PUNE BENCH SOLAPUR DISTRICT WEALTH-TAX REVENUE v. OFFICER SUBORDINATE WELFARE FUND February 7, 1987 JUDGMENT ORDER: V. S. GAITONDE, A. M.- These appeals have been filed by Revenue against order of AAC, Solapur Range, Solapur, dt. 13th Feb., 1984 for asst. yrs. 1971-72 to 1978-79 inclusive, whereby AAC held that assessee is not liable to wealth tax in view of s. 5(1) (i) of WT Act. On behalf of Revenue, appellant, Shri Sathe explained basic facts. fund came into existence on strength of resolution of government, Revenue Department, which formed rules and regulations governing Funds regarding contributors. beneficiaries and objects vide rules dt. 28th Nov., 1953 (pages 1 and 2 of paper books). There was doubtless some correspondence and adjudication before Charity Commissioner. This decision was, however reversed by judgment of Dy. Charity CIT dt 3rd Feb., 1979 (pages 3 to 10 of compilation). view was upheld by Charity commissioner who framed certain rules (pages 11 to 29 of paper book). These rules are however not relevant for purposes of these appeals. As far as factual position of valuation date is concerned, Shri Sathe contended that beneficiaries of fund do not form cross section of public identifiable with and impersonal or public character. beneficiaries are employees of particular group of Co-operative Department and posited within Solapur to be beneficiary moment he is transferred out exactly as person become potential beneficiary as soon as he joins is Solapur District in Revenue Department as subordinate officer. There are of course contributions made by persons who are not beneficiaries, but we are not considering this aspect. point to be seen in this case is extent to which Supreme Court judgment in Ahmedabad Rana Caste Association vs. CIT (1971) 82 ITR 704 (SC) could be considered applicable here. This judgment is doubtless authority for proposition that intention can be to benefit section of public as distinguished from specified individuals. section of this community to be benefited must be identifiable by common quality of public or imprisons nature. For applying this test one has to see how beneficiaries have been described In Oppenheim vs. Tobacco Securities Trust Co. Ltd. (1951) A. C. 297: (1951) All E. R. 31 (H. L.) referred to in (1971) 82 ITR 704 (SC) it was held that employees of under taking did not answer description of public. Shri Sather placed reliance on Zenith Tin Works Charitable Trust. vs. CIT (1974) 102 ITR 119 (Bom), page 121 wherein it was held that such institution not charitable. Shri Sathe admitted that in CIT vs. Andhra Pradesh Police Welfare Society (1983) 148 ITR 287 (AP) it is held that employees of police Department constitute welfare section of public and that such welfare funds are entitled to exemption. Shri Sathe however. contended that certain aspects have not been considered that certain aspects have not been considered in Andhra Pradesh High Court judgment. Firstly relying on Merchantile Bank of India (Agency) Ltd., in re (1942) 10 ITR 512 (AP) Shri Sathe contended that Trust having floating body of employees is violative of rules against perpetuity and hence void. We do not, however, propose to examine issue further because if trust is void no further question would arise here and there might be resultant Trust in favour of settler with which we are not concerned. Shri Sathe referred to J. K. Hosiery Factory vs. CIT U. P. (1970) 81 ITR 557 (All) where at page 575 it has been held that workmen in general is not denefinite class of public. Accordingly Shri Sathe submitted that assessee does not fulfil conditions of s. 5 (1) (i) . One other aspect sought to be brought out by Shri Sathe is that it would be unreasonable and discriminatory classification to distinguish Government and non-government employees. It has been held in S. K. Dutta, ITO vs. Lawrence Singh Ingty (1968) 68 ITR 272 (SC) that such classification is unreasonable and offends Art. 14 of Constitution. Therefore ratio of Oppenhiem s case would be applicable and ration of (1971) 82 ITR 704 (SC) would not be applicable to facts of case. Referring to Deputy Charity Commissioner s order dt. 3rd Feb., 1979, Shri Sathe contended that this deals with latter events regarding new items added to widen scope of objects. He further contended that Rules of 1953 make provision for adding further objects. Such objects may or may not be