Judgment :- 1. The Income-tax Appellate Tribunal, Cochin Bench has referred to us the following question in the Income-tax References 35 & 36 of 1974 by a common order dated 5 41974: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the assessee-company was not exempt under S.11 for the assessment years 1969-70 and 1970-71?" 2. The assessee is a limited company incorporated under the Companies Act, 1956. The assessment in respect of which the reference application has arisen is for the period 1969-70 and 1970-71, the relevant accounting years having ended on 3112 1968 and 3112'69. The company had been assessed to income-tax up till 1968-69 and no dispute had arisen in respect of the earlier assessments on the point which is raised in the present reference cases. 3. Clause.3 of the Memorandum of Association of the company refers to various objects of the company. The relevant provisions of Clause.3 are quoted below. "(c) To conduct Chitties and Kuries of all kinds open only to members as Foreman and or as Subscriber or any other deposit or other schemes beneficial to and open only to the members of the Company. X X X X X 0) To utilise the whole or any portion of the net profits of the Company for _ any charitable, religious, scientific, educational or public or other similar purposes as the Company shall from time to time deem fit." 4. Sub-clause (c) shows that one of the objects of the company is to conduct chitties and kuries. Sub-clause 0) indicates that the whole or any portion of the net profits of the company may be utilised for any charitable, religious, scientific, educational or public or other similar purposes as the company shall from time to time deem fit. 5. Regulation.101 of the Articles of Association of the company had originally provided as follows: "The company in general meeting may declare dividends, but no dividends shall exceed the amount recommended by the Directors." This regulation was in force when the company was assessed to income-tax up till 1968-69. On 27 61968 this regulation was altered by means of a special resolution to read as follows: "The company shall not pay any dividend or bonus to its members and the entire business undertakings of the company shall be. On 27 61968 this regulation was altered by means of a special resolution to read as follows: "The company shall not pay any dividend or bonus to its members and the entire business undertakings of the company shall be. held by the company under trust for the purposes specified in clause 0) of the objects clause in the Memorandum of Association of the Company." 6.. As a result of this alteration is the Articles of Association, the company claimed that it was not assessable to income-tax for the assessment years 1969-70 and 1970-71 relating to the accounting years ending on 31 121968 and 31-12-1969. The company contended before the Income-tax Officer that the business of the company was held for a charitable purpose and was consequently entitled to the exemption under S.11 of the Income-tax Act, 1961. The claim of the company for exemption was rejected by the Income-tax Officer on the ground that it was carrying on a business which did not come within the definition of 'charitable purpose' under S.2 (15) of the Act and therefore S.11 would be of no avail to the company. The Officer therefore rejected the claim for exemption under S.11 and determined the company's income for the year 1969-70 at Rs. 44, 925/- and for the year 1970-71 at Rs. 22,950/-. 7. However, on appeal to the Appellate Assistant Commissioner, the company's claim for exemption was accepted. He held that the objects of the company were charitable and therefore the business in kuries would not deny the company the exemption under S.11. 8. On an appeal by the department to the Income-tax Appellate Tribunal, Cochin Bench, the Tribunal upheld the order of the Income-tax Officer and found that the company was not entitled to the exemption under S.11. The Tribunal has made a consolidated order in I. T. A. Nos. 293 and 294/ Cochin/ 1971-72, and it is from this order that the Income-tax References have been made to us at the instance of the assessee¬company. 9. S.2 (15) of the Act gives the following definition: "'charitable purpose' includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility not invplving the carrying on of any activity for profit;" S.11 of the Act exempts from income-tax the income derived from property held under trust wholly for charitable or religious purposes. The question that arises in the present cases is therefore whether the income derived by the company in respect of the relevant accounting years can be considered to be income derived from property held under trust wholly for charitable purposes. It is contended for the assessee that in view of the amended Regulation.101 the company is entitled to the exemption under S.11. It is further contended that the objects mentioned in sub-clause (c) and other provisions of the Memorandum of Association are only incidental powers assumed by the company and its main object is what is mentioned under sub-clause 0) of Clause.3, namely to utilise the whole or any portion of its profit for any charitable, religious, scientific, educational or public or other similar purposes as the company shall from time to time deem fit. Learned counsel for the assessee-company therefore contends that there is no profit motive in respect of the business carried on by the company and that the entire income from the business was to be utilised for purposes coming within the definition of S.2(15). 