G.K. Mitter, J.In this reference the only question for the opinion of this court is whether the assessee association is a public charitable institution entitled to exemption u/s 4(3)(i) of the Indian income tax Act. The assessee was incorporated as a company not for profit u/s 26 of the Indian Companies Act, 1913. As the determination of the question depends upon the construction of its constitution it is necessary to set out the relevant clauses in its memorandum of association.

2. Clause 3.-The objects of the association are to promote and develop home industries, arts and crafts, in the Presidency of Bengal and to do all things necessary for the attainment of the object:

(1) to collect and publish or otherwise furnish information with respect to home industries, arts or crafts, in Bengal;

(2) to establish or assist home industries-

(a) by the purchase of the raw materials and articles necessary for their manufacture, by advance of money or furnishing of guarantees to encourage such manufacture and the acquisition of craft secrets, rights or methods of work;

(b) by promoting the formation of credit societies or other associations having for their object the extension or improvement of the work or the condition of the workers in any home industry or the sale of its products;

(3) to promote exhibitions, show-rooms or other public displays of industrial work and the raising of funds from individuals, private or public bodies;

(4) to purchase, sell or otherwise acquire or dispose of finished products, to act as agents for the supply of material or appliances or finished products in connection with any home industry;

(5) to acquire by purchase, lease or otherwise, and hold land, buildings and property of every description deemed expedient for furthering the objects of the association, and also to build, erect and establish any buildings, factories or other structures deemed suitable for the said purposes, and to sell and dispose of such lands and property as may be deemed expedient.

3. Clause 4.-The association shall not support with its funds or endeavour to impose on or procure the observance by its members or others of any regulations or restriction which if an object of the association would make it a trading concern.

4. Clause 5.-The income, profit and property of the association, whensoever derived, shall be applied solely towards the promotion and carrying out of the objects of the association as set forth in its memorandum of association, and no portion thereof shall be paid or transferred directly or indirectly by way of dividend, bonus or otherwise, howsoever by way of profit to the members of the association;

Provided that nothing herein contained shall prevent the repayment of loans and deposits and other liabilities incurred in the interest of the association nor the payment in good faith of remuneration to any person in return for, or recognition of, any service to or benefit conferred on the association.

5. Clause 6.-No member of any executive or working committee of the association shall be appointed to any salaried office of the association or any office of the association paid by fees, and no remuneration shall be given by the association to any member of such committee except repayment of out-of-pocket expenses and interest on money lent or rent for premises demised to the association. But this provision shall not apply to payments to any other company or association of which a member of the said two committees may also be a member for work done by such other company or association.

6. Clause 7.-The fifth and sixth paragraphs of this memorandum are conditions on which the registration of the association has been obtained under the provisions of section 26 of the Indian Companies Act (VII of 1913).

7. Clause 8.-Any person interested in the objects and aims of the association is eligible for membership.

8. Clause 9.-The association shall consist of (a) ordinary members, (b) life-members, and (c) patrons.

9. An ordinary member shall subscribe to the funds of the association-Rs. 10 per annum.

10. A contribution of Rs. 150 or more shall entitle the contributor to life-membership and shall exempt him or her from any further annual subscription.

11. A contribution of Rs. 5,000 or more shall make the contributor a patron of the association and shall exempt him or her from any further annual subscription.

12. Clause 12.-If upon the winding up or dissolution of the association there remains after satisfaction of all its debts and liabilities any property whatsoever, the same shall not be paid or distributed amongst the members of the association, but if and so far as effect can be given to the next provision shall be given or transferred to some other institution or institutions having objects similar to the objects of this association to be determined by the members of the association at or before the time of dissolution, and, in default thereof, by the High Court in Bengal.

13. The association had a set of articles of association to which no particular reference was made except to articles 7 and 16 noted below:

14. Article 7.-No person shall be admitted a member of the association in any class unless he is first approved by the executive committee, and the executive committee shall have full discretion as to the admission of any person to membership in any class.

15. Article 16.-Members shall be entitled to vote at all general meetings, to free admission to all exhibitions, libraries and meetings of the association, and to acquire publications of the association, at such reduced rates as the executive committee may, from time to time, determine.

