TMI Blog1997 (1) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of section 21AA of the Wealth-tax Act which is sought to be invoked by the Revenue for the assessment years 1981-82 to 1983-84 would not be applicable to the facts of the present case and is not the above approach, finding and decision wrong and based on irrelevant and unwarranted facts, circumstances and considerations (highlighted in paragraph 12 of its order) ? " The facts in brief are as follows : The assessee--Rama Varma Club--was founded as early as in the year 1897, in the former native State of Cochin during the regime of Raja Rama Varma (1895 to 1914). It was the first recreation club in Cochin. Located in the very heart of the present city of Cochin facing the Durbar Hall ground, the club provides facilities for games, such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of wealth-tax assessments for the assessment years 1981-82 to 1983-84, reliance was also made on the provisions contained under section 21AA of the Wealth-tax Act. It was contended that the assessee-club is an association of persons which has been formed for the purpose of making gain or profit or for acquiring properties and by virtue of the provisions contained under section 21AA incorporated by the Finance Act, 1981, with effect from April 1, 1981, the assessments for the years 1981-82 to 1983-84 are to be sustained. The Tribunal rejected the contentions raised by the Revenue and upheld the orders passed by the first appellate authority. Relying on the decisions of the High Courts of Gujarat, Bombay and Calcutta as also the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. CWT [1986] 158 ITR 23 (Mad) were dissented from. The decision of this court in CWT v. Trivandrum Club [1995] 211 ITR 448 following the decision in CWT v. Mulam Club [1991] 191 ITR 370 (Ker), was taken in appeal by the Revenue before the Supreme Court. The special leave petition was dismissed upholding the view taken by this court. Then, the only question to be considered in these references is whether introduction of section 21AA has made any change in the legal position, thereby making the assessee-club liable for being assessed under the Wealth-tax Act, 1957. The relevant portion of section 21AA reads as follows : " 21AA. Assessment when assets are held by certain association of persons. --- (1) Where assets chargeable to tax und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious facilities and amenities for sports, fine arts and other cultural activities and entertainments for its members. Specific reference was made by the Tribunal to rules 31 and 32 which contain provisions dealing with funds of the club and dissolution of the club. They read as follows : " 31. The income and property of the club whenever and howsoever derived, shall be applied solely towards the promotion of the objects of the club as stated and no portion shall be paid or transferred, directly or indirectly by way of dividend, bonus or otherwise howsoever, by way of profit to the members of the club. Provided, however, that nothing therein shall prevent the payment, in good faith of remuneration to any officer or servant of the club or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21AA makes every member of the association of persons jointly and severally liable for the amount of tax, penalty or other sum payable on the discontinuance or dissolution of the association of persons. From the wording of the rules governing the assessee-club, it is clear that no such liability can be fastened on its members as they do not have a share in its income or assets. If that be so, the assessee-club would not come within the net of section 21AA(1) so as to be assessed under the Wealth-tax Act, 1957. We are fortified in our above view by a decision of the Andhra Pradesh High Court in CWT v. George Club [1991] 191 ITR 368. In the above decision, reference is made to Board's Circular No. 320, dated January 11, 1982, issued under se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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