TMI Blog1983 (10) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Act, 1961 ? " The assessee is the " Bangalore Turf Club Benevolent Fund " which has been constituted by the Bangalore Turf Club (BTC). The Fund was administered by the Stewards of the BTC. It was constituted under the BTC Rules. The BTC collected licence fees and fines from the trainers, jockeys and apprentices and transferred those sums to the account of the Fund for the relief of the trainers, jockeys, apprentices, riding boys and their dependants. Rule 182 (of the BTC Rules), under which the Fund was constituted, reads as follows : " 182. All fines imposed under these Rules shall, on realisation, be remitted to the Secretary of the Club. (i) A fund shall be kept under the name of the Benevolent Fund for the relief of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Fund was not an assessable entity, the Tribunal did not give a clear-cut finding as to whether the income in the hands of the assessee was liable to tax. Being aggrieved by the order of the Tribunal, the Department filed an application under s. 256(1) of the I.T. Act for referring the question of law mentioned above for the opinion of this court. Hence, these references. There are two aspects in the question. They are: (i) Whether the BTC Benevolent Fund can be an assessable entity under the I.T. Act, and (ii) Whether the sums received by the Fund is its income assessable to tax under the I.T. Act. Sri K. Srinivasan, learned senior standing counsel for the Department, contended that the Fund is an assessable entity within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the 1922 Act which contained only an AOP. What then was the purpose of adding BOI in the 1961 Act ? It was certainly not to equate it with the AOP. The leading case on AOP is that of the Supreme Court in CIT v. Indira Balkrishna [1966] 39 ITR 546. While explaining the meaning of AOP found in s. 3 of the 1922 Act, the Supreme Court observed that an AOP means an association in which two or more persons join in a common purpose or common action, the object of which is to produce income, profits and gains. So far as the concept of BOI is concerned, the following decisions have taken the view that there must be a common object among the persons constituting BOI to produce income : Deccan Wine and General Stores v. CIT[1977] 106 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in support of his contention that even the members constituting a BOI should come together to produce income or they must at least hold income-producing assets. We gave our anxious consideration to the contention urged by Mr. Prasad. We ire unable to agree with the contention. The BOI was introduced under s. 2(31) with a definite purpose. The purpose appears to be that the AOP could not cover all the like taxable entities. It was intended to cover a distinct body different from an AOP. There may be some common attributes as between the two bodies. But to say that both must have the common purpose to produce income, profits or gains would defeat the purpose for which it was included in the 1961 Act. In our opinion, if a body of perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ss. 11 and 12 of the I.T. Act under which any person/persons receiving voluntary contributions can be subjected to tax as provided therein. Section 12 creates fiction and deems voluntary contributions as income derived from property held under trust for the purpose of ss. 11 and 13. The second aspect of the question, namely, whether the amounts received by the Fund from the BTC is not its income assessable to tax under the I.T. Act need not be gone into in this reference. Counsel on both the sides also agreed that the Tribunal has to consider this question afresh. In the result, we hold that the assessee is an assessable entity under the I.T. Act and answer the first part of the question in the negative and against the assessee. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