16. From 1917, when it was founded, down to 1951, the association had always been exempted from payment of income tax. Proceedings were then started u/s 34 of the Act and the income tax Officer made an assessment order on August 30, 1951, for the assessment year 1942-43 on an income of Rs. 14,296. Further orders were made for the years of assessment 1943-44 and 1944-45. The Appellate Assistant Commissioner set aside these assessment orders. This was upheld on a further appeal to the Tribunal by the revenue authorities. The Tribunal upheld the finding of the Appellate Assistant Commissioner. The present reference is at the instance of the revenue.

17. Section 4(3), as it stood at the relevant time, provided as follows:

"Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them:

(i) any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied or finally set apart for application thereto;

(ii) any income derived from business carried on, on behalf of a religious or charitable institution when the income is applied solely to the purposes of the institution and-

(a) the business is carried on in the course of the carrying out of a primary purpose of the institution, or

(b) the work in connection with the business is mainly carried on by beneficiaries of the institution."

18. "Charitable purpose" in the above section has its own meaning and "includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility".

19. The income tax Officer found that the assessees purposes were clearly not for relief of the poor, education or medical relief and the assessees purpose could not be said to be one of general public utility since it was primarily intended to benefit a section of the public, i.e., those who were engaged in home industries in Bengal. According to the income tax Officer the persons engaged in home industries in Bengal were a fluctuating body of private individuals and as such any benefit to this class could not be treated as charitable. The Appellate Assistant Commissioner however recorded that "from the examination of the object set forth in the memorandum of association as well as from the activities of this body it is clear that the association is meant for promoting the home industries, arts and crafts, in Bengal and helping poor craftsmen and destitute women of Bengal. The association makes advances to the poor craftsmen, weavers, destitute women and others, without interest in order to enable them to purchase raw materials, and takes back decorations and finished hand-made products from them. These are sold to the public and the sale proceeds are utilised for the furtherance of the object of the association... The real underlying object is to benefit the poor craftsmen and destitute women by providing them with easily available advances for purchase of raw materials and giving them remuneration for crafts-works. There is thus a good ground for holding that the purposes of the appellant association also included the advancement of general public utility."

20. This aspect of the activities of the association is not, however, dealt with in the order of the Tribunal. According to the Tribunal though the objects clause was not happily drafted (worded), it brought out sufficiently the purposes for which the association was formed, viz., to promote or develop home industries, arts and crafts, in the Presidency of Bengal. To achieve that object the association had been empowered to collect or publish or otherwise furnish information with regard to these industries and crafts and to do many other things; but all these activities were only meant to achieve the main object. Purchase and sale of the finished products was not an end in itself but only a means to promote and develop home industries, arts and crafts. The Tribunal found that the object of the assessee was not to benefit individuals but all those who were interested in home industries, arts and crafts, in the Presidency of Bengal. Thus the beneficiary was the general public and the object could be said to be one of general public utility. The Tribunal held that the case was covered by the decision in All India Spinners Association v. Commissioner of income tax [1944] 12 ITR 482.

21. Before us it was strenuously contended on behalf of the revenue that the association could not be said to have general public utility as one of its purposes. It was urged that the constitution of the assessee showed that it was formed for improving the lot of a trading community, that the promotion of industries, arts and crafts could not be a charitable object and if benefit to a particular community was one of the objects of the association its main purpose could not be held to be charitable. Lastly, it was urged that helping people concerned in ordinary trade was not an object of general public utility.

22. Here, as in many other branches of the income tax law, there is notable divergence between statutory provisions in England and in India and hence English decisions, however illuminating they may be, have to be applied with caution. Under the English Income Tax Act of 1842, allowances were to be granted on the rents and profits of lands, tenements, etc., belonging to any hospital, public school or alms house, etc., vested in the trustees for charitable purposes so far as the same were applied to such purposes. There was no definition of "charitable purpose" in the Act and to find out the meaning of the word "charity", "charitable uses", "charitable trust" and "charitable purposes", judges had to refer to decisions of the Court of Chancery. In his celebrated judgment in The Commissioners for Special Purposes of the Income Tax v. Pemsel [1891] AC 531, Lord Macnaghten came to the conclusion "that the expression trust for charitable purposes in the Act of 1842, and the other expressions in the Act in which the word charitable occurs, must be construed in their technical meaning according to English law". His Lordship discussed the foundation of the jurisdiction of the court over a class of trusts known as "charitable trusts", the Statute of Elizabeth, the Statute of Mortmain and said "charity in its legal sense comprises four principal divisions; trusts for the relief of poverty, trusts for the advancement of education; trusts for the advancement of religion and trusts for other purposes beneficial to the community, not falling under any of the preceding heads". With regard to the last class his Lordship said that "they were not the less charitable in the eye of the law, because incidentally they benefit the rich as well as the poor, as indeed, every charity that deserves the name must do either directly or indirectly".

