Case: Commissioner of Income Tax Bombay Vs. Bar Council of Maharashtra Bar Council of India Bar Council

aforesaid functions. (2) A State Bar Council may constitute one or more funds in the prescribed manner for the purpose of- (a) giving financial assistance to organise welfare schemes for the indigent, disabled or other advocates; (b) giving legal aid or advice in accordance with the rules made in this behalf." 7. Sections 9, 9A and 10 of the Act provide for the constitution of various committees for the purposes mentioned therein. Section 15 confers power on the Bar Council to make rules to carry out the purposes of this Chapter. The rest of the provisions of the Act are not material for the purpose of the issue under consideration. 8. Counsel for the Revenue contended that the primary object or purpose with which the Bar Council of a State is constituted is to benefit the members of the legal profession inasmuch as under s.6 (1) (d) it is an obligatory function of the State Bar Council to safeguard the rights privileges and interests of the advocates of its roll and that other functions like promotion of law reform, conducting law seminars etc. are incidental objects and the benefit to the public is remote or indirect or incidental and, therefore, the assessee-Council could not be regarded as a body intended to advance the object of general public utility. It is impossible to accept this contention. It is clear that sub-s. (1) lays down the obligatory functions while sub-s. (2) indicates what are the optional or discretionary functions that could be undertaken by the State Bar Council and from amongst the obligatory functions it will be wrong to pick out one and say it is the primary or dominant object or purpose. All the clauses of sub-s. (1) will hav e to be considered in light of the main objective sought to be achieved as indicated in the Preamble. The functions mentioned in cls. (a) and (b) of sub-s. (1), namely, to admit persons as advocates on its roll and to prepare and maintai n such roll, are clearly regulatory in character intended to ensure that persons with requisite qualifications who are fit and otherwise proper to be advocates are available for being engaged by the litigating public; the function prescribed in cl. (c) has been enjoined upon avowedly with the objective of protecting the litigating public from unscrupulous professionals by taking them to task for any misconduct on their part; it is also one of the obligatory functions of a State Bar Council to promote and support measures for law reform as also to conduct law seminars and organise talks on legal topics by eminent jurists, obviously with a view to educate the general public, the function prescribed by cl. (eee) is obvious ly charitable in nature, the same being to organise legal aid to the poor. Amongst these various obligatory functions one under cl. (d) is to safeguard the rights, privileges and interests of the advocates on its roll and it is difficult to regard it as a primary or dominant function or purpose for which the body is constituted, Even this function apart from securing speedy discharge of obligations by the litigants to the lawyers ensures maintenance of high professio nal standards and independence of the Bar which are necessary in the performance of their duties to the society. In other words, the dominant purpose of a State Bar Council as reflected by the various obligatory functions is to ensure quality service of competent lawyers to the litigating public, to spread legal literacy, promote law reforms and provide legal assistance to the poor while the benefit accruing to the lawyer members is incidental. It is true that sub-s. (2) prov ides that a State Bar Council may constitute one or more funds for the purpose of giving financial assistance to organise welfare schemes for the indigent, disabled or other advocates; but it is an optional or discretionary function to be undertaken by the Council. Apart from that, admittedly the assessee-Council has not so far constituted any such fund for the purpose specified in the instant case. As and when such a fund is constituted a question may arise for consideration and the Court may have to decide whether the function so undertaken by a State Bar Council has become the dominant purpose for which that Council is operating. Having regard to the Preamble of the Act and the nature of the various obligatory functions including t he one under cl. (d) enjoined upon every State Bar Council Under s.6 (1) of the Act, it is clear that the primary or dominant purpose of an institution like the assessee-Council is the advancement of the object of general public utility within the me aning of s.2 (15) of the Act, and as such the income from securities held by the assessee-Council would be exempt from any tax liability under s.11 of the Act.Having come to the aforesaid conclusion on applying the language of our Act to the natu re of functions undertaken by a State Bar Council under the Advocates Act 1961 it is truly unnecessary to deal with the English decisions cited during the course of arguments. However, we might indicate that in two cases (Royal College of Surgeo ns case and the General Medical Councils) case on an analysis of the functions undertaken by the two concerned institutions under the Statutes and Charters governing them the Court came to the conclusion that the institutions were not constituted for charitable purpose but they were more of professional institutions, the approach being to find out whether the objects satisfied the limited concept of charity within the spirit and intendment of the Statute of Elizabeth. In the other two cases (The Yorkshire Agricultural Societys case and The Institute of Civil Engineers case the Court took the view that both the institutions were constituted for charitable purposes entitled the exemptions under s.37 (1) (b) of the Income Tax Act, 1918, and the benefits accruing to the members were regarded as incidental. 