Law:

Section:

JUDGMENT Chakravartti, CJ.-The point involved in this reference is a short point, but not for the matter of that a very easy point to decide. The assessee is the Royal Calcutta Turf Club whose business is to hold race meetings in Calcutta on a commercial basis. It holds two series of meetings during two different seasons of the year. The Club does not own any horses, nor does it employ any jockeys. It only holds race meetings. At those meetings, horses are run by persons who own them and they are ridden by jockeys who are employed by the owners. The Club has thus no direct concern with horses or jockeys. Nevertheless, it is important to the Club that jockeys of the requisite skill and experience should be available to the owners, because no horses can be run unless there are jockeys to ride them and no races can be held unless there are jockeys to ride horses at the races. It appears that some time before 1948, the Club came to think that there was a risk of a serious decline in the number of jockeys available in Calcutta and that if such a decline did in fact occur, races to be held under the auspices of the Club might have to be abandoned and its business closed down. It was, therefore, thought expedient to take some steps for providing against that contingency. The step taken was to establish a school for the training of Indian boys as jockeys so that, when they passed out and got their riding licences, they might be available to the owners desiring to race their horses at meetings held by the Club. It has been found that the school did not prove a success and was closed down after a brief existence of three years. It has also been found that the young men trained at the Club's school would be under no obligation to serve owners entering their horses for races held by the Club. After obtaining their riding licences, they would be at complete liberty to accept employment under anyone they liked and anywhere in any country. During the year ending on the 31st of March, 1949, the Club spent a sum of Rs. 62,818 on the running of its riding school. In the course of its assessment to income-tax for the year 1949-50 and assessment to business profits tax for the…

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