Judgement

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 intended to advance any object of general public utility falling within S. 2 (15) for purposes of S. 11 of the Income-tax Act, 1961?"

2. The facts giving rise to the aforesaid question may briefly be stated. The respondent assessee - Bar Council of Maharashtra - is a body corporate established under the Advocates Act, 1961 (Act 25 of 1961) which came into force on December 28, 1961. During the accounting periods relevant to the assessment years 1962-63, 1963-64 and 1964-65 the assessee derived income from securities (interest) and other income by way of enrolment fees particulars whereof, are as follows :

Assessment year Interest on securities Other income

1962-63

Rs. 3,779 Rs. 28,035

1963-64 Rs. 8,629 Rs. 3,04,103

1964-65 Rs. 9,356 Rs. 96,322

3. The Income-tax Officer subjected to tax the income from both the sources for all the three years. In appeals preferred to the Appellate Assistant Commissioner it was contended by the assessee that its other income by enrolment fees was exempt under S. 10 (23A) and interest on securities was exempt from tax under S. 11 of the Income-tax Act, 1961. The Appellate Assistant Commissioner negatived the exemption claimed under Section 10 (23A) in the absence of the Central Governments notification according approval to the association and with regard to the claim for exemption in respect of the interest on securities he held that it was not established that the securities were held on trust for any charitable purpose. He took the view that the main object of the assessee-council was to benefit the legal profession (its Members) and, therefore, the object was not one of general public utility. Accordingly he confirmed the assessment orders for the three years.

4. The matter was carried in further appeal to the Income-tax Appellate Tribunal and since by that time the Central Government had accorded approval to the assessee for the purpose of S. 10 (23A) 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. In regard to the income by way of interest on the securities the Tribunal observed that the character of the body holding the securities was not by it self decisive, that safeguarding the rights, privileges and interest of advocates on its roll could not be said to be an object of general public utility, that the real question to be considered under S. 11 was whether the securities were held for any charitable purpose or not and the tribunal found that there was no evidence or material on record touching this aspect. It, therefore, remanded the case back to the Appellate Assistant Commissioner 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 observed that If the said securities were held for educational purpose or for any other charitable purpose then the exemption under S. 11 would be admissible to the extent available under the law. At the instance of the assessee-council the question set out at the commencement of this judgment was referred to the High Court for its decision under S. 256 (1) of the Act. The High Court took the view that regard to the obligatory functions enjoined upon a State Bar Council under S. 6 of the Advocates Act the assessee-council could be regarded as a body constituted for general public utility and that the entire income of the body would be exempt from tax under S. 11 of the Income-tax Act, 1961. In its view the advancement of any object beneficial to the public or a section of the public as distinct from an individual or a group of individuals would be a charitable purpose as defined in S. 2 (15) of