DECCAN GYMKHANA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal has referred to this Court, following questions arising out of it's order dt. 10th Feb., 1988.

(2.) BOTH the above two references raise common question of law and, therefore, they were heard together and they are disposed of by this common judgment. IT Ref. No. 76 of 1995 relates to accounting year 1972 73 (asst. year 1973 74), whereas IT Ref. No. 79 of 1991 relates to asst. yrs. 1973 74, 1974 75, 1976 77 upto 1979 80.

(3.) THE assessee is a society registered under the Society Registration Act 1860. It was registered on 5th Oct., 1906. It is a public trust. The objects of the society are described in cl. 3 of part I of the constitution. The main object was to develop and promote gymnastic games (sports) and sportsmanship. The assessee was assessed for the asst. year 1973 74 by the ITO on 20th Oct., 1975, granting exemption under S. 11 of the Act. However, the CIT initiated proceedings under s. 263 of the Act and came to the conclusion that Deccan Gymkhana Trust was not a public charitable institution and was not entitled to exemption under S. 11 of the Act. Against the order under s. 263, the assessee went in appeal to the Tribunal. By it's order dt. 20th Oct., 1978, the Tribunal agreed with CIT and dismissed the appeal. The Tribunal disallowed the application of the assessee under S. 256(1). However, the High Court, vide order under S. 256(2) of the Act directed the Tribunal to refer two questions, above quoted, to the High Court and accordingly, by statement of case dt. 18th March, 1983, the above two questions were referred to this Court by the Tribunal. To complete the chronology of events, it may be mentioned that for the subsequent asst. yrs. 1974 75, 1976 77 upto 1979 80, the ITO disallowed the assessee's claim for exemption. However, in appeal, the first appellate authority came to the conclusion that the assessee was entitled to exemption under S. 11. Being aggrieved, the Department went in appeal to the Tribunal. In the Tribunal, there was difference of opinion between the learned JM and the AM. The learned JM held that the assessee was not a charitable trust, whereas the learned AM held that the assessee was a public trust and it's objects were of a charitable nature. On such difference, the matter was referred by the President under S. 255(4) to the Third Member, who opined that the assessee did not fulfil the requirements of S. 2(15) and, therefore, disallowed the claim for exemption under s. 11. Following the opinion of the majority, the assessee lost the matter. Ultimately, the matter has come to this Court by way of reference to answer the above two questions.