Income Tax Appellate Tribunal - Ahmedabad
Surat City Gymkhana vs Assistant Commissioner Of Income-Tax on 20 January, 2000
ORDER
Shri T. N. Chopra, Accountant Member
1. These five appeals filed by the assessee relate to assessment years 1988-89 to 1992-93. The central issue involved in these appeals is regarding claim of exemption under section 11 of the I.T. Act, 1961. The claim of exemption has been rejected by the tax authorities against which the assessee, being aggrieved, has filed these appeals.
2. In the grounds of appeal the assessee has also assailed the denial of exemption under section 10(23) for the assessment years involved. However, since the requisite notification has not been issued by the Central Government granting exemption, the learned counsel did not press the claim and the same is, therefore dismissed as withdrawn.
3. In so far as assessment years 1988-89 to 1990-91 are concerned, these three appeals involve the additional question relating to the validity of re-opening of assessments by the Assessing Officer under section 147.
4. On behalf of the assessee, Shri Rasesh Shah, the learned counsel for the assessee appeared and argued the appeals. Written submissions along with paper books in two volumes have been filed. On behalf of the Department, Shri A. D. Makwana, learned Departmental Representative argued the matter.
5. At the outset, it would be useful to set out the relevant facts in brief. The assessee has been registered under the Bombay Public Charitable Trust Act, 1950 vide certificate of registration dated 24-2-1983. On the same date, the assessee trust has been registered as a Society under the Societies' Registration Act, 1860. The assessee trust has also been registered under section 12A of the I.T. Act, 1961 on 24-2-1983. It is further relevant to mention here that the assessee trust was recognised under section 80G by the CIT, Surat on 22-12-1986 for the period from 1-4-1986 to 31-3-1989. Again on 20th August, 1991 the recognition under section 80G was renewed for the further period from 2-5-1990 to 31-3-1993 by the CIT, Surat vide order dated 28-8-1991.
6. The main objects of the assessee trust, as per the Memorandum of Association are :
(i) To encourage sports and games in India, arrange and provide equipments and playgrounds to members for various games such as Table Tennis, Badminton, Swimming, Billiard, Tennis, Volleyball, Cricket, Hockey, Chess, Carrom, Bridge-Cards, Indoor and Outdoor games.
(ii) To arrange games which may be approved under section 10(23) by the Central Government and to guide and help the members.
(iii) To do other activities for sports and games only.
(iv) Gymkhana has no profit motive and, therefore, no activity for profit is to be done.
(v) Membership will be open for all without any discrimination of caste or creed.
(vi) To utilise income or surplus for the purpose of Institute only.
(vii) Any income of the Institution will not be distributed amongst the members.
7. The assessee trust had various categories of members. These categories may be enumerated as under :
(i) Founder Trustee
(ii) Patron Member
(iii) Life Member
(iv) Temporary Member
(v) Honorary Members
(vi) Membership to firm/concern/company.
8. The assessee trust has regularly filed its returns of income since assessment years 1984-85 and the Assessing Officer has allowed claim of exemption under section 11 of the Income-tax Act while making scrutiny assessment for assessment years 1984-85 to 1987-88. For subsequent assessment years, the Assessing Officer again allowed exemption under section 11 for assessment years 1988-89, 1989-90 and 1990-91, however, for assessment years 1991-92 and 1992-93 the Assessing Officer passed orders under section 143(3) on 11-11-1992 and 10-2-1995 denying the claim of exemption under section 11 of the Income-tax Act. Both these assessments are the subject-matter of present appeals before us.
9. The Assessing Officer initiated proceedings under section 147 for assessment years 1988-89, 1989-90 and 1990-91 and made re-assessments denying claim of exemption under section 11. These assessments are also the subject-matter of present appeals.
