Per Mahavir Singh, Judicial Member. - These cross appeals of the revenue and the assessee are directed against separate orders of the CIT (Appeals), Chennai. The relevant assessment years involved in these appeals are 1995-96, 1996-97, 1997-98, 1998-99 and 2000-01.

2. The common issue raised in these appeals of the revenue as well as the assessee is regarding denial of exemption under section 11 of the Income-tax Act, 1961 on the basis that the trust properties held are used for commercial purposes instead of charitable purposes and consequent to that, computation of income from these properties as well as donations is assessed as business income.

3. The briefly stated facts are that the assessee is a Registered Trust under section 12A(a) of the Act. It was established as a club by name "The Willingdon" which was started in 1924 with the then Governor of the State of Madras, the Administrative General of the State of Madras and the Secretary and Treasurer of State Bank of India as Trustees. The main object of the Club was to encourage and maintain the social interconnection between Europeans and Indians for promotion of sports such as tennis and other indoor games and past-time for the purpose of entertainment and amusements, educational, instructive or otherwise and such other purposes. The Willingdon Club acquired the property known as Willingdon premises bearing Door No. 1/4, Marshalls Road, Egmore, Chennai for a sum of Rs. 2 lakhs. The activities of the club became ineffective over the years, due to significant political and social changes brought about by the Indian Independence. Subsequently, in the year 1971 a new organization was created under the name of ‘The Willingdon Charitable Trust’. The said organization constituted a society by a resolution passed on 27-2-1971 for the proper utilization of the property and for the fulfilment of the objects of the trust and for promoting other objects consistent with the needs of modern times and the said trust was registered under the Societies Registration Act, 1860. The trustees of the said charitable trust applied to the Madras High Court in C.S. No. 76/1973 for transfer of the property of the erstwhile "The Willingdon" to "The Willingdon Charitable Trust". The Hon’ble Madras High Court by its order dated 8-3-1973 empowered the first mentioned three trustees of "The Willingdon" to transfer the properties and the assets of the club to "The Willingdon Charitable Trust" for the purpose of administering the aims and objects as mentioned in the Memorandum of Association and rules made thereunder of the trust. In view of the order of the Hon’ble Madras High Court, the properties and assets of the "The Willingdon" transferred to "The Willingdon Charitable Trust".

4. In view of the above background, The Willingdon Charitable Trust was created and managed by a Board of Directors with 15 trustees inclusive of the 3 trustees of the erstwhile "The Willingdon". The aims and objects of "The Willingdon Charitable Trust" are enumerated in clause 3 of the Memorandum of Association dated 10-2-1971 which reads as under :

"3. The objects and aims of the trust shall be as follows :—

1.To establish, run or maintain educational, technical or technological institutions of all kinds in India for the benefit of the public.

2.To institute and maintain or support hospitals, creches and dispensaries.

3.To maintain Homes for orphans, to support and educate pupils and students and destitute children.

4.To award scholarships and stipends for education and to institute lectureships and arrange lectures and arrange or support cultural activities of a charitable nature enduring for the benefit of the public and also to establish endowments for such purposes.

5.To provide relief for the poor and the distressed.

6.To provide for the carrying out of protection of animals useful to mankind and generally to spend amounts for charitable purposes enduring for the benefit of the public.

7.To collect and maintain a fund to