SABYASACHI MUKHARJI, J.

( 1 ) THE assessee, the Tollygunge Club Ltd. , is a company limited by guarantee. It is a social and sporting club and one of its activities is running gymkhana racing, i. e. , horse races in which amateur riders take part. It appears that for admission into the enclosures on the race course an, admission fee is charged and the member of the public whether he comes on his own or is a guest of the member of the club has to pay not merely an admission fee, but a surcharge of annas eight and two separate tickets are issued in respect of these amounts. The system of levying such a surcharge commenced from the year 1945, in terms of a resolution dated 28th February, 1945, passed at a meeting of the general committee. The relevant extract is as follows:"13. (c) It was decided to charge a flat rate of Rs. 4-8-0 admission to the races, plus a surcharge of 0-8-0 which will go to the Red Cross fund. The price of admission for officers and other ranks to remain at Rs. 5 (rupees 4-8-0 plus 0-8-0 surcharge) and Re. 1 respectively. "

( 2 ) THEREAFTER, in November, 1950, a further resolution was passed as follows:"9. (a) Gymkhana.--The following recommendations of the senior steward, Mr. A. R. Foster, were approved with effect from the first day of the Spring Meeting 1950: (i) The present surcharge of 0-8-0 on entrance tickets to be earmarked for local charities and not solely for the Indian Red Cross. "

( 3 ) SPECIMEN copies of the tickets are to be found at pages 5-6 of the paper book. One ticket states that the ticket holder has to be admitted and the price is indicated as Rs. 4. 50 inclusive of tax. In the body of the said ticket it has been stated that the ticket has been issued subject to the rules and regulations governing the Tollygunge Club Gymkhana Races and also to the Special Condition printed on the back of the ticket. The other ticket states that the surcharge on admission to Tollygunge Gymkhana Races for local charities, Rs. 4-8-0 of the enclosure, it is written on the ticket as surcharge 0-8-0.

( 4 ) THIS reference arises out of the assessment for the assessment year 1960-61, for which the corresponding previous year is the calendar year 1959. The receipts from the surcharge were not credited to the profit and loss account but were credited directly to the charity account. It was not disputed before the income-tax authority that the amount realised by way of surcharge had been disbursed to local charities and a list was filed before the Tribunal showing the charities to which such disbursements had been made. For all the assessment years prior to the assessment year 1960-61 the Income-tax Officer had made no attempt to tax the amount of the surcharge collected as part of the trading receipts of the assessee-company. In making the assessment for the year 1960-61, the Income-tax Officer held that the surcharge levied on the entrance ticket were receipts of revenue nature and could not be excluded from the total income of the assessee merely on the ground that later on it was applied towards charity. He, therefore, included these receipts in the total income of the assessee but allowed rebate under Section 15b of the Indian Income-tax Act, 1922, on the amount disbursed for charity in the accounting year.

( 5 ) ON appeal by the assessee it was held by the Appellate Assistant Commissioner that a person, who wished to gain admittance to the assessee's enclosure on any racing day, had to pay this surcharge, whether he was willing to contribute to the charity or not, and as such the amount of the surcharge must be held to be a part of the price charged by the assessee for such admission and it would therefore, be a part of its revenue receipts. The Appellate Assistant Commissioner, in these circumstances, upheld the order of the Income-tax Officer.

( 6 ) THERE was a further appeal before the Income-tax Appellate Tribunal. The Tribunal held that the assessee's receipts from the surcharge levied on the admis

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