JUDGMENT V. Khalid, J. 1. The Income-tax Appellate Tribunal, Cochin Bench, has referred the following question to this court for our opinion: Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the income of the assessed is exempt from tax under section 11 of the Income-tax Act, 1961, for the assessment years 1968-69 and 1969-70. 2. The assessee, a Chamber of Commerce, is a Company registered under the Indian Companies Act, 1956. The assessee has been permitted to omit the word 'limited' from its name. Its source of income is from property, apart from subscriptions and donations. The assessee claimed exemption under section 11 (1) (a) of the Income-tax Act, 1961, for short the Act, on the ground that its income was derived from property held under trust wholly for charitable purposes. The assessee returned, for the assessment year 1968-69, an income of Rs. 4,770 under the head 'property' and Rs. 178 under the head 'business' and for the year 1969-70, an income of Rs. 8,820 under the head 'property' and Rs. 227 under the head 'business'. The Income-tax Officer computed the income for the year 1968-69 at Rs. 4,950 and for the year 1969-70 at Rs. 9,050. He rejected the claim for exemption on the ground that the assessee carried on business activity for profit and it earned income with profit motive. 3. In Appeal, the Appellate Assistant Commissioner upheld the contention of the assessee that the property income derived by it was not liable to tax under section 11 (1) (a) of the Act on the ground that it was derived from property held under trust wholly for charitable purposes and the income under business was also exempt since it resulted incidental to promotion of the main object of the assessee. 4. The matter was taken before the Income-tax Appellate Tribunal, Cochin Bench by the Department and the Tribunal upheld the exemption claimed. Thereupon, the Department moved the Appellate Tribunal under section 256 (1) of the Income-tax Act, to refer the question extracted in para 1 above, for the opinion of this court and the Tribunal referred the above question for this court's opinion. 5. Section. 11 of the Income-tax Act reads as follows: "11 (1) Subject, to the provisions' of sections 60 to 63, the following income shall not. 5. Section. 11 of the Income-tax Act reads as follows: "11 (1) Subject, to the provisions' of sections 60 to 63, the following income shall not. be included in the total income of the previous year of the person in receipt of the income- (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and where any such income is accumulated for application to such purposes in India, to the extent to which the income so accumulated is not in excess of twenty-five per cent of the income from the property or rupees ten thousand, whichever is higher. * * * * * � Charitable purpose has been defined in section 2 (15) of the Act as hereunder: " 'Charitable' purpose includes relief, of the pour, education, medical relief, and the advancement of any other object of general public utility not involving the carrying on of any activity for profit." We are concerned herewith the last clause in the definition, namely, 'the advancement of any other object of general public utility not involving the carrying on of any activity for profit'. The Memorandum of Association of the assessee contains, among other things, the following clause which is the subject-matter of controversy between the Department and the assessee. "3 (i) To acquire by purchase, taking on lease or otherwise, lands or buildings and all other property, moveable or immoveable, which the Chamber may, from time to time think proper to acquire." Clause (5) of the Memorandum of Association of the assessee provides that the income and property of the Chamber whensoever derived shall be applied solely for the promotion of the objects as set forth in the Memorandum of Association and that no portion thereof shall be paid or transferred directly or indirectly by way of dividend, bonus or otherwise to persons, who at any time are or have been members of the Chamber or to any of them or. to any person claiming through any one or more of them. 6. It cannot be disputed that the object of the assessee is to promote trade' and the income that the Chamber receives will be applied solely for the promotion of the said object. to any person claiming through any one or more of them. 6. It cannot be disputed that the object of the assessee is to promote trade' and the income that the Chamber receives will be applied solely for the promotion of the said object. Advancement for promotion of trade, commerce and industry leads to economic prosperity, which enures to the benefit of the entire community and hence the object was of general public utility. The only question that falls to be considered is whether the Chamber engages itself in any activity with profit motive. The, question before us must be considered in the context of the expression 'involving' occurring in section 2 (15). To' take the assessee out of the scope of the definition contained in section 2(15), we must have material to find that the activities of the assessee involved carrying on of any activity for profit. If incidental to the advancement of the object of general public utility, some income comes into the hands of the assessee, it will not be proper to say that the object of the assessee involves carrying on of any activity for profit. 