TaxTMI 
TaxTMI 
1983 (10) TMI 48
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and the amounts received by the Fund is not income assessable under the Income-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 fu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of a body of individuals (BOI). In view of the finding that the assessee-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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rson " in the 1961 Act and it was not an assessable entity under the provisions 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at emphasis on the last statement of law in the above decision of the Madras High 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 pu....