COMMISSIONER OF INCOME TAX Vs. BAR COUNCIL

JUDGEMENT

(1.) THE questions referred by the Tribunal relate to the liability of the Bar Council of Madras to income-tax. THE IT authorities have imposed a tax on the income of the Council for the years 1939-40 and 1940-41. In the previous years no tax was levied, it being taken that the income of the Council was not taxable under the Act. It may be mentioned that the Bar Councils of Calcutta, Bombay, Allahabad, Lucknow, Patna, Sind and Nagpur have not been required to pay tax on their income. THE income of the Council consists of fees paid by persons enrolled as Advocates of the High Court, examination fees paid by apprentices-at-law and interest on investments. THE enrolment fees provide the biggest source of income. THE income is utilized for meeting the establishment expenses and the payment of fees to lecturers and examiners. THE Council is a statutory body whose main functions relate to the enrolment of persons as Advocates of the High Court, the rights and duties of Advocates and their discipline and professional conduct. Its duties, however, include the giving of facilities for legal education and training and the holding and conduct of examinations.

(2.) SEC. 3 of the IT Act, which is the charging section, makes, inter alia, an individual or association of persons liable to pay the tax on income. The Council has been taxed as an individual, and there can be no doubt that it is an individual or AOP within the meaning of the section. Therefore its income is taxable unless exemption is to be obtained under the provisions of s. 4 (3). Clause (i) of sub-s. (3) exempts 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. The last clause of this sub- section defines what is meant by the words "charitable purpose" and the definition includes education.