23. The difference between "charitable purpose" under the Indian statute and "charity" as known to lawyers in England will at once be noted. The counterpart of the English doctrine "all purposes beneficial to the community" is replaced in the Indian Act by the expression "advancement of any other object of general public utility". It is the difference in the wording of this last portion of the definition coupled with the meaning attached to "charity" in various English statutes which has caused a divergence in the stream which follows the same course up to a certain point. Otherwise, there is a strong resemblance between "charitable purpose" as known to Indian income tax law and "charity" as known to English lawyers. Further, under the Indian Act, even if property be not held under a "trust" as known to lawyers but on a legal obligation bearing close resemblance to a trust exemption would be attracted.

24. To find out whether exemption u/s 4(3) can be had, one must ascertain in the case of property held under a trust or legal obligation, whether the income is applied for religious or charitable purposes and where a religious or charitable institution derives income from business, whether the business is carried on in furtherance of the institution or whether the work in connection with a business is pursued by beneficiaries of the institution. When the institution itself is the assessee, its object is the touchstone to test its purpose. The law on this point is settled so far as India is concerned by two decisions of the Judicial Committee of the Privy Council. These are the cases of All India Spinners Associations case (supra) already referred to and the case of The Trustees of the Tribune, In re [1939] 7 ITR 415. In the case of the Tribune Press the Judicial Committee observed that "under the Indian income tax Act, the test of general public utility is applicable not only to trusts in the English sense but is to be applied to property held under trust or other legal obligation" and "to pronounce whether any particular object of a bounty falls within the definition the courts must in general apply the standard of customary law and common opinion amongst the community to which the parties interested belong". Their Lordships further found that "by the terms of the trust it is not to be carried on for profit to any individual", and observed "that it was not necessary for any purposes to be of general utility that it should provide something for nothing". According to their Lordships the object of the paper, Tribune, was that "of supplying the province with an organ of educated public opinion and as such one of general public utility".

25. The All India Spinners case (supra) has a close resemblance to the facts of the case before us. There the association was started for the purpose of development of village industries of hand-weaving (called Khadi) and the weaving of cotton materials (called Khaddar) by the use of handlooms. The constitution of the association was set out in a document without date or signature contained in a publication called the "Khadi Guide" published in 1931. The association bought charkas, handlooms and raw cotton out of the funds donated from the public and subscription from the members, supplied them to village people free of charge, gave the said persons a certain wage to enable them to maintain and support their families, taking over yarn spun and supplying them to others for weaving cloth. It then bought hand spun yarn paying persons who had spun them on the basis of the cost of raw cotton and wages for spinning. Such wages were not based on the current wages prevailing in similar work but sufficient to give the persons an income for maintaining their families. The cloth so woven was taken over by the association and sold in stores established by it. The price charged to the public for such cloth was calculated on the basis of the cost price incurred by the association plus a certain percentage for shop and overhead charges. Any surplus in the amount realised by the sale of cloth was utilised in the same manner as other funds of the association. Looking at the constitution of the association, which was one for the development of hand-spinning and Khaddar, the Judicial Committee had no difficulty in recognising the same as its dominant object excluding any question of profit-making or of party politics. Lord Wright made special reference to the fact that there was no power to distribute any surplus income among the members of the association and that the business had been carried on in pursuance of the primary purpose mainly by beneficiaries of the association. His Lordship said, "the practice however is not enough. The purpose is to be ascertained from the constitution". He held that "the limits fixed by the section must be strictly observed and its definition must be satisfied by the character of the association and its activity". He referred to the finding of the Bombay High Court that the real underlying object of the association was to benefit the poor agriculturists in the villages, especially at that time of the year when they were not actively engaged in agricultural operations and said "the judges in India with their knowledge of Indian conditions are peculiarly qualified to form an opinion on these matters. But their Lordships see no sufficient reason to doubt the conclusion that the primary object of the association was the relief of the poor. That would be enough prima facie to satisfy the statute. But there is good ground for holding that the purposes of the association included the advancement of other purposes of general public utility. These last are very wide words... These words, their Lordships think, would exclude the object of private gain, such as an undertaking for commercial profit, though all the same it would subserve general public utility. But private profit was eliminated in this case." His Lordship went on to add that there was no ground for the court to hold that the scheme was not one "which may be for the public benefit".