charitable. Besides they may narrow scope of existing objects also. items to be added are only occasions for specifying objects and not for altering class of beneficiaries as beneficiary ceases to be one on transfer out of Solapur, in ultimate analysis, it means benefits extending to specific individuals and therefore not cross section of public. In reply Shri Doshi pointed out that issue is fully covered by Andhra Pradesh High Court judgment (1983) 148 ITR 257 (AP). In particular he invited out attention to page 295. He also referred to Tribunal decision in case of Armed Forces Fund, Taxation, Vol. 38 s. 6, page 95. He further referred to CIT vs. Bengal Mills & Steamers Presbyterian Association (1981) 24 CTR (Cal) 318: (1981) 140 ITR 586 (Cal). That was case of society floated with object of supplying and maintaining institutions and diffusion of useful knowledge and maintain ordinances of religion among European establishments in Bengal, and amongst European officers and crews of vessels visiting Port of Calcutta and fostering of religious interests and activities among same. According to Shri Doshi point to be noted is regarding class of beneficiaries who were considered as representing public. Shri Doshi further referred to in Oppenhiem s case (1971) 82 ITR 704 (SC) (supra) in support of his contention. It was, however, admitted that new scheme (page 17 of compilation dt. 3rd Feb., 1979) is not retrospective. He, however, highlighted fact that for asst. yr. 1979-80 assessee has been accepted as charitable institution. Accordingly Shri Doshi sought confirmation of order of AAC. In his rejoinder Shri Sathe highlighted facts that no arguments have been addressed by Shri Doshi about impact of S. K. Dutta, ITO vs. Lawrence Singh Ingty. Treasury Officer (1968) 68 ITR 272 (SC). He also distinguished CIT vs. Bengal Mills & Steamers Presbyterian Association (1981) 24 CTR (Cal) 318: (1983) 140 ITR 586 (Cal) to show that it was not single proposition as in case of present assessee. He also pointed out that in income tax assessment ITO has referred to s. 224 (ii) which has no relevance to ss. 11 and 13 and submitted that this decision of ITO for corresponding income tax assessment should not be allowed to influence us. On careful examination of facts, we hold that assessee s case is not materially different from those considered by their Lordships of Andhra Pradesh High Court (1983) 148 ITR 287 (AP) (supra). One has to not point of distinction between manner of recruitment to public services on one hand and other services on other. We cannot of course say that non-government employers are not objective or that they shut doors of employment to any particular class or classes. It may often be that non-government employer makes recruitment on much broader basis than Govt. which often imposes restriction regarding residence, class etc. As far as recruitment to government services is concerned, it has to be assumed that it is open to all public who answer essential and desirable qualification mentioned for purpose. beneficiaries of assessee fund are therefore, persons who have become employees by reason of their being member of public. We have therefore no material to depart from Andhra Pradesh High Court judgment in Taxation, Vol. 38, s. 6, page 95 referred to above. Coming now to reliance on S. K. Dutta, ITO vs. Lawrence Singh Ingty (1968) 68 ITR 272 (SC) by Departmental Representative, we find that ratio of that case does not apply to facts of present case. In S. K. Dutta, ITO vs. Lawrence Singh Ingty (1968) 68 ITR 272 (SC) their Lordships were concerned with income earned and not source from which recruitment is made. Admittedly there can be no distinction between income earned as salaried employee of govt. on one hand and non-Govt. on other, as far as tax liability is concerned, in view of Art. 14 of Constitution. There can, however still be distinction basis of persons entitled to get selected for employment in Govt. service. As persons entitled to become beneficiaries do come from cross section of public, we hold that respondent fund is for benefit of public even during years when new scheme was not operative. in view of this position, we need not examine other contentions raised by either side. Accordingly we hold that AAC was justified on facts before him. Appeals are dismissed. *** WEALTH-TAX OFFICER v. SOLAPUR DISTRICT REVENUE SUBORDINATE WELFARE FUND