Institution of Civil Engineers v Commissioners of Inland Revenue
| Jurisdiction | England & Wales |
| Judgment Date | 08 June 1931 |
| Date | 08 June 1931 |
| Court | King's Bench Division |
NO. 795.-HIGH COURT OF JUSTICE (KING'S BENCH DIVISION).-
COURT OF APPEAL.-
Income Tax - Exemption - Charitable purposes - Income Tax Act, 1918 (8 & 9 Geo. V, c. 40), Section 37(1)(b).
The Institution was founded in 1818 and incorporated by Royal Charter in 1828 for "the general advancement of mechanical "science, and more particularly for promoting the acquisition of "that species of knowledge which constitutes the profession of a "civil engineer." By supplemental charter of 1922 corporate members of the Institution were authorised to use the title of member, or associate member, as the case might be, of the Chartered Institution of Civil Engineers.
The Institution appealed to the Special Commissioners against the refusal of the Commissioners of Inland Revenue to grant exemption under Section 37(1)(b) of the Income Tax Act, 1918, contending that it was a body of persons established for charitable purposes only. The Special Commissioners, having regard in particular to the provisions of the supplemental charter of 1922 and certain activities of the Institution, found that a substantial part of the objects of the Institution was to benefit the members and refused the claim.
Held, that the benefit of members was incidental to the main purpose of the Institution and that the Institution was established for charitable purposes only. Commissioners of Inland Revenue v. Forrest (Institution of Civil Engineers) 3 T.C. 117 followed.
Stated under the Finance Act, 1925, Section 19, and the Income Tax Act, 1918, Section 149, by the Commissioners for the Special Purposes of the Income Tax Acts for the opinion of the King's Bench Division of the High Court of Justice.
1. At a meeting of the Commissioners for the Special Purposes of the Income Tax Acts held on 19th March, 1930, the Institution of Civil Engineers (hereinafter called the Institution) being aggrieved by a decision of the Commissioners of Inland Revenue on a claim made by the Institution for exemption from Income
Tax under the provisions of Section 37(1)(b) of the Income Tax Act, 1918, for the years ending 5th April, 1927, 1928 and 1929, applied to have its claim for exemption heard and determined by the Special Commissioners.2. The Institution was founded in 1818 and was incorporated by Royal Charter dated 3rd June, 1928. The object for which the Institution was founded was "the general advancement of "mechanical science, and more particularly for promoting the "acquisition of that species of knowledge which constitutes the "profession of a civil engineer, being the art of directing the great "sources of power in nature for the use and convenience of man".
A copy of the charter of 3rd June, 1928, will be found at page 5 of Exhibit No. 1, which is attached hereto and forms part of this Case.(1)
3. By a supplemental charter dated 3rd August, 1887, which is set out at page 9 of Exhibit No. 1(1), the Institution's powers of purchasing and holding lands, tenements and hereditaments were extended.
4. By a supplemental charter dated 20th March, 1896, which is set out at page 12 of Exhibit No. 1(1), the Institution was empowered to pass bye-laws altering and enlarging the composition of the council of the Institution and the method of recording the votes of the members of the Institution at elections to the said council.
5. By a supplemental charter dated 24th February, 1922, which is set out at page 17 of Exhibit No. 1(1), a member and an associate member of the Institution was empowered to take and use the name, title of, or describe himself as a member or an associate member (as the case might be) of the Chartered Institution of Civil Engineers, and alteration was made in the method of voting at special general meetings of the Institution, and provision made for voting by all corporate members on proposals for alteration of bye-laws or regulations.
6. The bye-laws and regulations of the Institution are set out at page 24 et seq. of Exhibit No. I.(1)
The object of the Institution as defined by section I of the bye-laws is the advancement of mechanical science and more particularly for promoting the acquisition of that species of knowledge which constitutes the profession of a civil engineer.
