COMMISSIONER OF INCOME TAX BOMBAY CITY Vs. BREACH CANDY SWIMMING BATH TRUST BOMBAY

JUDGEMENT

(1.) The assessee is the Breach Candy Swimming Bath Trust, an association of persons, and the main question that arises on this reference is whether the income derived by it from certain activities is exempt from tax.

(2.) Now, the property of this trust consists of securities and immoveable properties, and no question arises on this reference as to the liability of the trust to pay tax on that income, but when the assesses went in appeal before the Tribunal against this assessment, the contention that was put forward by counsel for the Trust was that the Trust was a mutual association and it was exempt from tax in respect of services rendered to its members. That contention was not pressed before the Tribunal, but a new contention was put forward that the Trust being a charitable trust the income derived by the charitable trust was exempt from taxation. The Tribunal permitted the assessee to raise this point and answered it in its favour, and one of the questions that the Commissioner has asked the Tribunal to raise, and which has been referred to us, is: "Whether the Tribunal is competent in law in permitting an assessee to raise a ground at the time of the hearing of the appeal -- a ground which was not raised either before the Income-tax Officer or before the Appellate Assistant Commissioner, or in the grounds of appeal before the Appellate Tribunal?" On this question Rule 12, Appellate Tribunal Rules, 1946, is quite clear. The Tribunal has been given the authority to permit a new point to be raised provided that the party who is affected by the raising of this new point has been given sufficient opportunity of being heard on this point, and the Tribunal in the statement of the case points out that when this point was raised the representative of the Department never asked for an adjournment to consider the question and the matter was argued without the appeal being adjourned and therefore in the opinion of the Tribunal the Department was not denied sufficient opportunity of being heard on this new ground raised by the assessee. Mr. Joshi has not pressed this first question and it is obvious that that question must be answered against the Commissioner.

(3.) But the real question is with regard to the income of the Trust as a charitable institution. Now, the income in respect of which exemption is sought is income derived by the institution selling season tickets, tickets for daily admission, income made by the institution carrying on a bar and a restaurant and it is the surplus which is arrived at after debiting the necessary expenses in respect of the carrying on of these activities, and the question that we have to consider is whether this income is exempt from tax.