A.C.GUPTA, J.

(1) THE common question arising for decision in these four appeals is whether the income derived by the respondent, Indian Sugar Mills Association, from its sugar export division is exempt from tax under Section 4(3)(i) of the Income Tax Act, 1922. The assessment years axe 1958-59, 1959-60, 1960-61 and 1961-62 for which the previous years are respectively the calendar years 1957, 1958, 1959 and 1960.

(2) THE Indian Sugar Mills Association, hereinafter referred to as the Association, which has its office in Calcutta is a trade union registered under the Trade Unions Act, 1926; any individual, firm or company owning or managing a sugar mill or factory is eligible for membership of the Association. Rule 3 of the Rules of the Association states the various objects for which the Association is established and, of them, the first two, namely Rules 3(a) and 3(b) are as follows:

(A) To promote and protect the trade, commerce and industries of India and in particular, the trade commerce and industries connected with sugar.

(B) To encourage friendly feeling and good relations amongst the sugar mills in general and the members in particular and also between producers of sugar and cane-growers, distributors of sugar and others dealing with sugar mills and connected with sugar industry.

It was claimed on behalf of the Association that the business it carried. on was in the nature of property held under trust or legal obligation to apply the income for charitable purposes within the meaning of clause(i), sub-section (3) of S. 4 of the Income-Tax Act, 1922; the last paragraph of Ss. (3) defines "charitable purposes" as including relief of the poor, education, medical relief and advancement of any other object of general public utility. The claim for exemption appears to have been based on the objects mentioned in Rules 3(a) and 3(b) and on the first part of clause (a) of Rule (4). Clauses (a) and (b) of Rule 4 regulate the application of the funds of the Association. The first part of Rule 4(a) reads:

4. (a) Subject to such special rules as may be framed for the purpose, the income and property of the Association whensoever derived, shall be applied solely towards the promotion of the Association as set forth in these Rules and Regulations and no portion thereof shall be paid or transferred, directly or indirectly, by way of dividend or bonus or otherwise howsoever by way of profit, to the persons who at any time are, or have been members of the Association or to any of them or to any person claiming through any of them.

Rule 4 (a) has a proviso to which it is not necessary to refer for the present purpose. The Income-tax Officer, the Appellate Assistant Commissioner and the tribunal all rejected the claim though not exactly for the same reasons. At the instance of the Association the tribunal referred the following question to the High court at Calcutta under S. 65(1) of the Income Tax Act, 1922:

WHETHER on the facts and circumstances of the case and on proper construction of the Rules and Regulations of the Association, the tribunal was justified in holding that the income of the Association derived from the business of export of sugar and interest from current and fixed deposits were not exempt from tax under S. 4(3)(i) of the Indian Income-tax Act, 1922?

The High court answered the question in the negative and in favour of the assessee. These four appeals preferred by the Commissioner of Income Tax. West Bengal-III, Calcutta, with certificate granted by the High court under S. 66A(2) of the Income Tax Act. 1922 are directed against the judgment of the High court disposing of the reference and relate to the assessment orders made in respect of the aforesaid four years.

(3) THE High court observed that the question referred to it should be decided upon the principles laid down by the Privy council in Re the Trustees of the Tribune . and All India Spinners Association v. C. I. T.