. C. Manchanda and A. Subhashini for the Appellant. 
V. N. Ganpule and Mrs. Veena Devi Khanna for the Respon-
dent. 
V. N. Ganpule for Intervener No. I. 
S. C. Patel for Intervener No. 2. 
The Judgment of the Court was delivered by 
TULZAPURKAR, J. 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 

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