Law: Income Tax Act, 1922

Section: 2(6C),4,6,10(1),10(6)

Income-tax Act, 1922 -Sections 2(6-C), 4, 6, 10(1), 10(6) -- Business income -Race club -Subscription fees paid by members -Whether income from business and assessable to tax -Held no -- Income Racing Club, incorporated and registered under Companies Act (VII of 1913) -Subscriptions from members -Held, not "income" and therefore not liable to income-tax -- Corresponding Sections: Income-tax Ordinance, 1979 -Sections 22(a), 22(b) -- ORDER {The order was passed by NUR ILAHI, President}.---These are three direct appeals by the assessee relating to the charge years 1962-63, 1963-64 and 1964-65 raising the only and common objection that subscription money received from the members is not liable to income-tax. 2. The appellant is the B Race Club Limited incorporated, and registered under Companies Act, in 1926. Through the only object to create it was establish and run a racing club for its members, their families and friends and to carry out certain other things incidental to the running of that club, it is common ground that it has been carrying on racing and certain other allied businesses by allowing outsiders to participate in the racing activities. Receipts from these business activities are taxable and have always been taxed. in the years earlier to the three years under review subscriptions received from members were also declared as income and brought to tax. It is only for the three years under appeal that the assessee objects to the taxation of the subscription amounts on the ground that the payers and the payees of these amounts being one and the same identity, a club is nothing more than the whole group of members composing it, subscriptions are a payment by the members to the members themselves, therefore, any such payment cannot be called income as no one can trade with himself nor can make profit out of himself. It is also contended before us that the assessee's claim of non-taxability of its subscription receipts is very much based on the doctrine or mutuality and the assessing officer's remarks in his order that the assessee conceded it not to be so was rather misplaced and was not correct. 3. In support of the stand that subscription money was not…

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