The main legal point established in the judgment is that for income to be exempt under S.11 of the Income-tax Act, 1961, the object must be of general public utility and not involve the carrying on of any activity for profit.

1. This is a reference at the instance of the Commissioner of Income-tax and the Income-tax Appellate

Tribunal, Cochin Bench has referred the following question to this Court.

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that the income of the assessee Is exempt from tax under S.11 of the Income-tax Act, 1961?"

2. The assessee is the Cochin Chamber of Commerce and Industry, Cochin, and the years of assessments are 1964-65,1965-66 and 1966-67. The memorandum of association of the Chamber contained clauses very similar, if not identical, to those of the Indian Chamber of Commerce whose case we considered in the decision in Commissioner of Income-tax, Kerala v. Indian Chamber of Commerce (1971) 80 I. T. R.645. For activities similar to that carried on by the Indian Chamber of Commerce, namely the issuance of certificates for survey and weighment. the assessee bad received amounts in the accounting periods relating to the three assessment years referred to earlier, of Rs. 1,16,167/-, Rs. 1,12,919/-and Rs. 1,22,786/-respectively. The net income of the assessee for these three years came to only Rs. 7893, Rs. 18,177/-and Rs. 21,140/- respectively.

3. It was proposed to treat the receipts from the issue of certificates for survey and weighment as income for the purpose of assessment. The assessee contended that the income in question was that derived from the property held under trust wholly for charitable purposes and therefore is exempt under S.11 (1)(a) of the Income-tax Act, 1961. 'Charitable purpose' is defined in S 2(15) of that Act in these terms:

"2(15). 'charitable purpose' includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility not involving the carrying on of any activity for profit;"

4. We have had to consider the effect of the words 'not involving the carrying on of any activity for profit' in Commissioner of Income tax, Kerala v. Indian Chamber of Commerce ((1971) 80 I. T. R.645) and we came to the conclusion that it is not enough that some activity had been carried on which resulted in profit but that the object must involve the carrying on of any activity for profit. Counsellor the department has brought to our notice the decision of the Calcutta High Court is Commissioner of Income-tax, West Bengal II v. Indian Chamber of Commerce ((1971) 811. T. R.147). A view different from that that we took in the decision in Commissioner of Income-tax, Kerala v. Indian Chamber of Commerce ((1971) 86 I. T. R.645) has been taken by the Calcutta High Court and the reasoning is thus stated in the judgment;

"An appropriate interpretation of S.2 (15) of the Income tax Act, 1961, is to consider the expression "not involving the carrying on of any activity for profit' as qualifying the expression "advancement of any other object of general public utility' and not the other classes of charitable purpose mentioned in that section like relief of the poor, education and medical relief. That is the only way by which to avoid a conflict between S.11 and S.2 (15) of the Income tax Act, 1961, specially with the provisions of S.11 (1) (a) and 11 (4) of the Income-tax Act, 1961."

5. With great respect, we are unable to agree with the reasoning: If the object is for general public utility, such as, say, for educating public opinion or for the advancement of trade and commerce and there is no object to carry on any activity for profit, the fact that in carrying out the objects of the trust some income results would not take the charitable purpose outside the scope of the definition. We think that the very object must be for the carrying on of an activity for profit in order that the object may be outside the purview of the definition. This, we think, will be better understood if the section is read in a positive manner as postulating objects which are outside the purview of the definition. The section has to be