1977 (10) TMI 9

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..... 23,097 for the assessment year 1964-65. The Expenditure-tax Officer, by his order dated July 26, 1965, determined the taxable expenditure at Rs. 1,40,375. This amount included a sum of Rs. 99,838 representing the expenditure incurred by the assessee towards maintenance of race horses and racing. In other words, the Expenditure-tax Officer while determining the taxable expenditure rejected the assessee's claim that the expenditure incurred on maintenance of race horses and racing was exempted under the provisions of s. 5(a) of the Act. His appeal to the AAC was also rejected. That led to his filing a further appeal to the Tribunal. Before the Tribunal, the assessee apart from relying upon the exemption provision in s. 5(a) of the Act, also....

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....occur. s. 5(a) is in these terms : " 5. No expenditure-tax shall be payable under this Act in respect of any such expenditure as is referred to in the following clauses, and such expenditure shall not be included in the taxable expenditure of an assessee-- (a) any expenditure, whether in the nature of revenue expenditure or capital expenditure, incurred by the assessee wholly and exclusively for the purpose of the business, profession, vocation or occupation carried on by him or for the purpose of earning income from any other source ; ". The case of the assessee throughout has been that expenditure was incurred by him " on the maintenance and running of race horses for the purpose of earning income " and, therefore, was exempt und....

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....d by the Madras High Court was whether the receipts were taxable or not, the amounts constituted the income and that the income, however, was not taxable as it was an income of a casual and non-recurring nature within the exemption granted under s. 4(3)(vii) of the Indian I.T.Act, 1922. It is manifest from the view expressed by the Madras High Court, that the Madras decision does not in any way support the view expressed by the Tribunal. The Expenditure-tax Officer, the AAC and also the Tribunal were bound to give effect to the circular issued by the Board. The relevant portion of the circular reads: " The Board agrees that expenditure on purchase and maintenance of horses, including the medical expenses will be exempt under section 5....