10. Validity of re-assessments for assessment years 1988-89 to 1990-91
11. Re-assessment proceedings initiated by the Assessing Officer under section 147 for Assessment years 1988-89 to 1990-91 for the purpose of denying claim of exemption under section 11 and section 10(23) have been strongly assailed before us by the learned counsel inter alia on the ground that the requisite conditions for taking action under section 147 are not fulfilled. The ld. counsel submitted that the original assessment for assessment years 1988-89 was made under section 143(3) on 18-3-1991 by the Assessing Officer after making inquiries as well as collecting the relevant information from the assessee vide letters dt. 6-9-1990, 18-9-1990, 18-12-1990 and 5-2-1991. For Assessment years 1989-90 and 1990-91 assessments were made under section 143(1). The ld. counsel submitted that the Assessing Officer is not entitled to re-open these assessments without bringing on record any fresh facts or material which may form the basis of satisfaction on the part of the Assessing Officer that income has escaped assessment. The ld. counsel argued that the jurisdiction under section 147 can be invoked only if the Assessing Officer has reason to believe that income has escaped assessment. In support of his contentions, the ld. counsel relied on the following decisions :
(1) Ganga Saran & Sons (P.) Ltd. v. ITO [1981] 130 ITR 1 (6 Taxman 14) (SC) (2) Bir Arjna Enterprises (P). Ltd. v. ITO [1993] 204 ITR 258 (J&K) (3) Inventors Industrial Corpn. Ltd. v. CIT [1992] 194 ITR 548 (Bom.).
12. Relying on the decision of the Gujarat High Court in the case of VXL India Ltd. v. Asstt. CIT [1995] 215 ITR 295, the ld. counsel argued that the assessment cannot be reopened on the basis of mere change of opinion. In so far as merits of the claim of exemption under section 11 is concerned, the ld. counsel made detailed arguments in support of the claim and the same would be adverted to and considered by us while discussing the issue whether the assessee trust is liable to claim of exemption under section 11 or not.
13. On behalf of the Department, the ld. DR supported the reopening under section 147 and placed reliance on the decision of Gujarat High Court in Praful Chunilal Patel v. M. J. Makwana/Asstt. CIT [1999] 236 ITR 832.
14. During the course of hearing the Bench called upon the learned DR to furnish the relevant assessment records so that Bench could look into the reasons recorded by the Assessing Officer in support of the reopening of the assessments under section 147. The relevant assessment records have been produced before us. However, we find that the mandatory requirement of recording reasons before issuing notice under section 148 has not been fulfilled by the Assessing Officer. No such reasons are available on record and despite specific opportunity allowed by the Bench so as to enable the DR to trace the relevant papers on the record containing the reasons for reopening the assessments, the ld. DR was unable to produce before us reasons recorded by the Assessing Officer for reopening the assessments for assessment years under reference i.e. assessment years 1988-89 to 1990-91. All that the learned DR could place before the Bench was a copy of the proposal under section 263 sent to the CIT by the Assessing Officer on 24-11-1992 suggesting action under section 263. The grounds for suggesting action under section 263 as recorded in the proposal read as under :
"The assessee is an Association having income from members and non-members, interest etc. The assessee is registered as society, under the Society Registration Act and Public Trust as per Public Trust Act. As described in the assessment order for assessment year 1991-92 at page No. 3, para 5(3), the assessee is mutual concern and neither it is entitled to exemption under section 10(23) (since it is not approved by the Central Government) nor under sections 11 and 12 of the Act. Therefore keeping in view the position narrated in assessment order for assessment year 1991-92 (copy enclosed for immediate reference), the assessment for assessment year 1988-89 is proposed for action under section 263 of the Act."
15. After careful consideration of the facts and circumstances of the case as well as submissions made before us, we have no hesitation in cancelling the impugned re-assessments made by the Assessing Officer under section 147. The facts on record clearly indicate that the Assessing Officer has issued notices under section 148 for the three assessment years involved without complying with the statutory requirement of recording reasons in support thereof. Issue of notice under section 148 without recording satisfaction of the Assessing Officer regarding escapement of income and reasons in support thereof would be ab initio void and without jurisdiction. The proposal under section 263 sent by the Assessing Officer for assessment year 1988-89 to the CIT could not by any stretch of imagination be construed as compliance with the mandatory provisions for recording reasons as contained under section 148(2). On this ground alone, the re-assessments made for assessment years 1988-89 to 1990-91 are liable to be cancelled.