7. The identical question came up for consideration before this court in two Division Bench cases; one of us being a party in both, and also in a Full Bench decision to which also one of us was a party. The law is well-settled and a reference to these decisions will be sufficient for the disposal of this reference. 8. In Commissioner of Income-tax, Kerala v. Indian Chamber of Commerce 1971 (80) I.T.R. 645 this court was considering the case of the Indian Chamber of Commerce. In that case, the assessee had been issuing weighment certificates and also conducting survey of the goods to be exported and for this they charged a fee from those who required the certificates both from members of the Chamber as well as from non-members who approached the Chamber for such certificates. Exemption was refused by the Income-tax Officer holding that the purpose of the Association cannot be held to be 'charitable', within the meaning of the expression as defined in section 2 (15) of the Act. The assessee succeeded in the appeal before the Appellate Assistant Commissioner. The Tribunal also upheld the exemption claimed. Exemption was refused by the Income-tax Officer holding that the purpose of the Association cannot be held to be 'charitable', within the meaning of the expression as defined in section 2 (15) of the Act. The assessee succeeded in the appeal before the Appellate Assistant Commissioner. The Tribunal also upheld the exemption claimed. Before this court it was contended that the issuing of certificate for weighment and survey of the goods, involved an activity for profit. Stress was laid on the words "object not involving the carrying on, of activity for profit". This court repelling the contention observed as follows: "A plain reading of the section makes it clear that in order to take an object of general public utility outside the scope of the definition, that object must involve carrying on of any activity for profit. 'Involve' means comprise or imply and it, therefore, follows that the object must imply the carrying on of an activity for profit. It is not sufficient, we think, if there is some activity carried on which results in profit. There must be an activity in the form of business because the activity must be for profit and that activity for profit must be involved in the objects of general public utility. This last element we are unable to find in this case. This question as such has not arisen in any of the numerous decisions that have been cited before us. Since even in relation to the business activity a trust can be created, the question in these cases was only whether the activity was for private profit or whether the activity was in furtherance of the objects of the trust. We venture to think that even when an activity is in furtherance of the objects of a trust, and even if such activity results in profits, the definition will not be attracted unless the objects involve carrying on an activity for profit. The objects of this Association do not involve carrying on of any activity for profit. What has been done by the Chamber has not been suggested to be not in furtherance of the objects of the Chamber. The objects of this Association do not involve carrying on of any activity for profit. What has been done by the Chamber has not been suggested to be not in furtherance of the objects of the Chamber. If in carrying on , such objects there is resulting excess of income over expenditure, that cannot be brought in as income liable to tax under the Act by virtue of section 11 (1) (a) of the Act." The case on hand, according to us, falls squarely within the facts of the above case. 9. Against the same assessee, the Department had come before this court in I. T. R. No. 25 of 1972, with the identical plea for the assessment year 1967-68 and this court answered the reference in favour of the assessee. 10. We may incidentally refer to the Full Bench decision of this court where an identical question arose. We say identical because the question involved was the same, although on the facts of that case the Full Bench answered the reference against the assessee, on a construction of the objects of the trust in that case as disclosed in the Articles of Association. That decision is reported in Dharmaposhana Co, v. Commissioner of Income-tax, Kerala 1974 K.L.T. 585 (F.B.) The relevant object of the Memorandum of Association of that Company read as follows: "3. The objects of the company are: (a) To raise funds by conducting kuries with company as foreman, receiving donations and subscriptions, by lending money on interest and by such other means as the company deem fit. (b) To do the needful for the promotion of charity, education, industries etc., and public good. (c) For carrying on the business of the company and for the advancement of the purpose mentioned above in so far as is appropriate, to construct buildings or to purchase or take on lease or for hire moveable or immoveable properties. (d) To encourage others to form other institutions with the purpose of acting in accordance with the objects of the company. (e) To do all such things as are conducive to the fulfilment of the above objects. (d) To encourage others to form other institutions with the purpose of acting in accordance with the objects of the company. (e) To do all such things as are conducive to the fulfilment of the above objects. (f) To lend money on interest to one or more solvent persons individually or severally on the security of