26. In my view, what was said in the above case is true of the facts of the case before us. The cause of the relief of poverty referred to by the Appellate Commissioner is not included in the finding of the Tribunal, but according to the dictum of the Judicial Committee, the purpose can still be charitable, if it is otherwise one of general public utility. In terms of the decision of the Judicial Committee, there must be no element of private profit which, in my view, in reference to an institution must mean private profit of the members composing it. It does not and cannot mean that the association itself can make no profit. Indeed, that idea is dispelled by the judgment in The Tribune Press case (supra). So long, therefore, as there is no element of profit-making so far as the members of an institution are concerned and so long as the institution pursues an object which is beneficial to the general public as distinguished from a particular class or community, it is entitled to exemption u/s 4(3) of the Indian income tax Act.

27. The dominant object of the assessee is beyond doubt the promotion and development of home industries, arts and crafts in Bengal. "Home industries, arts and crafts" must, in my opinion, mean industries, arts and crafts which are pursued in the homes of people as distinct from factories and other organisations whose primary object is to turn out finished products in bulk and to trade in them. It would not be wrong to treat home industries, arts and crafts as cottage industries or pursuits, i.e., industries and occupations which people of limited means pursue or resort to in order to get a livelihood or supplement their meagre income. It is well known that people in different parts of Bengal used to carry on small scale or cottage industries most of which had to struggle for existence with the advent of factories run by power. To take a few instances only, the production of fine cloth, silk and muslin, various items of pottery and earthenware goods were industries pursued in different parts of Bengal.

28. Sub-clauses (1) to (5) of clause 3 of the memorandum of association only illustrate the manner in which the dominant object was to be carried out. Sub-clause (1) enables the association to collect and publish or otherwise furnish information with respect to home industries, arts or crafts in Bengal. Sub-clause (2) enables the association to establish or assist home industries by the purchase of raw materials and articles by advances of money, to encourage such manufacture by promotion of credit societies or other bodies to improve the work or the condition of the workers. Sub-clause (3) is aimed at giving publicity to industrial work and the taking of power to raise funds for the association. Sub-clause (4) enables the association to purchase finished products and sell and dispose of the same and to act as agents for the supply of material or appliances in connection with the Industry. This sub-clause was strongly criticised as going to show that it enabled the association to make profit thereby, but if the association is to help an industry it must necessarily help people engaged in it in turning out its goods and selling the same. Such an element was present in All India Spinners case (supra). Sub-clause (5) only enables the association to hold or acquire land, buildings, etc., for its purposes. It is obvious that the association must have a local habitation as well as a name and must be allowed to hold property from where to carry on its activities. The inclusion of the word "factories" is rather unfortunate but one must not emphasise too strongly on this.

29 Clause 4 of memorandum goes to show that the association was not to support any endeavour on the part of its members to make it a trading concern. This clause as well as clauses 5 and 12 in my opinion go to show that the idea of profit accruing to the members of the association was altogether eliminated. The profit, if any, could only be utilised in furtherance of the objects of the association as in All India Spinners case (supra). Clause 6 goes to show that the members were not to receive any remuneration. They were to be of different grades depending on the amount of their contribution but whether they were ordinary members or life-members or patrons they were not to derive any profit from the working of the association.

