This reference under section 27(1) of the Wealth-tax Act, 1957 concerns assessment years 1968–69, 1970–71 and 1971–72 and raises questions about (a) the status of the assessee for wealth-tax purposes and (b) the assessee's entitlement to exemption under section 5(1)(i) of the Act. The assessee is the Indian Jute Mills Association, a body registered under the Trade Unions Act, 1926. The Wealth-tax Officer issued notices under section 17 and the assessee filed nil returns, contending (i) that, as an association of persons, it was not a taxable entity under section 3 of the Wealth-tax Act, and (ii) that it was exempt under section 5(1)(i).

The Assessing Officer rejected both contentions, treating the association as an "individual" within section 3 by reference to Supreme Court decisions. The Appellate Assistant Commissioner confirmed the Assessing Officer's assessments. The assessee appealed to the Tribunal, which held that the association, being a juristic entity, is a distinct personality and therefore liable to be assessed as an "individual" under section 3. On the exemption claim under section 5(1)(i), the Tribunal considered that a detailed factual inquiry was required into the association's objects and the application of its receipts and therefore set aside the assessments and remitted the matter to the Wealth-tax Officer with directions for further enquiries.

The Tribunal referred two questions to the High Court for determination concerning (1) whether the association is liable to be assessed as an "individual" under section 3, and (2) whether further investigation was necessary to decide the claim for exemption under section 5(1).

Legal Issues Presented

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the association is liable to be assessed as an "individual" in accordance with the provisions of section 3 of the Wealth-tax Act, 1957?
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that further investigation of facts was necessary for determination of the association's claim for exemption from wealth-tax under section 5(1) of the Wealth-tax Act, 1957, and, in that view, in setting aside the assessment?

Arguments of the Parties

Assessee's (Appellant's) Arguments

The assessee filed nil returns asserting it is an association of persons and therefore not a taxable entity under section 3 of the Wealth-tax Act.
The assessee claimed exemption under section 5(1)(i), contending that certain property/activities were held/performed for public charitable purposes (as per the association's objects).

Revenue's (Respondent's) Arguments / Assessing Officer's Position

The Assessing Officer rejected the assessee's contentions and treated the body registered under the Trade Unions Act as an "individual" for the purpose of section 3, relying on Supreme Court authority interpreting "individual" expansively.
The Assessing Officer and subsequent appellate authorities required further factual examination of the association's objects and application of funds to determine if the exemption under section 5(1)(i) truly applied.

Tribunal's Findings (as presented in the opinion)