16. Apart from the legal infirmity in the re-assessments on the ground of lack of jurisdiction, as mentioned above, we feel that even on merits the reopening of assessments, in the absence of any fresh facts or material, cannot be sustained. The Assessing Officer has allowed exemption under section 11 to the assessee trust as a charitable Organisation after conducting detailed inquiries into the facts of the case, as evident from a number of communications sent ' to the assessee in this behalf on 6-9-1990, 18-9-1990, 18-12-1990 and 5-2-1991 and on the same facts, there is no justification for the Assessing Officer to reopen the assessments on the basis of a change of opinion regarding allowability of exemption under section 11. The judicial authorities cited by the ld. counsel, as referred to above, fully support the view being taken by us here. The decision of the Gujarat High Court in Praful Chunilal Patel's case (supra) cited by the ld. DR does not in any manner support the case of the Department.
17. For the foregoing reasons, the re-assessments made by the Assessing Officer for assessment years 1988-89 to 1990-91 are held as illegal and without jurisdiction and are hereby cancelled.
18. Exemption under section 11 of the I.T Act, 1961
19. This ground of appeal concerning denial of exemption under section 11 is common in all the five appeals of the assessee. This is in fact the core issue which has been argued by both the parties before us. The assessee made the claim for exemption under section 11 before the Assessing Officer on the ground that the assessee trust was established for the encouragement of the sports and games and the objects are of general public utility. The assessee placed reliance on the decision of the Andhra Pradesh High Court in the case of CIT v. Andhra Pradesh Riding Club [1987] 168 ITR 393. The Assessing Officer however held that the decision of Andhra Pradesh High Court was not applicable on the ground that in that case there was an object of imparting training. According to the Assessing Officer, the assessee is providing facilities for its members in respect of games which can be termed as recreational activities. The Assessing Officer observed that the activities undertaken by the assessee are more in the nature of entertainment rather than encouragement or promotion of sports. The Assessing Officer also referred to the fact that the membership fees charged by the assessee club is very high as compared to the fees charged by Andhra Pradesh Riding Club. In support of his view, the Assessing Officer relied on the decision of the Calcutta High Court in the case of Cricket Association of Bengal v. CIT [1959] 37 ITR 277 and Madras High Court in the case of CIT v. Ootacamund Gymkhana Club [1977] 110 ITR 392. The Assessing Officer observed that the assessee is a club limited to the members which constitute body of individuals existing on the subscription of fees of members and benefits arising therefrom are also limited to its members. On these facts the Assessing Officer treated the assessee club as a mutual concern and held that guest fee as well as interest income, which is not governed by the principle of mutuality, would be liable to tax. The Assessing Officer accordingly denied exemption under section 11 holding that the assessee trust is not a charitable Organisation. In Support of his view, the Assessing Officer heavily relied on the decision of the Gujarat High Court in the case of CIT v. Shree Jari Merchants Association [1977] 106 ITR 542 and Sports Club of Gujarat Ltd. v. CIT [1988] 171 ITR 504 (37 Taxman 38).
20. Aggrieved with the orders of the Assessing Officer, the assessee carried the matter in appeal before the CIT(A). The CIT(A) however confirmed the conclusion and reasoning adopted by the Assessing Officer and dismissed the appeals of the assessee.
