TMI Blog1969 (11) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... as not exempt under section 11 of the Income-tax Act ? 2. Whether, on the facts and in the circumstances of the case, the assessee was not entitled to the deduction of the loss in running the races at Mysore ? " The questions relate to the assessment year 1963-64. The assessee is the Bangalore Race Club Ltd., Bangalore. It was incorporated under the Companies Act, 1956, on 31st March, 1962. It took over the assets and liabilities of the unincorporated club known as the " Bangalore Race Club ". The objects for which the company was established were, inter alia, to carry on the business of a race club in all its branches and to enter into any arrangement with any person, association or company carrying on or engaged in any business or tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their opinion the object of the club is only to encourage sports and to provide recreation to a few individuals. The Tribunal relied on the decision in Cricket Association of Bengal v. Commissioner of Income-tax, wherein it was held that mere promotion of the practice of the game of cricket in general either for the entertainment of the public or for the advancement of the game itself was not a charitable purpose. In Simon's Income-Tax, volume I, page 455, this is what is stated: " The encouragement of a particular sport is not a purpose within the spirit and intendment of the preamble; consequently gifts for yacht racing (a), angling (b), fox hunting (c) or the teaching of cricket (d) are not for charitable purposes." We are in agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the memorandum and articles of association of the assessee-company, that the payment was within the scope of the objects of the company. In paragraphs 27 and 28 of the order of the learned company judge, this is what has been stated: " 27. The first contention of a total lack of relation between the objects of the company and the company's association with the Mysore Race Club appears to me to be not well-founded. I have already set out the relevant portions of the memorandum of association of the company as well as the rule of the Mysore Club defining its objects. Both the clubs are undoubtedly clubs formed with the principal object of encouraging horseracing. Whereas the memorandum of the company goes into the details of what may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unning races can be straightaway condemned as an activity beyond the scope of the objects of the company." This court, therefore, held that the payments by the assessee to the Mysore Race Club pursuant to the agreement between them was within the scope of the objects of the company. The assessing authority, after referring to the two agreements between the assessee and His Highness the Mharaja of Mysore and the agreement between the assessee and the Mysore Race Club held that the net effect of the agreements is that the Bangalore Race Club has undertaken to conduct races at Mysore and to bear the losses, if any, in such conduct. The Tribunal, in the statement of the case has also stated that the net effect of these agreements was that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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