ornaments, landed properties or other forms of security fixed by the Directors and to borrow money to meet the need of the company and to run other industries." Article 58 of the Articles of Association, which is also relevant, is extracted below: "The profit of the company shall not be divided among the members. The profit left after meeting the expenses of the company will be utilised for promoting education, industry, social welfare, and such other purposes of common good as are resolved by the general meeting." On a consideration of the objects of the Association, the, Full Bench, one of us speaking for the Bench, considered the real meaning of the word 'involving' and observed thus: "If the charitable purpose is one of general public utility and a business is carried on which is not wrapped in with the object of general public utility or entwined or entangled with it, the latter part of section 2 (15) will not apply and so the income from the business will have to be exempted. But in case the activities in connection will the advancement of an object of general public utility are also the activities for profit the income from the properties for profit will not be exempted. Thus if a Chamber of Commerce for the purpose of educating its members in trade and commerce conducted a school on business lines the object of running the school would be charitable-advancement of industry and commerce-but the school being run as an activity for profit the income would not be exempt. On the other hand, if the same school was financed by conducting a separate business which cannot be said to be involved with the school in the sense of 'wrapped in' the school activity the latter part of section 2 (15) will not be attracted and the income from the business may be exempt if the business is held under trust for the charitable purpose of advancing trade and commerce. We do not think that the Legislature meant to have any such patently anomalous result. We do not think that the Legislature meant to have any such patently anomalous result. It is a well-established principle that we must understand a legislative enactment as being reasonable. We have therefore to assign a meaning to the word 'not involving' which would be appropriate in the context and fortunately the word 'involve' has so many different shades of meanings that it is unnecessary to strain to find such a meaning. So understood, the last part of section 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 to be a charitable purpose' " These observations, we think, bring out the difference between an ostensible charitable trust and a real charitable trust. There may be occasions when an Association with cleverly worded phraseology may try to evade taxation by creating a prima facie impression that the 'Trust' is engaged in activities of general public utility not involving in carrying on of any activity for profit. It will be the function of this court to scrutinise the objects carefully and to find out whether the activities of the trust involves activities of making any profit or do not involve such an activity. In she Full Bench decision referred to above, this court found that the trust involved in activities of lending money on interest on the security of gold ornaments, landed property and other forms of security as fixed by the Directors. After considering the various clauses in the Articles of Association of the company, it was held that the main object of the company was in conducting kuries and lending money on interest which are both business activities. It was on such construction that the exemption was declined in that case. 11. The test to be applied is to see whether there is an activity in the form of business for profit and such activity for profit is involved in the object of general public utility. If so exemption cannot be granted. In other words, if in connection with the advancement of the object of general public utility, the Trust carries on activities for profit also, then such profit will not be exempt from tax. If so exemption cannot be granted. In other words, if in connection with the advancement of the object of general public utility, the Trust carries on activities for profit also, then such profit will not be exempt from tax. But if, incidental to the object of general public utility, the Trust comes by some profit, which is not independent of this object of the activity of the Trust, not wrapped in, entwined or entangled with it; the exemption will have to be granted. 12. In the case before us, the principal object of the Chamber is to promote trade and do everything with that aim in view. Advancement or promotion of trade, commerce and industry is for the benefit of the entire community, and such an object must be held to be an object of general public utility. We are satisfied that the Memorandum of Association do not contain any clauses from which it could be concluded that the assessee carries on an activity for profit. The assessee is therefore entitled to the exemption claimed and the Appellate Tribunal was right in extending the exemption to the assessee. 13. In the result, we answer the question referred to us in the affirmative, that is, in favour of the assessee and against the department. There will be no order as to costs. A copy of this judgment under the seal of the High Court and the signature of the Registrar will be forwarded to the Income-tax Appellate Tribunal. Cochin Bench.