COMMISSIONER OF INCOME TAX Vs. RANCHI CLUB LIMITED

JUDGEMENT

(1.) THIS reference has been made by the Income-tax Appellate Tribunal, Patna Bench, Patna, under the provisions of Section 256(1) of the Income-tax Act, 1961 (hereinafter to be referred to as "the Act" only), seeking the opinion of this court on the following questions of law :

(2.) THE assessee, Ranchi Club Limited, is a company incorporated under the Indian Companies Act, 1913. It is limited by guarantee. THE memorandum of association of the assessee discloses that its main object is to provide a club house and other conveniences and accommodation for the use of its members and their friends. Clauses (4) and (5) of the memorandum are material for the determination of the issues involved since these provide for the contribution of the members to the common fund of the club, guarantee towards debts and liabilities and upon winding up, their participation in the surplus. THE said clauses read as under :

(3.) SUBSEQUENTLY, when the present case came up for consideration before another Division Bench, it was felt that there was some conflict between the views taken by this court in the case of CIT v. Bankipur Club Ltd. [1981] 129 ITR 787 and CIT v. Ranchi Club Ltd. [1987] 168 ITR 120 and, accordingly, this case was referred to a Full Bench.