The Tribunal held that the assessee, being an association with members having independent corporate status and being a juristic person, is a distinct personality and liable to be assessed as an "individual" under section 3.
On the exemption claim, the Tribunal considered that the Wealth-tax Officer had not examined the objects sufficiently to decide whether the association's primary or dominant objective qualified as charitable/public purpose; it therefore remanded the matter for specific inquiries into receipts, activities, utilisation of funds and percentage of expenditure in relation to the dominant objectives.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
CIT v. Sodra Devi, [1957] 32 ITR 615 (SC) (also Damayanii Sahni v. CIT)	Interpreted the word "individual" as wide enough to include a group of persons forming a unit (not limited to a natural person).	Used as historical authority showing prior Supreme Court construction that "individual" may include bodies/units; supports assessing juristic persons under section 3.
Banarsi Dass v. WTO, [1965] 56 ITR 224 (SC)	Held the word "individual" in constitutional entry 86 and in tax context may include a group of individuals (thus covering HUFs and juristic persons).	Treated as decisive authority; affirmed that "individual" can include juristic persons and supports charging such bodies under section 3 of the Wealth-tax Act.
Andhra Pradesh State Road Transport Corporation v. ITO, [1964] 52 ITR 524	Held that a corporation constituted under a special Act is an "individual" within section 3 of the Income-tax Act, 1922.	Relied on to support the proposition that statutory corporations/ bodies under special Acts fall within the term "individual" for tax purposes.
Kerala Financial Corporation v. WTO, [1971] 82 ITR 477 (FB)	High Court view that "individuals" is not restricted to human beings and includes corporations constituted under special Acts.	Applied to show precedent at High Court level for treating statutory corporations as assessable individuals under section 3.
Assam Financial Corporation v. CWT, [1974] 94 ITR 404	Similar High Court view that statutory corporations are embraced by "individual" and are taxable.	Used to reinforce that statutory bodies can be charged to wealth-tax as "individuals".
Coimbatore Club v. WTO, [1985] 153 ITR 172 (Madras HC)	Held that a club can be treated as an "individual" because it is a body of individuals forming a single collective unit owning property (even without profit motive).	Cited as authority for club-like bodies being within the expression "individual" where they constitute a unit owning property.
CWT v. Hyderabad Race Club, [1978] 115 ITR 453 (Andhra Pradesh HC)	Similar High Court view recognizing club-like entities as "individuals" for tax purposes.	Referred to as consistent authority at High Court level supporting taxation of collective bodies.
Royal Calcutta Turf Club v. WTO, [1984] 148 ITR 790 (Calcutta HC)	Held that a members' club is only an association of persons for social/recreational purposes and not a juristic entity; such a club was held not to be an "individual" under the Wealth-tax Act.	Cited and distinguished: court said Royal Calcutta Turf Club is distinguishable because the present assessee is a juristic person registered under the Trade Unions Act.
Indian National Shipowners Association v. A. B. Joshi, Sixth WTO, [1987] 175 ITR 582 (Bombay HC)	Bombay HC decisions where the assessees were not registered under the Trade Unions Act; cited by the assessee.	Held not to advance the assessee's case in the present opinion because those bodies lacked registration under the Trade Unions Act, a distinguishing factual point.
Orient Club v. CWT, [1982] 136 ITR 697 (Bombay HC)	Decision concerning club/association status for tax purposes.	Distinguished on the basis that the Orient Club was not registered under the Trade Unions Act, unlike the present assessee.
CIT v. Indian Sugar Mills Association, [1974] 97 ITR 486 (SC)	Consideration of objects of an association and whether they are of charitable nature; decisions on exemption analogues under income-tax law.	Used to show that some objects in similar associations were not charitable and that if non-charitable objects exist, exemption may not be available; influenced analysis of section 5(1)(i) claim.
Indian Sugar Mills Association v. CIT, [1984] 150 ITR 593	Re-examined entitlement to exemption where promotion/protection of trade-union interests was an object and held not primarily charitable.	Applied by the court to indicate that where objects include promotion/protection of trade interests, the association may not be entitled to exemption under provisions analogous to section 5(1)(i).
Yogiraj Charity Trust v. Commissioner of Income Tax, New Delhi, [1976] 103 ITR 777 (SC)	Principle that if one object of a trust deed is not charitable, exemption under the relevant provision is not available.	Relied on to conclude that where some objects are non-charitable and that finding is unchallenged, exemption under section 5(1)(i) cannot be claimed.
East India Industries (Madras) (P.) Ltd. v. CIT, [1967] 65 ITR 611	Earlier Supreme Court principle applied in Yogiraj Trust concerning the effect of non-charitable objects.	Referenced as underlying authority for denying exemption when non-charitable objects exist.
CIT v. Upper Ganges Sugar Mills Ltd., [1985] 154 ITR 308	Held that where an object included maintenance/grant to places of worship, the entire object was not charitable and relevant tax benefits were denied.	Referred to by the court as consistent with the approach distinguishing charitable and non-charitable purposes.
Navinchandra Mafatlal v. CIT, [1954] 26 ITR 758	Discussed as authority on wide interpretation of "income" in constitutional entry; cited in the context of expansive statutory interpretation.	Quoted by the court to illustrate judicial willingness to give broad meanings in tax contexts (as cited in the Supreme Court's reasoning in Banarsi Dass).
Seaford Court Estates Ltd. v. Asher, [1949] 2 All ER 155 (Lord Denning)	English authority quoted for the judicial role in construing statutes to find legislative intention and "iron out the creases".	Quoted to justify constructive judicial interpretation where statutory wording leads to difficulty; used to support interpretive approach rather than as binding precedent on the tax point.