9.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Having regard to the aforesaid manner in which the definition of "charitable purpose" given in s.2 (15) has been interpreted by this Court the question that arises for consideration in these appeals is whether the securities, interest from which is s ought to be exempted from tax liability, were held by the assessee-Council on trust wholly for a charitable purpose, namely, for the advancement of an object of general public utility? Admittedly the assessee- Council is not indulging in any act ivity for profit and hence the aspect of considering the applicability of the restrictive words does not arise and the answer to the question must depend upon the nature or character of the functions and activities which the assessee-Council can undertake underthe Advocates Act, 1961 for it is clear that it cannot go beyond what is prescribed by that ActIt is clear that sub-s. (1) lays down the obligatory functions while sub-s. (2) indicates what are the optional or discretionary functions that could be undertaken by the State Bar Council and from amongst the obligatory functions it will be wrong to pick out one and say it is the primary or dominant object or purpose. All the clauses of sub-s. (1) will hav e to be considered in light of the main objective sought to be achieved as indicated in the Preamble. The functions mentioned in cls. (a) and (b) of sub-s. (1), namely, to admit persons as advocates on its roll and to prepare and maintai n such roll, are clearly regulatory in character intended to ensure that persons with requisite qualifications who are fit and otherwise proper to be advocates are available for being engaged by the litigating public; the function prescribed in cl. (c) has been enjoined upon avowedly with the objective of protecting the litigating public from unscrupulous professionals by taking them to task for any misconduct on their part; it is also one of the obligatory functions of a State Bar Council to promote and support measures for law reform as also to conduct law seminars and organise talks on legal topics by eminent jurists, obviously with a view to educate the general public, the function prescribed by cl. (eee) is obvious ly charitable in nature, the same being to organise legal aid to the poor. Amongst these various obligatory functions one under cl. (d) is to safeguard the rights, privileges and interests of the advocates on its roll and it is difficult to regard it as a primary or dominant function or purpose for which the body is constituted, Even this function apart from securing speedy discharge of obligations by the litigants to the lawyers ensures maintenance of high professio nal standards and independence of the Bar which are necessary in the performance of their duties to the society. In other words, the dominant purpose of a State Bar Council as reflected by the various obligatory functions is to ensure quality service of competent lawyers to the litigating public, to spread legal literacy, promote law reforms and provide legal assistance to the poor while the benefit accruing to the lawyer members is incidental. It is true that sub-s. (2) prov ides that a State Bar Council may constitute one or more funds for the purpose of giving financial assistance to organise welfare schemes for the indigent, disabled or other advocates; but it is an optional or discretionary function to be undertaken by the Council. Apart from that, admittedly the assessee-Council has not so far constituted any such fund for the purpose specified in the instant case. As and when such a fund is constituted a question may arise for consideration and the Court may have to decide whether the function so undertaken by a State Bar Council has become the dominant purpose for which that Council is operating. Having regard to the Preamble of the Act and the nature of the various obligatory functions including t he one under cl. (d) enjoined upon every State Bar Council Under s.6 (1) of the Act, it is clear that the primary or dominant purpose of an institution like the assessee-Council is the advancement of the object of general public utility within the me aning of s.2 (15) of the Act, and as such the income from securities held by the assessee-Council would be exempt from any tax liability under s.11 of the Act.Having come to the aforesaid conclusion on applying the language of our Act to the natu re of functions undertaken by a State Bar Council under the Advocates Act 1961 it is truly unnecessary to deal with the English decisions cited during the course of arguments. However, we might indicate that in two cases (Royal College of Surgeo ns case and the General Medical Councils) case on an analysis of the functions undertaken by the two concerned institutions under the Statutes and Charters governing them the Court came to the conclusion that the institutions were not constituted for charitable purpose but they were more of professional institutions, the approach being to find out whether the objects satisfied the limited concept of charity within the spirit and intendment of the Statute of Elizabeth. In the other two cases (The Yorkshire Agricultural Societys case and The Institute of Civil Engineers case the Court took the view that both the institutions were constituted for charitable purposes entitled the exemptions under s.37 (1) (b) of the Income Tax Act, 1918, and the benefits accruing to the members were regarded as incidental.