P.Chakravartti, C.J. - (1.) This is a Reference under Section 66(2) of the Income-tax Act made by the Income-tax Appellate Tribunal at the direction of this Court of two questions of law arising out of three assessments of the Cricket Association of Bengal, The question referred is practically a single question, but it has been split up into two separate questions, because by the time of the assessment for the third year, the law had been slightly changed.
(2.) The Cricket Association of Bengal is an unregistered and unincorporated body. Its membership is open to clubs, District Associations, Universities, Indian States and, subject to certain conditions, individuals. There is no trust deed or other document vesting any property in the Association for any purpose connected with its activities. Its objects are set out in Rule 4 of its Rules under 13 heads, but they may be roughly summarised as promotion of the game of cricket played in accordance with the highest standard, though there are certain subsidiary objects which will not be covered by such a summary. As between its members, it is a mutual association and receives payments by way of subscriptions and donations. The surplus of its receipts from those sources over the expenses has not been sought to be assessed, because the Department concedes that such surplus is not chargeable to tax. The Association, however, had other receipts as well from a totally different source. One of its objects is to organise, authorise or control cricket tournaments and leagues. It appears that during the accounting year relative to the assessment year 1950-51, it organised matches between a team from the West Indies and Indian teams & also held what are know as the Ranji Trophy Matches. In the accounting year relative to the assessment year 1951-52, it organised matches between Commonwealth teams and, as in the previous year organised the Ranji Trophy Matches. In the accounting year relative to the assessment year 1952-53, it again organised matches between Commonwealth teams and the Ranji Trophy Matches, but it also organised a School Tournament at Dehra Dun. For admission to all these matches it charged the public a fee by way of gate money. The receipts from this source were fairly considerable, but when the Department called for a return of its income, the Association did not show this income, but, on the other hand, showed its income as nil. The point it took was that its income was exempt from taxation under Sections 4(3)(i) and 4(3) (i)(a) and so far as the third year is concerned, under Section 4(3)(i) of the Income-tax Act because, as was pleaded, the income had arisen from property held under a legal obligation to be applied to the promotion of cricket which was a charitable purpose.
(3.) The Income-tax Officer did not accept the assessee's plea of exemption. He held that the object of the Association being merely the promotion of a game, it could not be said that the Association was pursuing a charitable object and further that even assuming that promotion of cricket could be regarded as a charitable purpose, the rules showed that the Association's activities could take other directions as well. Accordingly, the Income-tax Officer assessed the receipts from the exhibition matches after allowing certain deductions. On appeal, the Appellate Assistant Commissioner agreed with the Income-tax Officer that the professed object pursued by the Association was not a charitable object and he held further that the income concerned did not arise from any property held under a trust or other legal obligation. The assessee next appealed to the Tribunal which upheld the authorities below on all the points. It was held that the income assessed had not been derived. from any property held on trust, because there was no property at all out of which the income could be said to have arisen, nor was there any trust. The Tribunal held further that even assuming that the business of holding exhibition matches was property and assuming further that the Association was under a legal obligation not to spend its income otherwise than for the advancement of the game of cricket, its claim was still bound to fail, because advancement of the game of cricket could not be said to be a charitable purpose. This decision was supported by reference to a number of decided cases, mostly of English Courts.;