Law:

Section:

Section 11 of the Income-tax Act, 1961 (Corresponding to section 4(3)(i) of the Indian Income-tax Act, 1922) - Charitable or religious trust - Exemption of income from property held under - Assessment year 1960-61 - Whether an organization intended to promote social and physical well being of persons to enable them to participate in sports and game has a charitable purpose - Held, yes - Whether, where dominant object of assessee-club was encouragement and management of sports and games which was not confined only to its members nor to any particular sect or region but comprehended whole country, assessee would be entitled to relief under section 4(3)(i) of 1922 Act - Held, yes FACTS The assessee club was registered under section 26 of the Indian Companies Act, 1913. Its objects were inter alia, to provide a club for the accommodation of members and their friends and the encouragement and management of sports and games and to promote social inter-course amongst the members of the club and their friends and encourage and manage sports and games. Clause 12 provided that the income and property of the club would be applied solely towards the promotion of the objects of the club and that no portion thereof should be paid or transferred directly or indirectly by way of dividend, bonus or otherwise howsoever, by way of profit to the members of the club, or to any of them, or to any person claiming through any of them. For the assessment year 1960-61 the assessee was originally assessed at Rs. 50 on 'property' income. Thereafter, it was noticed by the ITO that the assessee had been in receipt of advertisement and donations from non-members. In the view of the ITO the assessee was not entitled to exemption in regard to such receipts. He also found that the property income computed already required modification. He, accordingly, took proceedings under section 147 and brought to tax 'property' income from club house and another sum as income from 'other sources'. The property income presented merely the bona fide annual value of the club house which was not let out to any one. On appeal, the AAC confirmed the action of the ITO. On further appeal, the Tribunal upheld the…

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