# AHMEDABAD RANA CASTE ASSOCIATION v. COM.\fISSIONER OF INCOME TAX, GUJARAT

- **Citation:** [1972] 1 S.C.R. 744
- **Court:** Supreme Court of India
- **Decided:** 1972
- **Case number:** Civil Appeals Nos. 21462148 of 1968
- **Bench:** K. S. Hegde, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ahmedabad-rana-caste-association-v-com-fissioner-of-income-tax-gujarat-5446
- **Pages:** 7

## Headnote

Income-tax Act, 1922, s. 4(3) (i) and Income-tax Act, 1961 s. lllncome of assessee to be utilised for benefit of a community-Beneficiaries· members of the community resident in a city and others
adniitted
according to caste customs and usage-If uriited by common quality of
impersonal nature.
The assessee was an association of penons and held various properties
for the purposes set out in its constitution.
One of the purposes was the
management of the movable and immovable properties of the Rana community of the City of Ahmedabad, doing
acts to improve education in
the community and to give medical help to the community, etc. The definition of Rana community. comprised two classes---one class consisting
of those who are natives .of Ahmedabad while the other consists of such
persons wh~ are admitted by the Rana caste according to the old custom
or the usage of the community.
On the question whether the income of the assessee-trust was exempt
under s. 4(3) (1) of the lncom<>-tax Act,. 1922, or s. 11 of the Incometax Act, 1961, the High Court held that since the second class of persons
consisted of those who had been accepted by the caste according its old
CllStom or usage, all the beneficiaries
were
not united by a common
characteristic or attribute of an impersonal nature and
therefore,
the
beneficiaries did not constitute a comIDunity or a section of the community
Allowing the appeal to this Court,
HELD : An object beneficial to a section of the public is an object of
general public utility.
But the section of the community sought to be
benefitted must be sufficiently defined and identifiable by some
common
quality of a public or impersonal nature. The common quality, in the
present case, uniting the potential beneficiaries consists of being members
of' the Rana caste .or community of Ahmedabad whether as natives or as
being admitted to that caste or community under custom or usage.
The
mere fact that a person of the Rana community who is not an original
native of Ahmedabad has to prove his credentials and according to the
custom and usage of that community cannot introduce a personal element.
Whenever a question arises whether a person belongs to a particular comllUJnity or caste the custom or usage prevailing in that community
must play a decisive and vital pl!rt.
The personal element or personal
relationship which takes a group out of a section of the community is
their personal relalionship to a single propositus or to several prop<>-
siti or a relationship of a similar nature.
Therefore, the members of
the Rana caste who are not natives of Ahmedabad but who come to
reside there and are aecepted as members of that caste according to its
usage and customs could be said to have a relationship of an impersonal
nature. [748 B-D; 749 D-G; 750 B-D]
Hazrat Pirmohamed Shah Sahtb Roza Committee v. Commissioner of
Income-tax, Gujarat, 58 I.T.R. 360, Com11Ussioner of Income-tax, Madras
v. Andhra. Chamber of Commerce, 55 I.T.R. 722, Re Compton, Powell v.
Compton & Ors., (1945) Qi, 123, Trustees of the Londonderry Presbyttrian Church House v. Commissioner!_ of Inland Revenue, 27 T.C. 431
and Oppenheim v. Tobacco Securities :rrust Co. Ltd. & Ors., (1951) A.C.
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RANA CASTE ASSCN. v. C.I.T. (Grover,. J.)
745
297, referred to.

## Text

744
AHMEDABAD RANA CASTE ASSOCIATION
v.
COM.\fISSIONER OF INCOME TAX, GUJARAT
September l 6, 1971
(K. S. HEGDE AND A. N. GROVER, JJ.]
Income-tax Act, 1922, s. 4(3) (i) and Income-tax Act, 1961 s. lllncome of assessee to be utilised for benefit of a community-Beneficiaries· members of the community resident in a city and others
adniitted
according to caste customs and usage-If uriited by common quality of
impersonal nature.
The assessee was an association of penons and held various properties
for the purposes set out in its constitution.
One of the purposes was the
management of the movable and immovable properties of the Rana community of the City of Ahmedabad, doing
acts to improve education in
the community and to give medical help to the community, etc. The definition of Rana community. comprised two classes---one class consisting
of those who are natives .of Ahmedabad while the other consists of such
persons wh~ are admitted by the Rana caste according to the old custom
or the usage of the community.
On the question whether the income of the assessee-trust was exempt
under s. 4(3) (1) of the lncom<>-tax Act,. 1922, or s. 11 of the Incometax Act, 1961, the High Court held that since the second class of persons
consisted of those who had been accepted by the caste according its old
CllStom or usage, all the beneficiaries
were
not united by a common
characteristic or attribute of an impersonal nature and
therefore,
the
beneficiaries did not constitute a comIDunity or a section of the community
Allowing the appeal to this Court,
HELD : An object beneficial to a section of the public is an object of
general public utility.
