Case: Commissioner of Income Tax West Bengal-III, Calcutta Vs. M/s. Indian Sugar Mills Association

2. The Indian Sugar Mills Association, hereinafter referred to as the Association, which has its office in Calcutta is a Trade Union registered underthe Trade Unions Act, 1926; any individual firm or company owning or managing a sugar mill or factory is eligible for membership of theHigh Court answered the question in the negative and in favour of the assessee. These four appeals preferred by the Commissioner of Income Tax, West Bengal-III, Calcutta, with certificate granted by the High Court under Section 66-A (2) ofthe Income Tax Act, 1922 are directed against the Judgment of the High Court disposing of the reference and relate to the assessment orders made in respect of the aforesaid four years.

Reasoning: On the facts of that case it was held that the principal objects of the Chamber of Commerce were to promote and protect trade, commerce and industries and to stimulate the development of trade, commerce and industries in India or any part thereof of and one of the objects mentioned in the Memorandum of Association that the Chamber of Commerce might take steps to urge or oppose legislative or other measures affecting trade, commerce or manufactures was purely ancillary or subsidiary aimed at securing the primary objects. In the case before us the High Court held that clauses (a) and (b) of Rule 3 of the Rules of the Association, quoted above, set out the primary objects of the Association which were objects of general public utility, and the other objects appearing from the remaining clauses of Rule 3 were only ancillary. Relying further on a part of Rule 4 (a), which we have reproduced above, providing that no part of the income and property of the Association was to be paid or transferred by way of dividend or bonus or otherwise by way of profit to the members of the Association the High Court came to the conclusion that the Association was under a legal obligation to hold the income it derived from the business of export of sugar for charitable purposes.5. The exemption under Section 4 (3) (i) can be claimed if the income is held wholly for religious or charitable purposes; this requirement is satisfied, as held in the Andhra Chamber of Commerce case, 55 ITR 722   = (AIR 1965 SC 1281  ) (supra) if the primary purpose is religious or charitable and the other purposes, not by themselves religious or charitable, are ancillary and serve to achieve the main purpose. Assuming clauses (a) and (b) of Rule 3 disclosed objects of general public utility, it is necessary to examine some of the other Rules of the Association to find out if it held the income derived from the business wholly for charitableWe have no right to assume some of the stated objects of the Association as primary to declare others in apparent conflict with them as of no effect. Rules 3, 4 and 64, all framed by the Association as a Trade Union. co-exist. We have no right to rewrite the rules of a registered trade union by deleting any of them.7. We also find it difficult to accept that only clauses (a) and (b) of Rule 3 represent the primary objects of the Association and the other Rules are all ancillary and incidental The Association is a Trade Union. Section 2 (h) ofthe Trade Unions Act,are all primary purposes of a Trade Union. Rule 3 (b) also may possibly be taken as a trade union object. Assuming Rule 3 (a) could be the primary object of a trade union, the other objects named in clauses (c), (d). (l) and (n) of Rule 3 also fall in the same category, and it is not possible to speak of one of them as ancillary or incidental to another. These other objects cannot also be called charitable purposes within the meaning of Section 4 (3) (i), even assuming that in some remote and indirect manner they might be of some public utility. It is not therefore possible to agree that the Association held the income derived from its business wholly for charitable purposes.