Indian Kanoon - Search engine for Indian Law

b) CIT vs. Hyderabad Race Club Charitable Trust, 262 ITR 194 (AP) wherein it was held that the objects of the trust were purely charitable in nature. The main objects of the trust were advancement and propagation of education, medical aid and relief of the poor. In fact, promotion of sports and games was also one of the charitable objects. Merely because a discretion was vested in the trustees to utilise the income to any one or more of the objects that would not make any difference. The transactions in conducting the races and inter-venue betting were meant for achieving the primary objects of the trust and could not be called a business and the income derived from such transactions could not be called an income from the business. Assuming that it was a business as contemplated under section 2(13) of the Act, the same was exempted under section 11. The licence to run races and betting itself could not be treated as property and the said property was obtained with the consent of the club and with the licence granted by the Government of Andhra Pradesh. The term "property" itself had widest import for income tax purposes and was inclusive of holding a licence. The income derived by the trust for the relevant assessment years was from property held under trust and, as such, it was computed under section 11. Even if it were not treated as income from the property held under trust, it could be treated as voluntary contribution give by the club to the assessee trust as contemplated under section 12. Such voluntary contributions could be characterised only as a capital receipt in the assessee's hands. Thus, it could not be held that there had been business in the normal sense in such arrangement and in the facts and circumstances, it was not such a business which would be hit by section 13(1)(bb). The trust was entitled to exemption.