But the section of the community sought to be
benefitted must be sufficiently defined and identifiable by some
common
quality of a public or impersonal nature. The common quality, in the
present case, uniting the potential beneficiaries consists of being members
of' the Rana caste .or community of Ahmedabad whether as natives or as
being admitted to that caste or community under custom or usage.
The
mere fact that a person of the Rana community who is not an original
native of Ahmedabad has to prove his credentials and according to the
custom and usage of that community cannot introduce a personal element.
Whenever a question arises whether a person belongs to a particular comllUJnity or caste the custom or usage prevailing in that community
must play a decisive and vital pl!rt.
The personal element or personal
relationship which takes a group out of a section of the community is
their personal relalionship to a single propositus or to several prop<>-
siti or a relationship of a similar nature.
Therefore, the members of
the Rana caste who are not natives of Ahmedabad but who come to
reside there and are aecepted as members of that caste according to its
usage and customs could be said to have a relationship of an impersonal
nature. [748 B-D; 749 D-G; 750 B-D]
Hazrat Pirmohamed Shah Sahtb Roza Committee v. Commissioner of
Income-tax, Gujarat, 58 I.T.R. 360, Com11Ussioner of Income-tax, Madras
v. Andhra. Chamber of Commerce, 55 I.T.R. 722, Re Compton, Powell v.
Compton & Ors., (1945) Qi, 123, Trustees of the Londonderry Presbyttrian Church House v. Commissioner!_ of Inland Revenue, 27 T.C. 431
and Oppenheim v. Tobacco Securities :rrust Co. Ltd. & Ors., (1951) A.C.
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RANA CASTE ASSCN. v. C.I.T. (Grover,. J.)
745
297, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 21462148 of 1968 and 1284 to 1286 of 1971.
Appeals by certificate/special leave from the judgment and
order dated July 25, 1967 of the Gujarat High Court in Incometax Reference No. 4 of 1966.
S. T. Desai, R. P. Kapoor for I. N. Shroffi for the appellant
(in all the appeals).
S. K. Ai,var, R. N. Sachthey and B. D. Sharma, for
the
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respondent (in ali the appeals).
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The Judgment of the Court was delivered by
Gro,·er,
J.
These
appeals
(C.As.
1284-1286/71) are
by special leave from a judgment of the Gujarat High Court in
an Income tax Reference. Originally the appeals had been filed
by certificate (C.As. 2146-2148/68) but th~t_was found to be
defective as no reasons were st~ted therein.
The Reference relates to the assessment
years
1960-61,
1961-62 and 1962-63 the relevant accounting years being the
financial years ending 31st March 1960, 31st March 1961 and
31st March 1962. During the relevant years the assessee which
is an association of persons held various properties for the purposes set out in its constitution. It is unnecessary to refer to
all the clauses therein. It would suffice to mention that among
'the objects and purposes of the institution were the management
of the movable and immovable properties of the Rana community
of the city of Ahmedabad, doing acts to improve the education
in the community, to give medical help to the community etc.
The Income •tax Officer took the view that the objects were not
charitable and therefore the assesse~ was not entitled to the exemption under s. 4(3)(i) of the Income tax Act, 1922.
The Appellate Assistant Commissioner held that although the assessee was
registered under the Bombay Public Trust Act the beneficiaries
were not the public and the class of community sought to be
benefitted was very vague and ill-defined and the number was
also negligible.
He held certain clauses among the objects ta
be charitable but others were held by him not to be charitable.
The matter was taken in appeal to the Tribunal. The Tribunal
held that the i;>eneficia.r!es as found in the Constitution were the
Rana commumty meamng thereby the "natives of Ahmedabad
only and other community members acceeted by the community
as per old rules of the community and staying in Ahmedabad.
746
SUPREME COURT REPORTS
[1972] l S.C.R.
This is a well defined cross-section of the public of Ahmedabad,
certain and ascertainable.
This number, we are rtold, is about
2,400 (?) but no minimum number is prescribed to constitute
a clear, ascertainab'le cross-section of the general public. It cannot be said, therefore, that there is any vagueness about the beneficiaries or of their public character." After considering various
other matters the Tribunal came to the conclusion that the trust
was a charitable trust and therefore entitl·~d to the exemption
claimed.
The Commissioner of Income itax moved the Tribunal
for stating the case and referring the question of Jaw arising from
its order.
The Tribunal referred the following question to the
High Court :-
"Whether on the facts and in the circumstances of
the case ihe income of the assessee trust is exempt under
s. 4(3)(i) of the Income tax Act 1922 and s. 11 of
the Income tax Act 1961."
The High Court decided the whole matter only on one point.