30. Following the decision in All India Spinners Associations case (supra) the Madras High Court held that a Chamber of Commerce registered. u/s 26 of the Companies Act, 1913, its main object being to promote and protect trade, commerce and industries of India in the Province of Madras and in particular in Andhra country as also to aid, stimulate and promote the development of trade, commerce and industries in India or any part thereof with capital principally provided by Indians under the management of Indians, was a body entitled to exemption u/s 4(3)(i) of the income tax Act: Andhra Chamber of Commerce Vs. Commissioner of Income Tax, Madras, . The assessee here was prohibited from distributing any part of its assets to its members by way of dividends, etc. It maintained an office, engaged secretarial and other assistants and paid their salaries. It published a weekly bulletin containing data and statistics and information with comments on market trends and tendencies of interest to persons engaged in the trade, commerce and industry in the States of Madras and Andhra. It was further found that the managing committee of the chamber desired to set up a commercial and industrial museum and to arrange to send trade delegations to various countries for the promotion of Indias trade relations, and to institute scientific and technical research and study, expand the library and organise commercial intelligence service on a larger scale. The assessee purchased an immoveable property in 1944, to which it made substantial additions and alterations and let out floor space not required for its own purpose to outside tenants. It was contended on behalf of the revenue that the income from the property was assessable as the assessee was not a charitable institution. The learned judges of the Madras High Court relied on the two decisions of the Privy Council and said "when the purpose of the association is the advancement of trade, commerce and industry in the country and that is an object of general public utility, neither the object of the individual members of the association to benefit themselves, nor the fact that they did derive such individual benefit from the activities of the association in the pursuit of its object should cloud or affect the determination of the issue". According to their Lordships the object of the association was one of general public utility notwithstanding the presence of an element of individual benefit to the members. At first blush it would seem strange that a chamber of commerce having for its object the promotion of trade and industry could be said to have a charitable purpose. Yet if an object of general public utility be a charitable purpose I can see no reason why a body which has for its object the advancement of commerce and industry can be said to be outside the pale of charitable institutions. Neither from the statement of case nor from the judgment does it appear who were the members of the chamber of commerce. If the members themselves were actively engaged in trade it would be difficult to describe their association as a charitable one for then the element of private gain which the Judicial Committee found lacking in All India Spinners case (supra) would loom large in the picture. Nor would the analogy of the decision in The Tribune case (supra) apply, for, there the profit, if any, to be made by the publication of the newspaper was to be applied for improving it.

31. The English decisions which Mr. Meyer referred to may now be considered to find out whether the ratio decidendi of these cases can be applied to the facts of the instant case. Mr. Meyer relied very strongly on the decision of MacDermott J. in Pigs Marketing Board (Northern Ireland) v. Commissioners of Inland Revenue [1945] 26 Tax Cas. 319. There the board was a statutory body corporate established by the Pigs Marketing Scheme, 1933, for regulating the marketing of pigs, a scheme framed by the Ministry of Agriculture for Northern Ireland pursuant to the Agricultural Marketing Act, 1933, which provided for the framing of such a scheme where necessary for the more efficient production and marketing of an agricultural product. The Board was constituted of members some of whom were elected by registered producers, i.e., persons who bred pigs or kept them for the purpose of breeding from them or selling them. The Board had power to buy and sell pigs; to produce bacon and other pig products and to establish slaughter houses for that purpose; to supply registered pig producers with anything required for the production of pigs, and to co-operate with others in the exercise of such powers. The Board was also empowered to borrow money and to levy contributions from pig producers. All moneys received had to be paid into what was known as the "fund" and payment had to be made thereout. Moneys to the credit of the "fund" might be invested and it was to the income of the investment so made that the decision related. The learned judge found on a scrutiny of the powers and objects of the Board that "while the Board exhibits several features distinguishing it from an ordinary commercial undertaking, it was clearly established as a trading concern. This, however, is not conclusive. Trading may be the means to a charitable as well as to a commercial end; and there can be no doubt that the trading powers of the board were intended to accomplish something beyond the field of normal commerce." It was urged on behalf of the appellant that the Board was established for a purpose beneficial to the community namely, more efficient production and marketing of agricultural product. His Lordship noted that the Special Commissioners had found that the operations of the Board had resulted in substantial relief to a depressed industry with consequential benefit to the general trading community and the view that the advancement of agriculture was, in itself, a charitable purpose could not be doubted. His Lordship was prepared to assume in favour of the Board that its purpose included the advancement of agriculture and added "but having made this assumption the question remains whether the purposes of the Board are charitable only. I do not think they are. The benefits conferred upon pig producers cannot, in my opinion, be left out of account as being merely incidental. I think there can be little doubt that one of the purposes for which the Board was established was to rescue pig producers from the plight into which their particular industry had fallen. The purpose of the scheme, as expressed in the statute under which it was framed, was to regulate the marketing of pigs in order to obtain more efficient production and marketing. I do not see how this purpose can be isolated from the direct effect which its implementation was bound to have on those most vitally concerned-the producers of the regulated product... This view brings me to the series of decisions establishing that a professional body whose purposes benefit the community in a manner which is charitable and also advance, not incidentally but directly, the interests of the profession concerned, is not established for charitable purposes only... In my opinion no distinction in principle can be drawn between the promotion of the interests of a particular commercial class and the promotion of the interests of a particular profession, and I therefore come to the conclusion that, even on the assumption I have made, the purposes of the Board are not charitable only. "