21. Assailing the orders of the tax authorities, the learned counsel strenuously urged that the primary object of the assessee trust is the promotion and encouragement of sports and games and the membership is open to all without any discrimination of caste and creed. The learned counsel submitted that the assessee trust has no profit motive and the income or the surplus generated by its activities can be applied for the purpose of the assessee trust as stipulated in the Memorandum of Association. It has been laid down in the trust deed that any income of the assessee trust will not be distributed amongst the members. The ld. counsel placed reliance on the Board Circular No. 395, dt. 24-9-98 and argued that the object of the club should be treated as falling within a purview of General Public Utility.
22. The ld. counsel further pointed out that the assessee trust has been recognised by the Department of Youth Affairs and Sports, Ministry of Human Resources Development, Govt. of India and the grant of Rs. 6.84 lakhs has been sanctioned for construction of a sports stadium. The learned counsel submitted that coaching camps and tournaments of various sports and games organised by the assessee trust are not restricted to only the members but are open to the General Public. With regard to the membership fees being high as commented by the Assessing Officer, the ld. counsel pointed out that there are different types of membership, like founder trustee member, life member, patron member, etc. Similarly there is provision for honorary members also.
23. The ld. counsel argued that since the membership of the assessee trust is open to the public without any discrimination, it cannot be said that the assessee trust does not advance object of General Public Utility. In support of this contention, reliance is placed on the decision of Rajasthan High Court in the case of CIT v. Paramhans Ashram Trust [1993] 203 ITR 711.
24. The ld. counsel pressed into service an array of rulings of various High Courts and the Apex Court in support of his contentions that the objects of the assessee trust are charitable in nature. These decisions are as under :
(a) CIT v. Breach Candy Swimming Bath Trust [1955] 27 ITR 279 (Bom.)
(b) CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC)
(c) CIT v. Ootacamund Gymkhana Club Case (supra)
(d) Addl. CIT v. Surat Art Silk Cloth Mfrs. Association [1980] 121 ITR 1 (19 Taxman 193) (SC)
(e) Bar Council of Uttar Pradesh v. CIT [1983] 143 ITR 584 (12 Taxman 209) (All.)
(f) Andhra Pradesh Riding Club's case (supra)
(g) Cochin Chamber of Commerce & Industry v. CIT [1994] 205 ITR 536 (Ker.)
25. The ld. counsel next argued that once registration has been allowed by the CIT under section 12A, the Assessing Officer is not entitled to deny the exemption under section 11 on the ground that the objects of the trust are not charitable. Reliance is placed on the following decisions :
(1) ITO v. Mrs. Dwarika Prasad Trust [1989] 30 ITD 84 (19 Taxman 193) (Delhi) (TM) (2) Audit Bureau of Circulations v. Asstt. Director of Income-tax [1995] 55 ITD 408 (Bom.)
26. The ld. counsel further argued that the assessee trust has been allowed exemption under section 11 right since assessment years 1984-85 to 1988-89 under scrutiny assessments and there is no justification for making a departure subsequently when the facts and circumstances remain the same and no new facts have been brought on record by the Income-tax Department in support of its view that the assesses is not a charitable Organisation. The ld. counsel argued that the principle of res judicata would apply in the absence of any fresh material in view of the following decisions :
(a) CIT v. Bhilai Engg. Corpn. (P.) Ltd. [1982] 133 ITR 687 (10 Taxman 87) (MP)
(b) CIT v. Shri Agastyar Trust [1984] 149 ITR 609 (18 Taxman 178) (Mad.)
(c) M.A. Namazie Endowment v. CIT [1988] 174 ITR 58 (38 Taxman 126) (Mad.)
(d) CIT v. Hindusthan Motors Ltd. [1991] 192 ITR 619 (Cal.)
(e) Sardar Kehar Singh v. CIT [1992] 195 ITR 769 ([1991] 55 Taxman 416) (Raj.)
(f) Smt. Godavari Devi Sehgal v. ITO [1992] 198 ITR 108 (Delhi) (sic)
(g) CIT v. Kamla Town Trust [1992] 198 ITR 191 (All.)
(h) Pukhraj Rikhabdass v. CWT [1993] 203 ITR 770 ([1995] 78 Taxman 566) (Raj.)
