DIRECTOR OF INCOME TAX Vs. GOREGAON SPORTS CLUB

JUDGEMENT

(1.) This Appeal by the Revenue under Section 260A of the Income Tax Act, 1961 arises out of a decision of the Income Tax Appellate Tribunal dated 24 March 2010 for Assessment Year 2003-04. The following questions of law are raised in the Appeal:

(2.) In the present case the Assessee is registered under the Bombay Public Trusts Act, 1950 and under Section 12A of the Income Tax Act, 1961. The main object of the Assessee is to promote sports and athletic activities. The Assessing Officer upon the return of the income being filed, passed an order of assessment under Section 143(3) but denied the exemption claimed under Section 11. Subsequently, the assessment was reopened since there was a mistake in calculations and while completing the reassessment the Assessing Officer treated the Assessee as a mutual concern and denied an exemption under Section 11. In Appeal, the Commissioner (Appeals) came to the conclusion that the promotion of sports and games fell within the purview of Section 2 (15) since it constituted an advancement of any other object of general pubic utility. The Commissioner (Appeals) noted that the Assessing Officer rejected the claim of the Assessee merely on the ground that the facilities for the promotion of sports are provided to a limited group of people, being the members of the club. The Commissioner (Appeals) held on the basis of factual material on record that the Assessee had acquired land from the State government which was utilised for facilities such as providing an Olympic size swimming pool which was open to the general public on an annual membership basis without restriction as to caste, creed, religion or profession. The order of the Commissioner (Appeals) has been confirmed in Appeal by the Tribunal relying upon its decision dated 18 September 2008 and 29 July 2009 in respect of the Assessee.

(3.) This Court had the occasion to consider similar issues in a Judgment delivered in the case of Director of Income Tax (Exemption) Vs. The Chembur Gymkhana (Income Tax Appeal No.5568 of 2010) decided on 13 February 2012. This Court, following the law laid down by the Supreme Court, has held that the fact that the membership of the club is open to a section of the community would not detract from the fact that the club has been constituted for the advancement of any other object of general public utility. The Club is not formed for the benefit of an individual or a group of individuals as such. However, while affirming that the object of the Club falls within the purview of Section 2(15), this Court had remanded the proceedings back to the Assessing Officer to determine whether as regards the application of the funds, the requirements of Section 11 have been duly fulfilled. In the present case also the Assessing Officer did not have an occasion to consider the application of the funds with reference to provisions of Section 11, since he had come to the conclusion that the Assessee does not fulfill the charitable purpose as defined in Section 2(15).