7. The Institution consists of members, associate members, associates entitled to the privileges of corporate membership, and honorary members. It also has attached to it associates not entitled to the privileges of corporate membership and students not entitled to such privileges.
The rules relating to the qualification of and election to the various classes of membership of the Institution are set out in sections II, III and V of the bye-laws of the Institution.
8. Section IV of the bye-laws lays down certain rules as to professional conduct to be observed by all corporate members of the Institution.
9. The direction and management of the concerns of the Institution are vested in the council.
The regulations as to the constitution of and election to the council are set out in section VIII of the bye-laws.
10. The annual subscription, transfer and entrance fees and life composition fee payable by members, associate members and associates and the annual subscription payable by students are at rates fixed by the council from time to time.
The rates at present in force are set out on a printed leaflet attached to section VII of the bye-laws.
11. Examinations are held for persons desirous of being admitted as students or elected as members or associate members, and the council are empowered to frame regulations for such examinations. No certificates are granted in respect of passes in these examinations, the results being merely recorded in connection with the applications for membership or studentship.
12. The Institution awards a number of medals, premiums, prizes and scholarships, for which persons who are not members of the Institution are eligible to compete equally with members, except in certain cases in which the award is provided out of trust funds under conditions laid down by the testator or donor expressly limiting eligibility to members or students of the Institution. The Institution also awards one examination prize out of a trust fund: eligibility for this prize is not confined to candidates who belong to the Institution. Scholarships are also awarded for educational purposes out of trust funds bequeathed or given to the Institution. Eligibility for these scholarships is, in some cases, confined to students of the Institution, or the children of members by the terms of the bequest or gift.
A list of the medals, prizes and scholarships awarded by the Institution is annexed hereto marked II.(1)
13. The property and effects of the Institution are vested in the corporate members for the time being for the use of the body politic and corporate solely, in furtherance of the public and scientific objects contemplated in the charters.
14. The Institution possesses and maintains a valuable library, which (subject to such variation as the council may direct) is open daily for the use of all members, associates and students of the Institution. The library contains many plans of important public
works, as well as scientific books and publications, and is of great advantage to consulting engineers and others using it. Though under the bye-laws the library is open to members only, members of the public, that is to say persons who are not members of the Institution, are permitted to use the library free of charge, and considerable use is made of this privilege.The attached list (marked III) indicates the use of the library by non-members during the period 1st January to 8th March, 1930.(1)
Exhibit No. III (a) illustrates a typical case of the use of the library by a non-member.(1)
15. The council have power to grant the use of the rooms of the Institution to any society for purposes analogous to those of the Institution and to any persons who may be desirous of having lectures delivered on subjects connected with the objects of the Institution.
The attached list, marked IV, shows the occasions on which this power was exercised in 1926, 1927, 1928 and 1929.(1)
16. The session of the Institution commences annually in November and continues until the end of the following April.
The meetings of the Institution are as follows:-
(a) The annual general meeting, at which the annual report of the council together with the annual statement of accounts is presented and considered, and the council and auditors of the Institution for the ensuing year are elected.
(b) Ordinary meetings, which are held once a fortnight during the session or more often if found necessary.
(c) At these meetings communications on engineering and scientific subjects are read and discussed.
(d) Special general meetings of corporate members only for the purpose of making, altering and establishing byelaws and for any other special business.
The council have power to arrange for supplementary meetings for the discussion of engineering subjects.
Every corporate member of the Institution has the privilege of introducing at every ordinary meeting one stranger. The public at large is not admitted, but we were informed that in practice strangers who are particularly interested in any subject which is to be discussed are admitted on request. Members of the public avail themselves of this privilege. Invitations to attend ordinary meetings are sent out to other societies and papers are accepted for discussion from members of other societies and persons who are not members of the Institution, and such of these papers as are of merit are published by the Institution and sent out to members of other societies.
17. The following publications are produced by the Institution:-
(a) Minutes of Proceedings, in which are published papers read at meetings and the discussions thereon. The bound volumes of these proceedings cannot be...
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