Court's Reasoning and Analysis

The court's analysis proceeded in two main stages corresponding to the two referred questions.

1. Whether the assessee is assessable as an "individual" under section 3

The court began by identifying the charging provision: section 3 levies wealth-tax on "every individual, Hindu undivided family and company". The assessee was neither a natural individual, a Hindu undivided family nor a company.
The court observed that the assessee is a juristic person by virtue of registration under the Trade Unions Act and section 13 of that Act confers capacity to acquire and hold property.
Confronting the ordinary meaning of "individual" (a human being), the court relied on established Supreme Court authority (notably Banarsi Dass and Sodra Devi) which construed "individual" broadly in tax/constitutional contexts to include juristic persons and groups forming a unit.
The court surveyed High Court decisions (Kerala, Assam, Madras, Andhra Pradesh) which had held statutory corporations or clubs could fall within the term "individual" for wealth/income-tax purposes and noted contrary authority (Royal Calcutta Turf Club) but distinguished it on facts: the Turf Club was only an association of persons not a juristic entity, whereas the present assessee is a juristic person under the Trade Unions Act.
Because the Supreme Court's expansive construction of "individual" has become firmly embedded in tax law (Banarsi Dass), and because the present assessee is a juristic entity created under statute with property-holding capacity, the court concluded there was no error in treating the assessee as an "individual" under section 3.

2. Whether further investigation was necessary for the exemption claim under section 5(1)(i)

The court set out section 5(1)(i): exemption for property held under trust or other legal obligation for any public purpose of a charitable or religious nature in India.
The court examined the object clauses of the assessee (as placed before the Tribunal and in the paper book) and referenced prior Supreme Court and High Court decisions (Indian Sugar Mills Association cases) that had scrutinised similar objects and found some were not charitable.
The court recalled the settled principle (derived from Yogiraj Charity Trust and earlier cases) that if one of the objects is not charitable, exemption under the relevant provision is not available; in particular, where charitable and non-charitable objects are inseverable or the institution is free to use funds for non-charitable purposes to the exclusion of charitable ones, the overall character ceases to be charitable.
Given those principles and the fact that the Tribunal had directed specific factual enquiries (whether receipts were applied to objects, what activities were actually carried out, and how funds were utilised and in what proportion), the High Court found no perversity in the Tribunal's decision to remit the matter for further investigation and fresh adjudication by the Wealth-tax Officer.

The court therefore upheld the Tribunal's approach on both issues: (i) that the assessee could be assessed as an "individual" under section 3, and (ii) that further factual inquiry was necessary to determine entitlement to exemption under section 5(1)(i).

Holding and Implications

Holding: The court answered both referred questions in the affirmative and against the assessee. In the words of the opinion, the assessee is to be treated as an "individual" for the purposes of section 3, and the Tribunal was right to set aside the assessment and remit the matter for further factual inquiry on the claim under section 5(1)(i).

Implications

Direct effect on the parties: The Indian Jute Mills Association is properly assessable as an "individual" under section 3 and therefore can be charged to wealth-tax; its claim to exemption under section 5(1)(i) was not accepted on the papers and requires further enquiry as directed by the Tribunal (which the High Court approved).
Remittal: The matter is to proceed on the Wealth-tax Officer's file for fresh orders after enquiries into the application of receipts, actual activities, and manner/percentage of fund utilisation relative to dominant objectives — with opportunity to the assessee to be heard (as per Tribunal directions upheld by the High Court).
Precedential note: The court applied and relied upon established Supreme Court and High Court authorities construing "individual" broadly in tax statutes; the decision implements those principles rather than creating a novel rule. The court distinguished cases where the factual situation (e.g., lack of statutory registration) made a difference.

