The main legal point established in the judgment is the interpretation of the assessable entity status under the Income Tax Act, specifically distinguishing between 'association of persons' and 'body of individuals' and determining the taxability of voluntary contributions received by the Fund.

Rajasekhara Murthy J.—The following question arising out of the common order of the Tribunal for the assessment years 1968-69 and 1969-70 has been referred to this court :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee was not an assessable entity and the amounts received by the Fund is not income assessable under the Income Tax Act, 1961 ?"

2. The assessee is the "Bangalore Turb Club Benevolent Fund" which has been constituted by the Banglore Turb Club Benevolent Fund [BTC]. The Fund was administered by the Stewards of the BTC. It was constituted under the BTC Rules. The BTC collected licence fees and fines from the trainers, jockeys and apprentices and transferred those sums to the account of the Fund for the relief of the trainers, jockeys, apprentices, riding boys and their dependents. Rule 182 (of the BTC Rules), under which the Fund was constituted, reads as follows :

"182. All fines imposed under these Rules shall, on realisation, be remitted to the Secretary of the Club.

(i) A fund shall be kept under the name of the Benevolent Fund for the relief of the trainers, jockeys, apprentices, riding boys and their dependents.

The fund shall be under the charge of the Stewards of the Club and shall be administered by them in their discretion.

There shall be credited to such fund : -

(a) all fees received by the Club on account of licences granted to trainers, jockeys and apprentices;

(b) unless otherwise provided or directed by the Stewards of the Club, all fines imposed under these rules and received by the Secretary of the Club;

(c) such other sums as the Stewards of the Club may from time to time determine."

3. The assessee was taxed by the ITO for the assessment years 1968-69 and 1969-70 treating the contributions made by the BTC as the income of the Fund.

4. On behalf of the assessee it was contended that the amount transferred by the BTC was not its income and hence not liable to be taxed under the I.T. Act, 1961. The ITO did not accept this claim and held that the entire receipts transferred by the BTC in its favour constituted its income and brought it to tax in the hands of the Fund treating it as an association of persons (AOP) for purpose of assessment.

5. In the appeal preferred by the assessee, the AAC confirmed the assessment order. But, on further appeal, the Tribunal held that the assessee was not a taxable entity as an AOP. The Tribunal also rejected the contention of the Department that the Fund could be assessed in the status of a body of individuals (BOI). In view of the finding that the assesses fund was not an assessable entity, the Tribunal did not give a clear-cut finding as to whether the income in the hands of the assessee was liable to tax.

6. Being aggrieved by the order of the Tribunal, the Department field an application under s. 256(1) of the I.T. Act for referring the question of law mentioned above for the opinion of this court. Hence, these references.

7. There are two aspects in the question. They are :

(i) Whether the BTC Benevolent Fund can be an assessable entity under the I.T. Act, and

(ii) Whether the sums received by the Found is its income assessable to tax under the I.T. Act.

8. Sri K. Srinivasan, learned senior standing counsel for the Department, contended that the Fund is an assessable entity within the meaning of the inclusive definition of "person" as defined in S. 2(31) of the I.T. Act, and that its receipts from the BTC constitute its income assessable to tax under the I.T. Act. His further submission is that if the assessment made in the status of an AOP was not valid, the Tribunal should have at least upheld the assessment in the status of a BOI. Mr. K. R. Prasad for the assessee contended to the contrary. According to him, the Stewards, who were entrusted with the sums, did not have any purpose except to distribute it to the deserving persons mentioned under r. 182. They did not join together