(i) CIT v. P. Krishna Warrier [1994] 208 ITR 823 (Ker.)
(j) Taraben Ramanbhai Patel v. ITO [1995] 215 ITR 323 (Guj.).
27. The learned DR, on the other hand, reiterated the case of the Department in support of the denial of exemption under section 11 as made out in the orders of the tax authorities below. Placing reliance on the decision of Allahabad High Court in the case of Fifth Generation Education Society v. CIT [1990] 185 ITR 634 the learned DR argued that registration under section 12A by the CIT would not debar the Assessing officer from looking into the objects of the trust whether the same are charitable or not and whether exemption under section 11 is allowable or not. The ld. DR further relied upon the decision of the Gujarat High Court in the case of Shantagauri Ramniklal Trust v. CIT [1999] 239 ITR 528. The ld. DR further cited the following decisions in support of his arguments that claim of exemption under section 11 is not allowable to the assessee trust :
(1) Khemraj Nemichand Shrishrimal Charitable Trust v. CIT [1998] 231 ITR 43 (96 Taxman 375) (MP) (2) CIT v. I.T.I. Employees Death & Superannuation Relief Fund [1998] 234 ITR 308 (101 Taxman 315) (Kar.) (3) Nachimuthu Industrial Association v. CIT [1999] 235 ITR 190 (SC) (4) CWT v. Gangabai Charities [1999] 236 ITR 735 (Mad.) (106 Taxman 69) (5) Hyderabad Race Club v. CWT [1997] 223 ITR 703 (SC)
28. We have given our thoughtful consideration to the rival contentions made before us. We have also carefully gone through the array of judicial decisions of various High Courts and the Apex Court cited by the learned representatives of both sides before us. At the outset, we note that the tax authorities have treated the assessees trust as a mutual society bringing to tax interest income as well as club fees and excluding the subscription and contribution of the members from the purview of taxation. The assessee trust formed for the purpose of promotion of sports and games which has been conducting tournaments and coaching camps for the participants and which has been sanctioned substantial grants-in-aid by the Govt. of India for construction of sports stadium cannot be treated as a mutual concern. It is to be noted that the Memorandum of Association of the assessee trust provides that the surplus funds on dissolution of the society would not be distributed amongst the members but the same would be utilised for the charitable objects as enumerated in the trust deed. On these facts the conclusions of the tax authorities that the assessee trust is a mutual concern is factually and legally unsustainable.
29. The objects of the assessee trust, as reproduced hereinbefore, are unquestionably the promotion and encouragement of sports. The circular No. 395, dt. 24-1-1998 issued by the CBDT clearly envisages that such objects for promotion of sports and games are to be treated as charitable objects within the meaning of section 2(15) of the I.T. Act, 1961. The relevant portion of the circular may be extracted as under :
"The question whether promotion of sports and games can be considered as being charitable purpose has been examined. The Board is advised that the Advancement of any project beneficial to the public or section of the public as distinguished from an individual or group of individuals would be object of general public utility. In view thereof, promotion and games is considered to be a charitable purpose within the meaning of section 2(15). Therefore, an association or institution engaged in the promotion of sports and games can claim exemption under section 11 of the Act, even if it is not approved under section 10(23) relating to exemption from tax of sports, association and institutions having their objects as the promotion, control, regulation and encouragement of the specified sports and games."