Concurring opinion: Shyamal Kumar Sen, J. agreed with the reasoning and result.

Show all summary ...

Ajit K. Sengupta, J.:— This reference under section 27(1) of the Wealth-tax Act, 1957, relating to the assessment years 1968–69, 1970–71 and 1971–72 involves the question of status of the assessee and its entitlement to exemption under section 5(1)(i) of the Act. The assessee is a body registered under the Trade Unions Act, 1926. The objects of the association are enumerated in rule 3 of Chapter I of the Rules and Regulations of the Association. The Wealth-tax Officer initiated the wealth-tax proceeding by issue of notices under section 17 of the Act in respect of the assessment years under reference. In response to the said notice, the assessee filed nil returns contending that it being an association of persons was not a taxable entity in terms of section 3 of the Act. It further contended that it could not be brought to tax in view of section 5(1)(i).

2. The Assessing Officer negatived both the contentions of the assessee and observed that the word “individual” in section 3 includes a group of persons who form a unit or association of persons relying on the decisions of the Supreme Court in CIT v. Sodra Devi, [1957] 32 ITR 615 and Banarsi Dass v. WTO, [1965] 56 ITR 224.

3. Aggrieved by the assessment order, the assessee preferred appeals before the Appellate Assistant Commissioner who confirmed the Assessing Officer's orders by his consolidated order dated December 5, 1981. The assessee preferred appeals against the said appeal orders to the Tribunal. The Tribunal held that “the assessee being ah association consisting of members having independent corporate status is a distinct personality and, consequently, is liable to be assessed as an individual in accordance with the provisions of section 3”. As to the assessee's claim of exemption under section 5(1)(i), “the Tribunal was of the opinion that the Wealth-tax Officer, it seems, did not examine the various objects of the association as enumerated in paragraph 3, Chapter 1 of the Rules with a view to ascertain, whether the primary or dominant objective of the association was to promote the advancement of jute industries so as to enable the country to earn valuable foreign exchange as has been argued by the assessee's learned counsel… and restored “the assessment on the Wealth-tax Officer's file with a direction to pass fresh orders after making necessary enquiries with reference to the assessee's books of account: (i) whether the entire receipts of the association have been applied towards implementation of the objects as stipulated in paragraph 3 of IV of the Rules; (ii) what were the actual activities of the association during the assessment years under appeal and which of the objects mentioned in Chapter 3 were actually carried out; and (iii) the manner in which the funds have been utilised and the percentage of expenditure in relation to the total expenditure of the association for implementing the main and dominant objectives of the assessee after giving necessary opportunity to the assessee of being heard”.

4. Against this background, the Tribunal has referred to us the following two questions:

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the association is liable to be assessed as an ‘individual’ in accordance with the provisions of section 3 of the Wealth-tax Act, 1957?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that further investigation of facts was necessary for determination of the association's claim for exemption from wealth-tax under section 5(1) of the Wealth-tax Act, 1957, and, in that view in setting aside the assessment?”

5. We have heard the rival contentions. Learned counsel, appearing for the parties, reiterated what they had submitted before the Tribunal.

6. The first question falling for determination is whether the Indian Jute Mills Association should be assessed in the status of an association of persons as claimed in the return.

7. According to the charging section 3 subject to the other provisions of the Act, wealth-tax is leviable on the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company. The assessee is neither an individual nor a Hindu undivided family nor a company. It is, therefore, contended on behalf of the assessee that it has no liability to tax.

