TMI Blog2011 (3) TMI 1747X X X X Extracts X X X X X X X X Extracts X X X X ..... oiting the same commercially by allowing non-members to play on the same for a fee. Accordingly, he treated such activity as commercial activity, though incidental for the attainment of its object. Since the assessee had not maintained separate books of accounts for such activity, the Assessing officer invoked the provisions of Section 11(4)/11 (4A) of the Act and rejected the exemption u/s 11 to the extent of ₹ 67,84,182/- treating the same as business income. However, he allowed 25% of these receipts as expenses incurred for earning such an income. 2. We may point out that before taking the action the AO had asked the assessee to furnish complete list of casual members and fee charged from them and services enjoyed. The queries were answered by the assessee vide letter dated 19th November, 2008 in the following manner:- you further desired to have list of casual members fee charged from them alongwith services enjoyed by them and receipt from the same In this connection we bring to your kind notice that any person who is not a member of the Club and plays Golf and is above 21 years of age can play by payment of Green fees (known as Casual Membership fees) as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not one with profit motive. Despite the department holding that the assessee s activities are not profit motivated, the AO has held that the casual membership fee charged by the assessee is business income. This is opposed to the facts of the case and is against the very decision of the department in the preceding years. To justify its stand the assessee also cited Clause-9 of the Article of Association of the assessee which defines an Associate Member in the following terms:- An Associate Member is a lady or gentlemen who plays Golf and is about 21 years of age and who is admitted as such and enjoys the privileges as specified in these articles and bye-laws of the Club. An Associate Member is not a Permanent Member of the Club The Committee may admit the following classes of the Associate Member:- Mid-Week Member C Member Tenure Member Temporarily Member Honorary Member Casual Member As per the article of the club, non-members are not members are not allowed the use of club facility extensively as other permanent members can. The Casual Members are allowed the usage of the green to play the game of Golf by payment of Green fee. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cited above, the activities of the appellant cannot be treated as business activities and the case of the appellant is squarely covered under the judicial principles laid down and merits consideration for exemption under Section 12AA on entire income including casual membership fees and the action of the Assessing Officer is incorrect and against the principles of natural justice. I, therefore, direct to delete the addition made on account of casual membership fee as business income. The appellant succeeds on this ground. 7. It was now the turn of the Department to feel unsatisfied with such an outcome. Accordingly, it decided to assail the aforesaid order of the CIT (A) and, therefore, preferred an appeal before the ITAT. The Revenue, however, has failed to convince the Tribunal as the Tribunal vide impugned order dated 21st December, 2009 has dismissed the appeal and affirmed the view taken by the CIT (A). Still dissatisfied, the Revenue has approached this Court by way of present appeal under Section 260A of the Act as according to the Revenue the issue involved raises substantial question of law namely, whether the income of the assessee from casual member amounts to comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces we proceed to decide this appeal on the basis of oral argument advanced by both the parties and the written submissions filed by the respondent/assessee. 11. After giving our careful consideration, we are of the opinion that no substantial question of law is involved in the present case and the appeal warrants to be dismissed in limini . We would in the first instance, like to track down the following undisputed position which prevails on the record of this case:- (i) After being established in 1950, with the main object of promotion of the game of Golf, the respondent club has consistently devoted itself to the said activity for over 6 decades, and is a well known club of credible standing and repute, with a large pool of members from various walks of life. (ii) The object of the respondent club promotion of the game of golf or sport are admittedly charitable , undisputedly coming under the expression object of general public utility and as such existing for purposes of non-profit , the respondent club on that basis has consistently been held to be exempt earlier under Section 10 (23) of the Income Tax Act right and uninterruptedly from 1967 to 1998 and then un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and accruals therefrom are utilized/applied for the same purpose as set forth by the assessee. Following further aspects which have been accepted by the department needs to be highlighted:- (a) Casual membership fee has been charged from Associate Members (registered for a single day), right from 1967 uptill the date, much in like with the global practice procedure of Golf/Sports Clubs, and in no other year was made the basis of any assessment proceedings by the department. (b) Even otherwise, the said activity being again carried out without any profit motive, as part of the overall functioning of the club, and part of the broader activities of the promotion of the sport of gold and as such ought to have been considered as being its integral part, especially when the character or the activities of the club or its long tradition of promotion of game of golf has not been disputed by the department. 14. At this stage, we would also like to extract below the relevant discussion contained in the order of the Tribunal with which we are in agreement:- We have considered the rival contentions carefully gone through the order of the authorities below and also perused the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore clear that for an association to be recognized and given benefit of Section 12(A) of the I.T. Act, its objectives listed should cover any one or all of the following laid down principles:- A. Object of General Public Utility within the meaning of Section 2 (15) means that the benefit need not reach each and every person. It is sufficient if it reaches a sizable number of members of the public. B. To serve as charitable purpose object should be to benefit the mankind and not the whole of mankind in a particular country or province. C. The section of public which is expected to benefit should be well defined even though it does represent only a portion of the mankind. D. The intention of providing the benefit to portion of the public as individual should be clearly spelled out. 6. The question whether promotion of sports and games can be considered as being charitable has been examined. The Board is advised that the advancement of any object beneficial to the public or a section of the public as distinguished from an individual or group of individuals would be an object of general public utility. In view thereof, promotion of sports and games is con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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