DHARMADEEPTI, ALWAYE, KERALA versus THE COMMISSIONER OF INCOME TAX, KERALA

Citation: [1978] 3 S.C.R. 1038 · Decided: 24-07-1978 · Supreme Court of India · Bench: Y.V. CHANDRACHUD · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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DHARMADEEPTI, ALWAYE, KERALA 
v. 
THE COMMISSIONER OF INCOME TAX, KERALA 
July 24, 1978 
[Y. V. CHANDRACHUD, C.J., D. A. DESAI AND R. S. PATHAK, JJ.] 
Income Ta.x Act 1961-Sections 2(15) and 11 (1) (a)-Main objects to be 
pursued by the company which has been granted a licence under s. 25 of the 
Companies Act were (i) to give charity and (ii) to promote education and 
(iii) to establish or aid in the establishment of associations institutions, funds, 
trusts with the object of promoting charity and! or education and the objects 
incidental or ancillary to the attainment of the said objects was "to run Chitties 
(Kuries)-Whether the said objects identifiable with the first two heads 'relief 
of the poor' and "education" in the definition of 'charitable purpose' in Section 
2(15) of the Income Tax Act and whether the income derived from running 
Chillies (Kuries) is exempt under Section 11 ( 1) (a) of the A ct. 
The appellant _Association carries on the business of conducting 'Kuries' 
which was one of the ancillary object in furtherance of its main objects. Clause 
3(a) of the Memorandum of Association declares the main objects to be : (1) 
to give charity (ii) to promote education and (iii) to establish or aid in the 
establishment of associations, institutions, funds, trusts with the object of promot· 
ing charity and/ or education. In respect of the income during the calendar 
year 1968 from that business i.e. during assessment year 1969·70 the claim 
by the appellant for exemption under S. ll(l)(a) of the Income Tax Act, 1961 
was rejected by the Inc.Orne Tax Officer. The Appellate Assistant Commissioner 
reversed. the order in appeal and held that 'education' constiluted the main 
object of the appellant, and therefore, the income from the Kurie business 
even though a pr_ofit making activity being in aid of or incidental to the main 
object was entitled to exemption. The appeal of the Revenue before the Income 
Tax Appellate Tribunal failed and therefore at the instance of the respondent, 
the question whether on the facts and in the circumstances of the case, the 
assessee is entitled to exemption under s. 11 of the Income Ta.'I{ ~~ct, 1961 for 
the assessment year 1969·70 ?" Was referred to the 
High Court of Kerala 
which answered it against the appellant. 
The present appeal was then lodged 
in this Court. 
Allowing the appeal, the Court 
HELD : (1) The words "not involving the carrying on of any activity for 
profit" govern the words "the advancement of any other object of general public 
utility" and not the words "relief of the poor, education and medical relief" in 
section 2(15). 
The heads "relief of the poor, education and medical relief" 
remained unqualified by any express statutory restriction, and income arising 
from a profit making activity linked with those heads enjoyed exemption without 
express limitation until section 13(1) (bb) was inserted in the Act by the 
Taxation Laws (Amendment) Act, 1975 with effect from April 1, 1977. 
[1042 B-D) 
The specific heads 'relief to the poor, education and medical relief' ins. 2(15) 
define well known chJ1,1:itable purposes. 
But the residual general head "the 
advancement of any other object of general public utility" is of wide compre~ 
hension, ~nd Parliament when framing the Income _Tax Act, 1961 considered 
it appropriate to cut down the wide scope of these Words by qualifying them 
with the restrictive words "not involving the carrying on of any activity for 
profit", thereby emphasising that the residual general head was to be confined 
to objects which were essentially charitable in nature. [1041 E, 1042A] 
Morice v. Bishop of Burham, [1805] JO Ves 522, 532; William's Trust v. 
I.R., 27 T.C. 409 referred to. 
(2) In the instant case : 
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DHARMADEEPTI v. C.l.TJ KERALA (Pathak, J.) 
1039 
(a) According to sub-clause (a) of clause (3) of the Memorandum 
of 
Association, the main objects Ior which the appellant was formed arc "to give 
charity" and "tQ promote education". 
The third sub-clause merely confers 
power to establish associations and other bodies with the object of promoting 
the two main objects. 
Having regard to the language used and the context 
in which the two main objects are set forth, it would be reasonable to identify 
the expression "to give charity" and "to promote education" with the first tv.'O 
heads "relief of the poor" and "e

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