8. The first point that has to be noted is that the assessee here is a juristic person and not a natural person. It is registered under the Trade Unions Act. Section 13 of the Trade Unions Act invests it with the juristic character with the power to acquire and hold property. The Wealth-tax Officer, in the case, has held that such a juristic person would be brought to the charge of wealth-tax as an individual, because under section 2 of the Act, the assessee means a person by whom wealth-tax on any sum of money is payable under the Act. Section 3 is the charging section. It says that the tax is payable by every individual, Hindu undivided family and a company. Now, the assessee here is not a company which means a body corporate incorporated under the Companies Act, 1956, nor is it a Hindu undivided family. It has to be regarded as an individual to be brought within the charge of tax. If it is not an individual, there is no charge of tax on its wealth.

9. The difficulty for the Revenue, in the case, is that the word “individual” in the common acceptance means a human being. Therefore, a juristic person like an association registered under the Trade Unions Act may on the first blush seem to be at odds with the common understanding of the word “individual”.

10. But, it is now a settled principle that the word “individual” in law may not necessarily imply a human being. A juristic person like the assessee in the instant case may also be treated as an individual. The assessee's contention is that when the ordinary connotation of the word “individual” does not encompass a body or an association of persons, it is improper that the word should be overstrained to yield a result helpful to fasten a liability of tax on to a juristic person.

11. But we have to refer here to the decision of the Supreme Court in Banarsi Dass' case, [1965] 56 ITR 224, wherein the Supreme Court interpreted the word “individual” in an expansive manner to cover, apart from the individuals, juristic persons. It is not for mere forensic novelty that the Supreme Court had to stretch the word “individual”. A difficulty arose in Banarsi Dass' case, [1965] 56 ITR 224 as the taxation on the wealth of the Hindu undivided family was challenged on grounds of want of constitutional authority to tax the wealth of such family. It was contended before the Supreme Court, that there is no reference in entry 86 of List I of the Seventh Schedule of the Constitution to Hindu undivided family as the subject of taxation in respect of its wealth. There is only reference to individuals and companies. Entry 86 of List I of the Seventh Schedule which is the source of authority for the levy reads as follows:

“86. Taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies; taxes on the capital of companies.”

12. That being the case the inclusion of a Hindu undivided family, in section 3 is ultra vires entry 86 of List I of Schedule VII of the Constitution. It is in that context that the Supreme Court decided that the word “individual” in the said entry has a broad sweep and shall include a group of individuals including a Hindu undivided family. Therefore, the vires of section 3 is beyond question. The Supreme Court doubtless gave the entry a connotation larger than its common meaning. Gajendragadkar C.J observed, in this connection, as follows (page 231):

“The tax legislation may, for convenience or other valid reasons, have made a distinction between individuals and a Hindu undivided families; but it would not be legitimate to suggest that the word “individuals” occurring in an organic document like the Constitution must necessarily receive the same construction. Take, for instance, the traditional concept of income as recognised by the tax law. It has been held by this court in Navinchandra Mafatlal v. CIT, [1954] 26 ITR 758, that the said traditional concept of income cannot introduce considerations of restriction or limitation in interpreting the word ‘income’ in entry 54 in List I of the Seventh Schedule to the Government of India Act, 1935, which corresponds to entry 82 in List I of the Seventh Schedule to the Constitution. In that case, the validity of the tax levied on capital gains was impeached on the ground that capital gains cannot be regarded as income, and so entry 54 did not justify the levy of the tax on capital gains. In rejecting this contention, this court held that the word ‘income’ occurring in entry 54 must receive the widest interpretation and could, therefore, be interpreted to include a capital gain.”

13. Even earlier under the Income-tax Act, 1961, there arose the question whether the individual could imply an artificial person. In that context, the word “individual” fell to be considered by the Supreme Court.

