Promotion of sports and games may qualify as charitable purpose when the dominant object serves public physical and social well-being.

Promotion of sports and games can fall within "charitable purpose" as advancement of an object of general public utility where the activity serves the physical and social well-being of the public and is not confined to members alone. A licence under section 26 of the Indian Companies Act, 1913 was treated as only prima facie evidence and not conclusive for income-tax purposes. The club's social intercourse object was regarded as ancillary rather than a distinct non-charitable purpose, so the dominant purpose remained charitable. Relief under section 4(3)(i) of the Income-tax Act, 1922 was therefore available.

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Issues: Whether the assessee-club was entitled to exemption under section 4(3)(i) of the Income-tax Act, 1922 on the footing that its income was derived from property held under trust or other legal obligation wholly for charitable purposes, and whether the promotion of sports, games and social intercourse among members constituted a charitable purpose.

Analysis: The club was incorporated under section 26 of the Indian Companies Act, 1913 with objects directed to the encouragement and management of sports and games, together with incidental clauses concerning social intercourse among members. The court held that the grant of a licence under section 26 was only prima facie indicative and was not conclusive for income-tax purposes. Applying the statutory definition of charitable purpose under section 4(3)(i), the court treated the advancement of objects of general public utility as including the promotion of sports and games where the activity tended to the physical and social well-being of the public and was not confined to members alone. The court further held that the object of promoting social intercourse among members was ancillary and not a distinct non-charitable primary object, and that the dominant object of the club remained charitable.

Conclusion: The assessee-club was entitled to relief under section 4(3)(i) of the Income-tax Act, 1922, and the question referred was answered in the affirmative in favour of the assessee.

Final Conclusion: The exemption claim succeeded because the club's predominant purpose was held to be advancement of an object of general public utility, with the remaining clauses treated as merely ancillary.

Ratio Decidendi: Promotion of sports and games may constitute an object of general public utility where the dominant purpose is the public's physical and social well-being and any non-charitable features are merely incidental or ancillary.

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