32. In my view, these observations do not apply to the association before us. The members of it derived no benefit directly or indirectly. The object of the association is not to help directly people of a particular profession but only incidentally persons pursuing indigenous industries with limited resources either for the purchase of raw materials or for the disposal of the finished products. It is evident on a perusal of the different sub-clauses of clause 3 of the memorandum of association that the object of the association was to help those people who could with difficulty procure or purchase raw materials and who had to be advanced money for the purpose. In order to help these persons it was thought desirable to promote the formation of credit societies. It was not out of the bounds of possibility that it might act as agent not only for the supply of materials or appliances but also for the sale of the finished products. The association could promote exhibitions, showrooms and other public displays for the purpose of raising fund from individuals, private or public bodies to add to its coffer. All this was, however, incidental to the main purpose, viz., promotion and development of home industries, etc.

33. In Tennent Plays Ltd. v. Commissioners of Inland Revenue [1948] 30 Tax Cas. 107, the assessee was a non-profit making company limited by guarantee, with a view to the production, in association with the Council for the Encouragement of Music and the Arts, of plays of outstanding merit which were thought unlikely to be commercial success. The objects of the company included the advancement of education, educational plays, arts of all kinds, the production of plays, concerts, exhibitions and dances, etc., whether educational, partly educational or scientific or partly scientific or otherwise and as ancillary to the foregoing objects of the company and with a view to find income and funds for the purposes of the company to carry on business as theatre, music hall, concert hall, dance hall, ballroom, public hall, cinema and picture house properties and managers. It was found that the activities of the company had in fact been confined to the fostering of dramatic art subject to the guidance of the Council and the production of plays of great artistic merit. Having regard to the wide terms of the memorandum of association the Special Commissioners held that the objects of the company were not confined to charitable purposes. This was upheld both by Macnaghten J. and the Court of Appeal. It was argued before the Court of Appeal that Macnaghten J. had failed to give due weight to the introductory words and that to decide the question whether a company was established for charitable purpose only its main or dominant purpose was alone to be considered. The Court of Appeal found itself unable to accept this argument and referring to the objects clause whereby plays of all kinds whether educational, partly educational or scientific or partly scientific or otherwise or for philanthropic or charitable purposes were mentioned, Cohen L.J. observed that it was not possible to rule out plays which were not purely educational or for other non-charitable purposes as an independent object. Looking at clauses (a), (b) and (c) of the objects clause his Lordship said that objects which were not charitable had also been included.

34. I do not think that there is anything in the objects clause of the association before us which can be said to savour of a direct purpose other than charitable.

35. The next case referred to by Mr. Meyer was that of Commissioners of Inland Revenue v. City of Glasgow Police Athletic Association [1953] 34 Tax Cas. 76. This association was formed to encourage all forms of athletic sports and general pastimes. Membership of the association was restricted to officers and ex-officers of the City of Glasgow Police Force and was voluntary. As a matter of fact, however, 85% of the members of the force belonged to it. The association was administered by the members themselves each paying an annual subscription. Funds were also raised by holding an annual sports meeting. The Special Commissioners decided that while the associations object was not, per se, a charitable object, there were special features in the nature of a police force which enabled them to hold that the association was a body of persons established for charitable purposes only. The House of Lords by a majority of four to one took a different view. Lord Normand placed great reliance on rule 2 of the association, namely, "to encourage and promote all forms of athletic sports and general pastimes", which were not charitable purposes. He said "no one can read the rules without perceiving that the association was regarded as having an official importance and a public aspect. And in order to ascertain what the purposes of an association are, the court is not limited to consideration of its rules or its constituent documents. They are very important... But it is quite in order for the association to prove by parole evidence that it had other purposes than that set down in the rules.... But there remains the non-charitable purpose of providing recreation to the members. The question is, whether this non-charitable purpose is incidental to the public charitable purpose. If not, it cannot be said that the association was a body established for charitable purposes only. This is not a matter of the motive of the members of the association or of the high police officials who took a part in furthering the association, though there is a natural probability that their motives agree with the purposes of the association. The question is: What are the purposes for which the association is established, as shown by the rules, its activities and its relation to the police force and the public And what the respondents must show in the circumstances of this case is that, so viewed objectively, the association is established for a public purpose, and that the private benefits to members are the unsought consequences of the pursuit of the public purpose, and can, therefore, be disregarded as incidental. That is a view which I cannot take. The private benefits to members are essential. The recreation of the members is an end in itself, and without its attainment the public purpose would never come into view.... The private advantage of members is a purpose for which the association is established, and it therefore cannot be said that this is an association established for a public charitable purpose only.... If an association has two purposes, one charitable and the other not, and if the two purposes are such and so related that the non-charitable purpose cannot be regarded as incidental to the other, the association is not a body established for charitable purposes only."