It considered the question whether the purpose for which the
11roperties were held by the asses~ee had the public character
which the income tax law required of the charities it recognised
for the purpose of exemption. The question that was posed was
"are the purposes directed to the benefit of the community or a
section of the community as distinguished from private individuals or a fluctuating body of private individuals"? There can
be no doubt, according to the High Court, that the beneficiaries
did not constitute a 'community since they weP~ confined only to
the members of the Rana Caste residing in Ahmedabad and fulfilling one or the other conditions set out in the definition clause.
It had, therefore, to be decided whether the beneficiaries could
be said to constitute a section of the community. After referring
to certain English cases and the decision of this Court in Hazrat
Pirmohamed Shah Saheb Roza Committee v.
Commissioner of
Income tax, Gujarat('), the High Court rightly held that the enquiry
must be directed to what the common quality was which united
the parties within the class and whether ithat quality was essentially impersonal or personal. If the former, the class would rank
as a section of the community; if the latter, the answer would be
in the negative.
According rto the High Court having regard to
the common opinion amongst the people and the conditions of
Indian life if the beneficiaries were the members of the Rana
caste residing in Ahmedabad ancf were natives of Ahmedabad
they would be section of the community because the common
quality uniting them within the class would be essentially an im-
-personal quality. But the High Court proceeded to say :
(I) 58 I.T.R. 360.
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RANA CASTE ASSCN. v. C.I.T. (Grov(!r, J.)
747
"the class of beneficiaries before us consists of two
sections; one comprising members of the-Rana Sect .who
are natives of Ahmedabad and the other compnsmg
members of the Rana Sect who are residing in Ahmedabad and who have been accepted by the community
according to the old usage of the caste. It is difficult
to see how this class of beneficiaries can b.~ said to constitute a well section of the public connected together
by a common quality or characteristic".
Although it was recognised that even the second cfass l!f. ben~
ficiaries were members of the Rana caste and were res1dmg m
Ahmedabad but the distinguishing feature, in· the view of the
High Court, was tha! the second section or class consisted of
persons who had been accepted by the caste according to its old
custom or usage. This led the High Court to conclude that all
the beneficiaries compi:ised in this class were not united by a
common characteristic or attribute.
The question referred was
answered in the negative.
Section 4(3) (i) to the extent it is material is in the following
terms:-
"4(3) Any income, profrts or gains falling within
the following classes shall not be included in total income of the· person receiving them :
( i) Subject to the provisions of clause ( c) of subsection ( 1 ) of section l 6, any income derived from property held under trust or other legal obligation wholly
for religious or charitable purposes, in so far as such
income is applied or accumulated for application to such
religious or charitable purposes as relate to anythino
done within the taxable ~~rritories, and in the case of
property sc;i held in part only for such purposes, the income applied or finally set apart for application thereto:
Provided that . . . . . . . . . . . . . . . . . . . "
The operative part of s. 11 ( 1 ) (a) of the Income tax Act 1961
is in similar terms.
There are certain points of difference between
the provisions of the two Acts.
Some of them may be noticed. In
the 19.22 Act .~ clrar~table purpose included relief of the poor,
educal!on, m.ed1c~l. relief and advancement of any other object of.
general public ullhty. Section 2(15) of the Act of 1961 intro-
~uces. the followinl( qu.alifying words to general public utility,
not mvolvmg the carrymg on of any activity for profit". Under
the Act ?f 1922 a trust for the benefit of..any particular religious
communrty or caste was entitled to exemption but under the Act
of 1961 a charitable trust which is created for such benefit on Jr
748
SUPREME COURT REPORTS
[1972] 1 s.c.R.
after the first day of April 1962 would be disen1itled to the exemption. In the present case the trust was created prior to first April
1962 and therefore no question arises of its not being .entitled
to the exemption if other conditions were satisfied even though
it was creaJted for the benefit of the Rana cas1e of Ahm.edabad.
It is well settled by now and the High Court also has rightly
taken that view that an object beneficial to a section of the public
is an ob.i>xt of general public utility. To serve a charitable purpose it is not necessary that the object should be to benefit the
whole of mankind or alt persons in a particular country or State.
It is sufficient if the intention to benefit a section of the public
as distinguished from a specified individual is present. This Court
in Commissioner of Income tax, Madras v. Andhra Chamber of
Commerce(') overruled the view of Bea.umont C.J. in Commissioner of Income tax v. Grain Merchants' Association of Bombay(2)
on the point.
It was, however, observed that the section
of the community sought to be benefitted must be sufficiently
defined and identifiable by some common quality of a public or
impersonal nature. Where there was no common quaHty uniting
the potential beneficiaries into a class the trust might not be
regarded as valid.
In the various orders the clause relating to
the beneficiaries has not been clearly and accurntely set out. In
the petition of appeal dated October 7, 1968 the provisions of
the constitution of the assessee are set out. and with reference to
the community it is stated, "Rana community means natives of
Ahmedabad only and the other community brothers accepted by
the community as per old rules of the community staying in
Ahmedabad".