30. The Board circular in our opinion clearly supports the claim of the assessee that it is a charitable Organisation entitled to claim of exemption under section 11. It is further to be noted that the CIT, Surat has registered the assessee trust on 4-1-1984 under section 12A. Section 12A provides that for claiming exemption under section 11 it is mandatory that an application for registration of the trust in prescribed Form No. 10A is filed before the CIT along with the instrument under which the institution is established accompanied with the accounts of the institution relating to such prior year or years for which such accounts have been made up. The grant of registration by the CIT under section 12A does not constitute an empty formality which is to be completed in a routine and mechanical fashion by the CIT without any scrutiny regarding the charitable nature of the trust or institution required to be registered under the I.T. Act. It goes without saying that registration under section 12A is to be granted only if the CIT is satisfied that the trust or the institution is a charitable institution and its objects are covered as charitable as per the definition of "charitable purposes" contained under section 2(15) of the Act. Once the institution has been registered under section 12A, it is for the Assessing Officer to find out whether the income of the institution has been applied for the objects of the institution and the statutory conditions as contained under sections 11 to 13 are fulfilled by the assessee. In our opinion it is beyond the province of the Assessing Officer to reject the claim of exemption under section 11 by looking into the objects of the association and holding the same as non-charitable in nature. In support of the view being taken by us here, reliance is placed on the judgment of Calcutta High Court in Ananda Marga Pracharaka Sangh v. CIT [1996] 218 ITR 254. At page 270 of the report their Lordships observed as follows :
"It may be mentioned here that the registration of the charitable society as a charitable society under section 12A is not an idle or empty formality. This is apparent from the tenor of the provisions of section 12A. It requires that no only an application should be filed in the prescribed form setting out the details of the origin of the trust but also the names and addresses of the trustees and/or managers. The form further requires a certified copy of the instrument of its creation as well as two copies of the latest accounts of the applicant-trust or institution for as far as back as three years to accompany each application. The requirement of obtaining the details as also the copies of the past accounts cannot be said to be a ceremonial one. The purpose is to examine the objects of creation as well as an empirical study of the past activities of the applicant for three years where the application is made belatedly so that the Commissioner could come to a conclusion on examination of all the factors that the applicant is really a charitable trust or institution eligible for registration."
31. Similar view has been taken by the Special Bench of the Tribunal in the case of Mrs. Dwarika Prasad Trust (supra) relied upon by the ld. counsel. The decisions of the Allahabad High Court in Fifth Generation Education Society's case (supra) and Calcutta High Court in CIT v. Ganapatrai Sagarmal [1990] 182 ITR 89 have taken similar view in the matter. In view of the aforesaid discussion, we feel that after allowing registration under section 12A it is not for the Assessing Officer to deny exemption under section 11 on the ground that the assessee Association is not charitable in nature.
32. Regarding the two decisions cited by the ld. D.R. viz. Fifth Generation Education Society's case (supra) and Shantagauri Ramniklal Trust's case (supra), we find that both these decisions rather support the view being taken by us here and the reliance placed by the learned DR is entirely mis-conceived. In Shantagauri Ramniklal Trust's case (supra) the Hon'ble Gujarat High Court held that whenever application is made for registration under section 12A, it is for the CIT to make an inquiry and reach conclusion regarding the charitable nature of the assessee trust. Obviously once the conclusion has been reached by the CIT that the objects of the trust are charitable and the CIT proceeds to register the trust, the Assessing Officer is precluded from carrying out the same exercise again and deny the claim of exemption under section 11.
33. It is further to be noted that not only the trust has been registered under section 12A of the Act by the CIT, the trust has been accorded recognition by the CIT under section 80G(5) vide order dt. 22-12-1986 and again vide order dt. 28-8-1991. Vide the first order recognition has been allowed for the purpose of section 80G for the period 1-4-1986 to 31-3-1989 and vide the second sanction letter dt. 28-8-1991 recognition has been given for the period 2-5-1992 to 31-3-1993. Thus the CIT has accorded recognition to the assessee trust as a charitable Organisation for the purposes of allowing deduction to the donees under section 80G. This clearly indicates that the CIT is satisfied that the assessee is charitable Organisation fulfilling the conditions laid down under section 80G(5) for the period indicated in the two certificates issued by the CIT. After the CIT has allowed the benefit to the assessee institution under section 80G and also registered the assessee institution as a charitable Organisation under section 12A, we see no reason for the Assessing Officer to come to a conclusion that the assessee trust is not a charitable Organisation entitled to exemption under section 11.
