COMMISSIONER OF INCOME-TAX, MADRAS versus ANDHRA CHAMBER OF COMMERCE

Citation: [1965] 1 S.C.R. 565 · Decided: 01-10-1964 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Cited by 3 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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565. 
COMMISSIONER OF INCOME-TAX, MADRAS 
v. 
ANDHRA CHAMBER OF COMMERCE 
October 1, 1964 
(K. SuBBA RAo, J. C. SHAH AND S. M. SIKRI JI.) 
Indian Income Tax Act, 1922 (11of1922), s. 4(3)(i)-Charitable pur-
posei meaning of-Conzpany's object to proniote trade, com1nerc:e and 
industry, whether charitable-Urging or opposing legislation affecting trade 
etc.-Object whether political. 
The assesseo c~mpany-The Andhra Chamber of Commerce-had as 
its main object the promotion, protection, and development of trade, comM 
merce and industry in India. It owned a building where it had ils offices, 
and those parts of it not in the company's own use were let out to tenants. 
In income-tax proceedings the company claimed exemption in respect of 
the rental income under s.4(3)(i) of the Indian Income-tax Act, 1922. 
The claim was negatived by the assessing and appellate authorities. The 
High Court, however, held that the company was a charitable institution 
and its income from property was exempt under s. 4(3)(i). 
The Re-
venue appealed to the Supreme Court by special leave. 
It was contended by the appellant that the property was not held by the 
company for a charitable purpose within the meaning of s. 4(3) (i), that 
the objects of the company were vague, that the benefit contemplated by 
the Memorandum of Association was not to the public generally but to 
the members of the company only, and that the objects of the company 
were political it being open to it to appropriate the entire income for 
political purposes. 
HELD : (i) The term charitable purpose as defined in the Act was 
inclusive and not exclusive. 
It included objects of general public utility. 
lbe object of the assessee company-promotion of trade and commerce 
in the country-was an object of general public utility, as not only the 
trading class but the whole country would benefit by it. It is not necessary 
that the benefit must include all mankind. It is sufficient if the intention be 
to benefit a section of the public as distingUished from specified individuals. 
[571 F-H]. 
Commissioners of Inland Revenue v. 
Yorkshire Agricultural Society, 
11928] I K.B. 611 and The Institution of Civil Engineers v. Commissioners 
of Inland Revenue, 16 T.C. 158, relied on. 
Commissioner of Income-tax Bombay Presidency, Sind and Baluchistan 
v. The Grabi Merchants' Association of Bombay, 6 I.T.R. 427, disapproved. 
(ii) There was nothing vague about the company's objects. An object 
of general public utility such as promotion, protection, aiding an_d stimulaw 
tion of trade, commerce need not to be valid, specify the modus or the 
steps by which the objects may be achieved or secured. [573 A-ll]. 
Runchordas Vandrawandas v. Parvati Bai L.R. 26 I.A. 71. Commi.<-
sioners of Inland Revenue v. National Anti-Vivisection Society, 28 T.C. 311 
and Baddeley and others (Trustees of the Newtown Trust) v. Comn1issioners 
of Inland Revenue, 35 T.C. 661, distinguished. 
(iii) The argument that it was only for the benefit of the trading classes 
itt Andhra Desa that the funds of the company could be utilised did not 
stand scrutiny. [574 D-E]. 
566 
SUPREME COURT REPORTS 
[1965] I S.C.R. 
(iv) It cannot be said that a purpose would cease to be charitable even 
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if public welfare is intended to be secured thereby if it includes the taking 
of steps to urge or oppose legislation affecting commerce, trade or manu-
facture. 
If the primary purpose be advancement of objects of general 
public _utility, it v.·ould remain charitable even if an incidental entry into 
the pohiical domain for achieving that purpose e.g. promotion of or opposi-
tion to legislation concerning that purpose is contemplated. 
The object 
mentioned in the ~1cmorandum of Association was that the asses.see may 
take steps to urge or oppose legislative or other measures affecting trade, 
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commerce, or manufacture. Such an object must be regarded as purely 
ancillary or subsidiary and not the primary object. [575 G-H; 580 B-C]. 
In re the Trustt!es of the Tribune, 7 l.T.R. 415 and All India Spinners 
Association v. Conzmissioners of lnconie-uu, Bombay, 12 J.T.R. 482, relied 
OD, 
Pemse/ v. Con1missioner for special Purposes of Jnco1ne Tax, [I 891] 
A.C. 531 and Bowman v. Secular Society Ltd., (1917] A.C. 406, referred 
to. 
Rex v. The Special Commissioners of lncome-'ax (ex-parte Tht lncor· 
porated Association of Preparatory Schools) 10 T.C. 73, 1·ne Commissioners 
of Inland Revenue v. Tire 

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