It is common ground that the word "old rules"
do not represent the correct translation of the original word in
Gujarati which is Riwaj meaning custom.
The learned judges
of the High Court also, who are conversant with that language,
have proceeded on the basis that the correct rendering of the
aforesaid word is custom or usage.
That is why according to
the High Court the definition comprises two classes of members
of Rana caste residing in Ahmedabad, one class consisting of
those who are natives of Ahmedabad while the other class consists of such persons who are admitted by the Rana caste according to the old custom or usage of the community.
The reason
which prevailed with the High Court for treating the second class
as .not being •mited with the first class by a common characteristic or attribute was 'that its members have to be accepted by the
community according to the old custom or usage and that the
entry of the members of this class into the Rana caste residing
in Ahmedabad was dependent on the decision of the caste to
( ) 55 l.T.R. 722.
(2) 6 l.T.R. 427.
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RANA CASTE ASSCN. V. C.I.T. (Grover, J.)
749
admit them. We are altogether unable to concur in the approach
or the conclusion of th·~ High Court on the above point.
We may usefully refer to the judgwent .Jf Lord Greene M.R.
in re Compton, Powell v. Compton & Others('). The Master of
Rolls declared that no definition of what was meant by "a section
of the public" had, so far as he was aware, been laid down. But he
indicated that the trust of'a public character is one in which the
beneficiaries do not enjoy the benefit when they receive it by
virtue of their character as individuals but by virtue of their
membership of a specified class 'the common
qualiiy
uniting
potential beneficiaries into the class being essentially an impersonal one. This common quality he said was "definable by reference to what each has in common with the others 3nd that is
something into which their status as individuals does not enter".
Andrew, L.C.J. accepted this statement of law without hesitation
in Trustees of the Londonderry Presbyterian Church House v.
Commissioners of Inland Revenue(2 ). What has to be seen in the
present case is whether the members of the Rana caste who are
not natives of Ahmedabad but who come to reside there and arc
accepted as members of that caste according to its usage and
customs can be said to have a relationship which is an impersonal one dependent on their condition as members of the Rana
community.
We are unable to comprehend how such members
of the Rana caste can be regarded as having been introduced into
that caste by consideration of their personal status as individuals.
As a matter of fact the predominant content and requirement of
the clause defining "beneficiaries" in the constitution of the assessee is the factum of their belonging to the Rana cim1munity of
Ahmedabad. The common quality, therefore, uniting the poten-
'tial beneficiaries into the class consists of being members of the
Rana caste or community of Ahmedabad whether as natives or
as b~ing admitted to that caste or community under custom or
?sage. The .D?ere fac~ that a person of the Rana communFty who
is not an ongmal natrve of Ahmedabad has to prove hi> credentials acc?rdin~ to tire custom a~d usage of that community to
get adm~tted mto that commumty cannot introduce a personal
element.
In Oppmheim v. Tobacco Securities Trust Co. Ltd. &
Others(') the trustees were directed to apply certain income in
providing for the education of children of employees or "former
employees" of a British limited company or any of its subsidiary
or _all~ed companies.
It was held by the House of Lords by a
ma1onty that though the group of persons indicated was numerous, the nexus between them-was employment by particular employers and accordingly the trust did not satify the test of public
(I) [1945] Ch. 123.
(2) 27 T.C. 431.
(3) [1951] A.C. 297.
750
SUPREME COURT REPORTS
[1972] l S.C.R.
benefit requisite to establish it as charitable.
This is what Lord
A
Simonds observed :-
"A group of persons may be numerous but, if the
nexus between them is their personal relatianship to a
single propositus or to several propositi, they are neither
the
community
nor a section of the community for
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charitable purposes ...
The personal element of personal relationship which takes a group
out of section of the community for charitable purposes is of the
nature which is to be found in cases of the aforesaid type.
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cannot possibly discover a similar element of personal nature in
th·~ members of the Rana community who settle in Ahmedabad
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and have been accepted by the Rana community of that place
as members of that community.
As regards the acceptance of
such persons as members of the community or caste, according
to custom and usage, it is well known that whenever a question
arises whether a person belongs to a particular community or
caste the custom or usage prevailing in that community must play
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a decisive and vital part. That cannot be regarded as an element
which would detract from the impersonal nature of the common
quality.
For the reasons given above the appeals are allowed and the
answer returned by the High Court is discharged.
The matvers
are remitted to the High Court for returning the answer to th·~
E
question referred after determining the other points which were
left undecided.
The parties shall bear their own costs in th·~se
appeals.
Appeals by certificate (i.e. CAs. 2146-2148 of 1968)
are dismissed, the certificate being defective for want of reasons.
V.P.S.
Appeals allowed.