The judgment established the principles for determining the tax liability of statutory bodies, clarifying the exemption of income from investments utilized solely for specific purposes and the classification of such bodies for tax purposes.

JUDGMENT OF APPELLATE TRIBUNAL

Under Section 33 of the Indian Income Tax Act (XI of 1922) the Income Tax Appellate Tribunal, Calcutta Bench, consisting of RAM PRASAD VARMA (Judicial Member) and P.N.S. AIYAR (Accountant Member) delivered the following judgment on November 5, 1941.

"The Bar Council, Madras, has been assessed to Income Tax for the years 1939-40 and 1940-41 in respect of its income amounting to Rs. 9,708 and Rs. 11,189 respectively. These two appeals raise common questions of law and will be governed by one judgment given in this appeal No. R.A.A. No. 24 Madras of 1941-42.

2. The Bar Council, Madras, returned the above figures of income under protest to the Income Tax Officer and questioned its liability to pay the tax and the ground firstly, that its case is covered by the exemption mentioned in Section 4(3) clause (i) of the Income Tax Act and, secondly, that it is not one of the classes of persons liable to pay the tax which are mentioned in Section 3 of the Income Tax Act.

3. The Income Tax Officer held that the Bar Council is not exempt under the provisions of Section 4(3)(i) of the Income Tax Act and on the second question, viz., the status of the Bar Council, he held it to be an "Association of persons" and for this view he relied on Commissioner of Income Tax, Madras v. Salem District Urban Bank Ltd., and assessed the appellant as an "Association of persons."

4. The Appellant Assistant Commissioner gave the matter a detailed and careful consideration and confirmed the assessment made on the appellant. The Appellant Assistant Commissioner, however, differed from the Income Tax Officer on the question of the status of the Bar Council for purposes of assessment and held it to be in "Individual" within the meaning of Section 3 of the Income Tax Act. He relied on Currimbhoy Ebrahim Baronetcy Trust v. Commissioner of Income Tax, Bombay approved in Commissioner of Income Tax, Madras v. Salem District Urban Bank Ltd.

5. The appellant has argued the same questions before us and has claimed that his case is covered by the exemption mentioned in Section 4(3)(i) of the Act on the ground that the object of the Bar Council is to promote legal education. It is further contended that in any case it comes within the exemption on the ground that its object is one of general public utility benefiting the public.

6. The questions which arise for our determination may be stated as below :-

(1) Whether the object of the Bar Council is one which attracts the provisions of Section 4(3)(i) of the Income Tax Act and whether the object of the Bar Councils Act, by which the Bar Councils are constituted, is to confine its activities to legal education ?

(2) Whether the status of the Bar Council for the purposes of assessment is that of an "Individual" or "Association of persons" or whether it does not come under any of the classes liable to pay Income Tax under the Income Tax Act.

7. We shall first take up the determination of the question as to what the constitution of the Bar Council is and what are the objects with which the Bar Councils Act has been enacted.

Constitution of the Bar Council, its aims and objects. -The Bar Council is statutory body and according to Section 3(2) of the Indian Bar Councils Act it has all the attributes of a body corporate. The same section of the Act enacts as under :-

"Every Bar Council so constituted shall be a body corporate having perpetual succession and a common seal with power to acquire and hold property, both movable and immovable and to contract, and shall, by the name of the Bar Council of the High Court for which it has been constituted, sue and be sued."

The Act, which is No. 38 of 1926, is based on the recommendations of the Indian Bar Committee and the whole object was the unification of the Bar in India, the idea being to have a single grade of practitioners entitled to practice in all Courts. The purpose of the Act is to consolidate and amend the law relating to the legal practitioners. Th