36. Lord Cohen laid down certain principles deducible from the cases:

"(1) If the main purpose of the body of persons is charitable and the only elements in its constitution and operations which are non-charitable are merely incidental to that main purpose, that body of persons is a charity notwithstanding the presence of those elements: Royal College of Surgeons of England v. National Provincial Bank [1952] AC 631.

(2) If, however, a non-charitable object is itself one of the purposes of the body of persons and is not merely incidental to the charitable purposes, the body of persons is not a body of persons formed for charitable purposes only, within the meaning of the Income Tax Acts: Oxford Group v. Inland Revenue Commissioners [1949] 31 Tax Cas. 221.

(3) If a substantial part of the objects of the body of persons is to benefit its own members, the body of persons is not established for charitable purposes only: Inland Revenue Commissioners v. Yorkshire Agricultural Society [1928] 13 Tax Cas. 58."

37. Applying these principles to the facts of this case, his Lordship said that he was "unable to draw from the evidence the conclusion that the benefits to the members were given with a view only to giving encouragement to the maintenance of the strength and efficiency of the Glasgow Police Force. These benefits were and could be given to the members and to no one else." In my view the association before us would be entitled to exemption on the application of the first of the above tests.

38. In Commissioners of Inland Revenue v. Royal Naval and Royal Marine Officers Association [1954] 36 Tax Cas. 187, the finding of the Special Commissioners that the dominant purpose of the association was charitable only was upset by Danckwerts J. Rule 2 of the association bearing the title "object" provided as follows:

"2. The objects of the Association are:

(a) to present such a sum of money as is from time to time decided upon by the association to the nominee, widow or next-of-kin of a deceased member;

(b) to give every assistance to members and their dependants;

(c) to provide such friendly intercourse as the Branches may from time to time decide."

39. His Lordship held that "the primary purpose of the Association is to provide the death benefits for which provision is made in the rules. The promotion of efficiency of the Royal Navy is, in my view, merely an incidental result of the purpose of the association. As in Glasgow Police Forces case (supra), moreover, the private benefits to the members (or their widows) in the present case are not the unsought consequences of the pursuance of a public purpose but are an object without which the association would not have been formed and could not survive. It is indeed, I think, as has been argued substantially, a mutual benefit society and not an altruistic charitable body."

40. The benefit of the members being wholly eliminated on the facts of the case before us the association cannot be said to be established for a non-charitable purpose and the decisions either in Glasgow Police Forces case (supra) or Royal Naval and Royal Marine Officers Associations case (supra) do not apply to the facts before us.

41. Mr. Meyer referred also to the case of Pharmaceutical Society of Ireland v. Special Commissioners of Income Tax [1938] I.R. 202. I do not think it is necessary to examine the case in detail. After examining the various authorities cited at the Bar, Hanna J., who delivered the judgment of the court, said that "these cases give us two contrasted tests: (1) where the institution or society is mainly for a purpose that falls within the categories in the Act as charitable and entitled to the exemption and (2) where the institution has for its purpose mainly the betterment of the private members, it is not entitled to exemption. In other words, if it is a vocational institution to promote the interests of the profession or vocation, it is not charitable." The Tribunal should have referred to the activities of the association in some detail. It is unfortunate that there is no reference to it. The Tribunal guided itself only by the consideration of the objects of the association. In the light of the authorities the question framed: "Whether, in the facts and circumstances of this case, the association can be held to be a public charitable institution and, as such, entitled to exemption u/s 4(3) of the Indian income tax Act" must be answered in favour of the assessee who will have the costs of this reference.

Ray, J.

I agree.