14. The Supreme Court in Banarsi Doss' case, [1965] 56 ITR 224 thus observed on the said earlier decision, viz., Sodra Devi's case, [1957] 32 ITR 615 (SC) (page 233):

“In CIT v. Sodra Devi and Damayanii Sahni v. CIT, [1957] 32 ITR 615, the question which arose for the decision of this court had relation to the construction of section 16(3) of the Indian Income-tax Act, 1922. That subsection provides that in computing the total income of any individual for the purpose of assessment, there shall be included the items specified in clauses (a) and (b). What is the denotation of the word ‘individual’ was one of the points which had to be considered in that case. According to the majority decision, though the word ‘individual’ is narrower than the word ‘assessee’, it does not mean only a human being, but is wide enough to include a group of persons forming a unit. ‘It has been held’, observed Bhagwati J., who spoke for the majority, ‘that the word “individual” includes a corporation created by a statute, e.g, a university or a bar council, or the trustees of a baronetcy trust incorporated by a Baronetcy Act. It would also include a minor or a person of unsound mind’. We are referring to this case only for the purpose of showing that the word ‘individual’ was interpreted by this court as including a group of persons forming a unit.”

15. These early decisions of the Supreme Court indicate that there was some amount of ambiguity with regard to the meaning of the expression “individuals” in its use in entry 86 of List I of the Seventh Schedule to the Constitution and its use and setting in section 3 of the Wealth-tax Act. This difficulty had to be resolved. There is nothing exceptional in the judiciary taking upon itself the duty of resolving such dilemma by use of astute forensic skill. In this connection, the memorable observations of learned Lord Denning in Seaford Court Estates Ltd. v. Asher, [1949] 2 All ER 155 are worth quoting (page 164): “It would certainly save the judge's trouble if Acts of Parliament were drafted with divine prescience and perfect clarity. In the absence of it, when a defect appears, a judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament… A judge must not alter the material of which the Act is woven, but he can and should iron out the creases

16. Anyway, the decision of the Supreme Court in Banarsi Dass' case, [1965] 56 ITR 224 has become a landmark and part of the tax law itself. A similar view has been taken by the Supreme Court in a few more other decisions, for example, in Andhi'a Pradesh State Road Transport, Corporation v. ITO, [1964] 52 ITR 524. It has been held that a corporation constituted under a special Act is an individual within the meaning of section 3 of the Indian Income-tax Act, 1922, and as such is taxable. Eventually, many High Courts have held that the statutory corporation, which is not a company, is embraced by the word “individual” and, thus, can be the subject of taxation in terms of section 3 of the Wealth-tax Act. This view has been taken by the Kerala High Court in Kerala Financial Corporation v. WTO, [1971] 82 ITR 477 [FB]. The same has been the view taken by the Gauhati High Court in Assam Financial Corporation v. CWT, [1974] 94 ITR 404. In these decisions, it has been held that the import of the word “individuals” is not restricted to human beings and can include a corporation constituted under a Central or Provincial or State Act.

17. Reference may also be made to the decision of the Madras High Court in Coimbatore Club v. WTO, [1985] 153 ITR 172. There, the Madras High Court held that a club is to be treated as an “individual” because the word “individual” in section 3 includes within its meaning plurality of individuals or body of individuals forming a single collective unit knit together by ties of common and joint interest without profit motive but owning property. A similar view has also been taken by the Andhra Pradesh High Court in CWT v. Hyderabad Race Club, [1978] 115 ITR 453.

18. This court in Royal Calcutta Turf Club v. WTO, [1984] 148 ITR 790 (Cal) has, however, held that a members’ club is not a juristic entity but is only an association of persons who come together for social intercourse and recreation but not absolutely for gain and as such a members’ club being an association of persons would not be an individual entity for the purpose of the Wealth-tax Act. But that case is distinguishable from the assessee-association. The assessee here is an institution, a Jute Mills Association, and is a juristic person by virtue of being registered under the Trade Unions Act. It, therefore, passes the tests laid down by the Kerala and the Assam High Courts. Reliance on behalf of the assessee on the decisions of the Bombay High Court in Indian National Shipowners Association v. A.B Joshi, Sixth WTO, [1987] 175 ITR 582 and Orient Club v. CWT, [1982] 136 ITR 697, does not advance the assessee's case as in those cases the assessees were not registered under the Trade Unions Act. That makes a radical difference to the entire case.