34. It is further to be noted that the assessee trust has been allowed exemption by the Assessing Officer under section 11 for assessment years 1984-85 to 1987-88. Further more, the assessee institution has been registered under section 12A by the CIT and conferred the benefit of recognition under section 80G. Obviously the instrument under which the assessee trust has been constituted as well as its rules and regulations have been examined by the Revenue Authorities while granting registration under section 12A as well as under section 80G and exemption under section 11 for the earlier assessment years. We see no reason why a contrary view is being taken by the Revenue authorities in the context of identical facts and circumstances for the assessment years under appeal. There is no quarrel with the proposition that the doctrine of res judicata is not applicable to income-tax proceedings. However, this principle is subject to limitations for there should be finality and certainty in all litigations including litigation arising out of the Income-tax Act and an earlier decision on the same question cannot be reopened if that decision is not arbitrary or perverse and if it had been arrived at after due inquiry. Certainty and finality are the most essential attributes of matured and developed tax jurisprudence. We do not approve of the approach of the Revenue to turn a somersault in utter disregard of the aforementioned principles of jurisprudence and take a view that the objects of the assessee trust are not charitable in nature.
35. Now coming to the decisions relied upon by the Assessing Officer in support of denial of exemption under section 11, the decision of Gujarat High Court in the case of Sports Club of Gujarat Ltd. (supra) and Shree Jari Merchants Association (supra) are entirely distinguishable on facts. In both these decisions the question involved centered around the principle of mutuality. There was no occasion for their Lordships to consider whether Sports Club of Gujarat or Shree Jari Merchants Association have charitable objects or not. These two decisions therefore render no assistance to the case of the Revenue. The next decision cited by the Revenue has been rendered by the Calcutta High Court in the case of Cricket Association of Bengal (supra). In that decision their Lordships observed that the Association was not incorporated under any law and therefore the claim of exemption on the ground of the property held for charitable purposes cannot be allowed. In the assessee's case the assessee trust is registered under the Societies' Registration Act as well as the Bombay Public Charitable Trust Act. There is thus legal obligation for applying the income and funds of the assessee trust for the objects contained in the Memorandum of Association. The Calcutta High Court decision is therefore not applicable. The next decision relied upon by the Revenue is Ootacamund Gymkhana Club's case (supra). This decision does not in any manner militate against the case of the assessee.
36. In our opinion the objects of the assessee trust being encouragement of sports and games are clearly charitable in nature in terms of the definition contained in section 2(15) of the Act. Merely because the assessee charges fees from its members would not in any manner intrinsically alter the nature and character of the services rendered by the assessee trust. The dominant purpose and objective of the assessee trust is promotion of sports and games and any fees charged from the members is not motivated by commercial considerations. The fees is charged admittedly for the purposes of provision and management of sports facilities for the General Public. The fact that without becoming a member of the assessee trust, the facilities provided by the assessee trust cannot be availed off, would not by itself indicate that the activities of the club are non-charitable. The word "public" used in the expression "object of General Public Utility" in section 2(15) does not necessarily refer to the entire public. It may embrace and include a segment of the public to bring the expression within the ambit of section 2(15).
37. For the reasons discussed above and particularly keeping in view the various judicial pronouncements on the issue considered by us as above, we hold that the assessee trust is entitled to the claim of exemption under section 11 of the Act. We would accordingly hold that the assessee trust is a charitable institution under section 11(1) of the I.T. Act and would be entitled to exemption under section 11 if other conditions regarding application and utilisation of income as per the provisions of sections 11 to 13 are satisfied in the instant case. With these observations the appeals of the assessee for Assessment Years 1988-89 to 1990-91 are allowed and for Assessment Years 1990-91 and 1991-92 the appeals are disposed of protanto as above.
38. Before parting with these appeals, we may note that we have considered various judicial authorities cited before us by both the sides even if some of these might not have been specifically discussed in the order.