10. A Full Bench of our High Court has had occasion to consider the scope of S.2(15) and 11 of the Act in Dharmaposhana Co. v. Commr of I. T. (1974 KLT 585). This decision contains a detailed discussion of the scope of the Sections. In Para.7 and 8, this Court observed as follows: "No distinction had been made by the Indian Income-tax Act, 1922 between the well-known charities of relief to the poor, education and medical relief on the one hand and charities resulting from the advancement of any other object of general public utility, on the other. But such a distinction has been introduced by (he definition of the term "charitable purpose" in S.2(15) of the Act though the definition is an inclusive one. The restriction is that the advancement of objects of general public utility should not involve the carrying on of any activity for profit. If it involved any such activity the charity will fall outside the definition "charitable purpose" in S.2(15). This change has certainly altered the law and whenever the advancement of an object of general public utility involved an activity for profit that object will cease to be a charitable purpose. So, in such cases the income from the activity for profit cannot be exempted from tax under S.11 of the Act. This change has certainly altered the law and whenever the advancement of an object of general public utility involved an activity for profit that object will cease to be a charitable purpose. So, in such cases the income from the activity for profit cannot be exempted from tax under S.11 of the Act. So understood, the last part of S.2(15) would mean that when the advancement of an object of general public utility is linked or connected with an activity for profit, that object would cease t6 be a "charitable purpose". This is how, we think, that the latter part of the section must be interpreted. Having reached the above conclusion, we must now turn to S.11 of the Act. S.11 (1)(a) speaks of income from property held wholly for charitable purposes and S.11 (1)(b) of property held under trust in part only for charitable purposes. Different considerations arise when one or the other of the clauses of sub-section (1) comes into operation. Income actually applied for charitable purposes and which have been finally set apart (S. 11 (2) ) are exempt under S.11 (1) (b) if the property is held under trust in part only. But in order that the exemption under S.11 (1) (a) might apply the property held under trust must be so held wholly for a charitable purpose. And in understanding what is meant by charitable purpose, we have naturally to look at the definition in S.2 (15) of the Act though it is only an inclusive definition. When the charitable purpose is one that falls under the general clause of charities, namely advancement of objects of general public utility, if that object is linked or connected with an activity for profit, it ceases to be a charitable purpose for the purpose of S.11 and so the exemption under S.11 (a) as well as (b) might cease to have application. But the difficulty arises when the objects for which the property is held under trust comprise charitable purposes that fall within the definition and those that fall outside the definition. Advancement of an object of general public utility when it is linked with an activity for profit will be outside S.2 (15) but it need not necessarily cease to be a charitable purpose in the general sense of the word "charitable purpose". Advancement of an object of general public utility when it is linked with an activity for profit will be outside S.2 (15) but it need not necessarily cease to be a charitable purpose in the general sense of the word "charitable purpose". But this is not enough in order to get the exemption provided by the Act and if there is no restriction in the case of a company by the Memorandum of Association and or the Articles of Association enjoining that any specific part or quantum of the income from the property held under trust must be applied exclusively to specific charitable purposes the trust will cease to be one for a charitable purpose ". 11. The assessee-company has under Clause.3 of the Memorandum of Association the power to utilise the whole or any portion of its net profits for any charitable, religious, scientific, educational or public or other similar purposes as the company may from time to time choose to invest. The expression "any charitable" or "similar purposes" referred to in that clause may take in charities or objects going beyond the ambit of S.2 (15) of the Act. As pointed out by the Full Bench, a charitable purpose in the general sense of the term might fall outside the definition of "charitable purpose" in S.2 (15) if it involved the carrying on of any activity for profit. Clause.3 indicates that, apart from the well known chanties like relief to the poor or education, the company may utilise its net profits for the advancement of objects of general public utility. Such charities further involve the carrying on of a business and are thus clearly outside the definition in S.2 (15). Apart from this, Clause.3 envisages activities other than charities such as matters of public. interest. There is no prohibition in the Memorandum or Articles of Association of the company against utilisation of its net profits for any purposes other than those falling under charitable purposes mentioned in S.2 (15). This being a very wide power assumed by the company under Clause.3 of the Memorandum of Association, we hold that, in the light of the. Full Bench decision cited above, the company is not entitled to claim the exemption under S.11 of the Act. A Division Bench decision of our High Court in Commissioner of I. T. v. Dharmodayam Co. This being a very wide power assumed by the company under Clause.3 of the Memorandum of Association, we hold that, in the light of the. Full Bench decision cited above, the company is not entitled to claim the exemption under S.11 of the Act. A Division Bench decision of our High Court in Commissioner of I. T. v. Dharmodayam Co. (1973 KLT 504) was brought to our notice by the learned counsel for the assessee-company. It was held in this case that the business of kuries was not a purpose or object of the company, but it was only a property of the company. It was therefore held that the purpose of the institution was to promote charity and it was therefore entitled to exemption under S.11, notwithstanding the kuries which were conducted by the company. This decision of the Division Bench on this point is no longer good law in view of the Full Bench decision reported in Dharmaposhana Co. v. Commr of I. T. (1974 KLT 585). In the light of the above, we answer the question referred to us in the affirmative, that is, in favour of the department and against the assessee. We direct the parties to bear their respective costs. A copy of this judgment under the seal of the High Court and with the signature of the Registrar will be sent to the Income-tax Appellate Tribunal, Cochin Bench.