TMI Blog1958 (9) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... ey may be roughly summarised as promotion of the game of cricket played in accordance with the highest standard, though there are certain subsidiary objects which will not be covered by such a summary. As between its members, it is a mutual association and receives payments by way of subscriptions and donations. The surplus of its receipts from those sources over the expenses has not been sought to be assessed, because the Department concedes that such surplus is not chargeable to tax. The Association, however, had other receipts as well from a totally different source. One of its objects is to organise, authorise or control cricket tournaments and leagues. It appears that during the accounting year relative to the assessment year 1950-51, it organised matches between a team from the West Indies and Indian teams and also held what are known as the Ranji Trophy matches. In the accounting year relative to the assessment year 1951-52, it organised matches between Commonwealth teams and, as in the previous year, organised the Ranji Trophy matches. In the accounting year relative to the assessment year 1952-53, it again organised matches, between Commonwealth teams and the Ranji Trop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is court, but the Tribunal declined to do so. Thereafter, on an application made under section 66(2) of the Act, this court directed the Tribunal to state a case and refer the question which had been suggested by the Commissioner of Income-tax in his reply to the rule issued to him under section 66(2) of the Act. Only, the question was split up into two questions in view of the fact that prior to the year 1952-53. section 4(3)(i) had been amended. The two questions referred are the following : (1) For the assessment years 1950-51 and 1951-52 : Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the applicant Association was not entitled to the exemption conferred by section 4(3)(i) and section 4(3)(ia) of the Indian Income-tax Act, 1922, as it stood before its amendment in 1953 ? (2) For the assessment year 1952-53 : Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the applicant Association was not entitled to the exemption conferred by section 4(3)(i) of the Indian Income-tax Act, 1922, as amended in 1953? I shall take up first the question relating to the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iated to it, though on occasions one or two players who were members of those bodies played. The receipts which constitute the income in question came entirely from the members of the public who came to witness the games. If the income in question was derived from the fees charged for admission to the games held under the auspices of the Association, it is difficult to see how it was derived from any property. The assessee relied upon the decision of the Privy Council in the case of All India Spinners' Association v. Commissioner of Income-tax [1944] 12 ITR 482, and contended that the property contemplated by section 4(3)(i) was not physical property alone, but an organisation or undertaking could also be property. The Privy Council in the case cited did not lay down any general proposition, but what they held was that the organisation and the undertaking of the Spinners' Association as well as the fluctuating stock of yarn and cloth with which it dealt might well be taken as constituting the property from which the income was derived. This observation was made with reference to a very different state of facts. The Spinners' Association had a board of trustees in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be a breach of trust which the court could restrain and that even if there was no trust in the case, there was a legal obligation. There was, however, a trust in that case and the Judicial Committee held it to be a valid trust, although there was no formal deed and it could, therefore, appropriately be said that an obligation existed to keep to the objects of the trust. In the present case, there is no trust and the legal obligation, if any, can arise only out of the binding character of the rules, if they be binding. I concede that the rules may be binding on the members inter se, but, as I have already pointed out, except that some objects are set out in the rules, they do not compel the Association to apply its assets or income to those objects or to any particular purpose. There is also the further difficulty in the assessee's way that even among the objects, there are some which cannot possibly be called charitable objects and, therefore, even if it be correct to say that there is a legal obligation to hold property for the purposes set out in the rules, the property will not be held wholly for charitable purposes because all the purposes are not charitable. This, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o not provide for any service to the public in connection with the game of cricket except that an incidental benefit to the public may be that occasional opportunities will be provided to them to witness some matches on payment. If in order to constitute a charitable purpose some public benefit is essential, the only benefit to the public that one can see is a chance now and then of some entertainment in the form of witnessing cricket games or it may be some opportunity for having a visual demonstration of finer types of play, although this will interest only those who can play the game or understand it. Strictly speaking, there is no assurance in the rules for even this incidental benefit to the public, because the rules do not require the association to admit the public to the matches arranged for by it, which it may as well not do. The question we have to consider is whether promotion of cricket as a general purpose or more particularly promotion of cricket in the form in which the Association professes to promote it can at all be a charitable purpose. In England, it has repeatedly been held that no gift or bequest made merely for the promotion of some game or pastime can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of their education. Where, however, a gift or bequest has been made solely for the promotion of a game or pastime, it has always been struck down as not charitable. To take the case of In re Nottage: Jones v. Palmer [1895] 2 Ch. 649, which is so often cited, the four Judges who decided it, one in the High Court and three in the Court of Appeal, all held that a request, for the encouragement of yacht racing, although it might be beneficial to the public, could not be upheld as charitable, because it was a bequest for the encouragement of a mere sport. Lindley, L.J., in the Court of Appeal made an observation in the course of his judgment which is peculiarly appropriate to the present case, since it mentions encouragement of the game of cricket: Now, I should say , observed the learned Judge, that every healthy sport is good for the nation-cricket, football, fencing, yachting, or any other healthy exercise and recreation ; but if it has been the idea of lawyers that a gift for the encouragement of such exercises is therefore charitable, we should have heard of it before now. It will be noticed that the learned Lord Justice included cricket among the games in the illustrations he g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter. It will thus be seen that while promotion of games as a part of the education of those who participate in them may be a charitable purpose, the promotion of the practice of a game in general either for the entertainment of the public or for an advancement of the game itself has never been held to be charitable. So far as cricket is concerned, I shall content myself with citing only one other case. In re Patten : Westminster Bank Limited v. Carlton [1929] 2 Ch. 276. A trust was created for the benefit of the Sussex County Cricket Club and in order to bring the trust within the statute of Elizabeth, it was said that the trust was for the supportation aid and help of young tradesmen handicraftsmen and persons decayed. Really, however, it was a trust for the promotion of cricket among boys of the working and lower middle classes who might not be well off financially. Romer, J., who decided the case said that it might be that with the aid of the assistance provided from this trust, some boys would be enabled to embark upon life as professional cricketers, but he continued to say : It is, I think, reasonably clear that the object of the fund is the encouragement of the game ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral public utility, so as to amount to a charity, in arranging for cricket matches which the public can see on payment. How untenable must be a contention that such an object is an object of general public utility and, therefore, must be held to be charitable will appear if one considers certain parallel cases. Suppose a body of men bind themselves together into a club and collect annually some musicians from all parts of the country to give demonstrations for a number of days and suppose the public are admitted to such demonstrations on payment of a fee. If the contention of the Association in the present case is to be accepted, it must equally be held that the body of men in the hypothetical case I have mentioned who derive a large income by selling admission to the musical demonstrations organised by them, are also exercising themselves for a charitable purpose and that their earnings must be equally exempt from tax. It was contended that the game of cricket had a place of its own among games and that it inculcated a spirit of fairness and an honourable conduct to such an extent that the term cricket had come to be a synonym for fairness and honour. That may be so, but I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out any other business in connection with the above, that is to say, in connection with the promotion of the objects set out earlier, does not seem to me to come within the terms of section 4(3)(ia) which requires the business to be carried on in the course of carrying out one of the primary purposes of the Association. If so, it appears to me that even assuming that there is a property and even assuming that the purpose of promoting the game of cricket is a charitable purpose, the property is here held not wholly for that purpose but it is held for other purposes as well. The above disposes of the question relating to the years 1950-51 and 1951-52. The position with regard to the year 1952-53 is far worse for the assessee. By that time, section 4(3) of the Act had been amended and the new section 4(3)(i), substituted for old clauses (i) and (ia), reads as follows. I am reading only a part : Subject to the provisions of clause (c) of sub-section (1) of section 16, 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 charit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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