Amateur Riders Club vs Commissioner of Wealth Tax

T.D. Sugla, J.—This is the assessee''s reference. It relates to the assessee''s wealth-tax assessments for the assessment years 1962-63 to 1970-71. The question of law referred to this court by the Tribunal are :

"1. Whether, on the facts and in the circumstances of the case, the assessee, in the context of the Wealth-tax Act, 1957, can be termed as a ''body of individuals'' or as an association of persons ?

If it can be termed as a ''body of individuals'', then, can it be charged to wealth-tax on the footing that it constitutes an ''individual'', as held by the Appellate Tribunal ?

If the Appellate Tribunal erred in holding that the assesses, in the context of the Wealth-tax Act, was not an ''association of persons'' and in law it does constitute an ''association of persons'', whether even in that case it can be taxed as an ''individual'' ?"

Shri Mehta, learned counsel for the assessee, stated that the issue involved herein is covered by two judgments of our court in the cases of Orient Club Vs. Commissioner of Wealth-tax, Bombay City-II, and Willingdon Sports Club Vs. C.B. Patil, 3rd Additional Wealth-tax Officer, "G" Ward, Bombay and another, in favour of the assessee.

Shri Jetley, learned counsel for the Revenue, on the other hand, stated that it was not so and the issue involved herein required reconsideration. The Supreme Court, it was pointed out, held in the case of The Commissioner of Wealth Tax, Andhra Pradesh, Hyderabad Vs. Trustees of H.E.H. Nizam''s Family Hyderabad, , that the trustees of a trust were included in the expression ''individual'' as used in section 3 of the Wealth-tax Act. The Supreme Court, in that case, had relied on its earlier decision in the case of Trustees of Gordhandas Govindram Family Charity Trust Vs. Commissioner of Income Tax, Bombay, . Following the Supreme Court decision in The Commissioner of Wealth Tax, Andhra Pradesh, Hyderabad Vs. Trustees of H.E.H. Nizam''s Family Hyderabad, , the Gauhati High Court, in the case of Commissioner of Wealth-tax Vs. B.C. Gupta and Sons Ltd., , he pointed out, held that the trustees, in the case of deities, were assessable u/s 21 of the Wealth-tax Act. The Madras High Court was also stated to have held in the case of Coimbatore Club Vs. Wealth-tax Officer, , that the club was an assessable entity under the Wealth-tax Act. The submission of Shri Jetley, thus, is that the question involved herein requires reconsideration as the Supreme Court decision in The Commissioner of Wealth Tax, Andhra Pradesh, Hyderabad Vs. Trustees of H.E.H. Nizam''s Family Hyderabad, , was not noticed in our court''s aforesaid two decisions.

We have gone through the decisions of the Supreme Court in Trustees of Gordhandas Govindram Family Charity Trust Vs. Commissioner of Income Tax, Bombay, and The Commissioner of Wealth Tax, Andhra Pradesh, Hyderabad Vs. Trustees of H.E.H. Nizam''s Family Hyderabad, carefully. Both these cases are of trusts where the legal ownership of the trust funds vested in the trustees. The case of the club is different and we do not think that the ratio of the aforesaid two Supreme Court decisions wherein the question whether the trustees could be assessed under the Wealth-tax Act was considered, have any bearing on the question involved before us. As regards the Gauhati High Court decision, there is hardly any discussion on the subject. Moreover, that was also a case of deities and, for the reasons stated by us above, we do not think that the Supreme Court decision in The Commissioner of Wealth Tax, Andhra Pradesh, Hyderabad Vs. Trustees of H.E.H. Nizam''s Family Hyderabad, can be taken to be an authority for the proposition that the club, like the one before us, is also an assessable entity under the Wealth-tax Act. It is true that the Madras High Court has independently discussed and come to the conclusion that the club like the one in the present case is an assessable entity under the Wealth-tax Act. However, as fairly conceded by Shri Jetley himself, the Madras High Court has not followed the Gujarat High Court decision in the case of Orient Club Vs. Wealth-tax Officer, Circle IV, Ward-K, Ahmedabad, , and the judgments of our court in Orient Club Vs. Commissioner of Wealth-tax, Bombay City-II, and Willingdon Sports Club Vs. C.B. Patil, 3rd Additional Wealth-tax Officer, "G" Ward, Bombay and another, which are binding on us. The mere fact that the Madras High Court has taken a different view is no ground for our not following those judgments.

Accordingly, we hold that the issue involved in the three questions is covered by the judgments of our court''s two judgments in Orient Club Vs. Commissioner of Wealth-tax, Bombay City-II, and Willingdon Sports Club Vs. C.B. Patil, 3rd Additional Wealth-tax Officer, "G" Ward, Bombay and another, and answer the question thus :

The assessee club is not an assessable entity under the Wealth-tax Act and cannot, therefore, be taxed as such.

There will be no order as to costs.