19. In Banarsi Dass' case, [1965] 56 ITR 224, the Supreme Court interpreted the word “individual” in entry 86 of List I of the Seventh Schedule of the Constitution which reads:

“Taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies; taxes on the capital of companies.”

20. According to the said interpretation, the word “individual” may include a group of individuals.

21. In the result, there is no error in treating the assessee-association as an individual within the meaning of the word “occurring” in section 3.

22. The second point for consideration is whether the Indian Jute Mills Association is entitled to exemption under section 5(1). Section 5(1)(i) is as under:

“Exemptions in respect of certain assets.— (1) Subject to the provisions of sub-section (1A), wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee,—

(i) any property held by him under trust or other legal obligation for any public purpose of a charitable or religious nature in India.”

23. The object clauses of the assessee are contained at page 38 of the paper book. All the objects along with the provisions of the Trade Unions Act as quoted in CIT v. Indian Sugar Mills Association, [1974] 97 ITR 486 by the Supreme Court will go to indicate that some of the objects are not of charitable nature. The Supreme Court and this court in Indian Sugar Mills Associalimi's case [1974] 97 ITR 486 and Indian Sugar Mills Association v. CIT, [1984] 150 ITR 593, have reconsidered the question of exemption under section 11(1) of the Income-tax Act, and under section 4(3)(i) of the Indian Income-tax Act, 1922, which are almost in pari materia to section 5(1)(i) of the Wealth-tax Act. In Indian Sugar Mills Association's case, [1984] 150 ITR 593, it has been held that one of the objects was promotion and protection of trade union interest and it was held that the association was not formed primarily for the purpose of promoting good relationship between employees and employees or between employers and workmen (see page 599 of the Reports). It is settled law that if some of the objects are not charitable, the assessee cannot claim exemption. Reference is made to the decision of the Supreme Court in the case of Yogiraj Charity Trust v. Commissioner Of Income Tax, New Delhi, [1976] 103 ITR 777. It has been held that if one of the objects of the trust deed is not of charitable nature, the exemption under section 4(3)(i) of the Indian Income-tax Act, corresponding: to section 11 of the Income-tax Act, is not available. In that case, the Supreme Court applied the principle laid down by its earlier decision in East India Industries (Madras) (P.) Ltd. v. CIT, [1967] 65 ITR 611. In this case, the finding of the Tribunal was that all objects were not of charitable nature, which has not been challenged and as such the assessee cannot claim exemption under section 5(1)(i). Reliance is also sought on the decision of this court in the case of CIT v. Upper Ganges Sugar Mills Ltd., [1985] 154 ITR 308. In that case one of the objects of the trust was to maintain and grant aid to public places of worship and on that ground it was held that the whole object is not a charitable purpose and the assessee was not entitled to claim the benefit of section 80G of the Income-tax Act. Distinction has to be made between charitable and non-charitable purposes, as has been done by the Supreme Court in the case of Indian Sugar Mills Association, [1974] 97 ITR 486. The same view is applicable to the instant case.

24. Where charitable and non-charitable objects are inseverable in the sense that the charitable trust or institution is free to spend income or to hold the property for the benefit of non-charitable objects to the exclusion of the charitable objects if it so chooses, the character of the objects of the institution in such event ceases to be charitable. We see no perversity in the Tribunal's order giving directions for further investigation as to the assessee's claim for entitlement to exemption under section 5(1)(i). The Tribunal has merely shown anxiety to see that justice is done to the parties by setting aside the matter for fresh adjudication.

25. For the reasons aforesaid, we answer both the questions in the affirmative and against the assessee.

Shyamal Kumar Sen, J.:— I agree.