Commissioner of Wealth-Tax, Meerut vs Meerut Race Club

The income tax Appellate Tribunal, Delhi has referred the following two questions of law u/s 27(3) of the Wealth-tax Act, 1957 (hereinafter referred to as ''the Act'') for opinion to this Court:-

"1. Whether on the facts and in the circumstances of the case, the Tribunal was legally justified in upholding the order of the Appellate Assistant Commissioner annulling the assessment?

Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in not pronouncing the decision on merits of the case?"

Briefly stated the facts giving rise to the present reference are as follows:-

The reference relates to the assessment year 1977-78.

We have heard Shri Govind Krishna, the learned standing counsel for the revenue and Shri Amitabh Agrawal, learned counsel holding brief of Shri P.K. Jain.

The respondent-assessee is a Club. The Wealth-tax Officer had assessed the respondent-assessee in the status of an association of persons which was set aside by the Appellate Assistant Commissioner which order has been upheld by the Tribunal in both the orders. It may be mentioned here that prior to the insertion of section 21AA by the Finance Act, 1981 with effect from 1-4-1981 an association of persons was not assessable entity under the provisions of the Act. The Apex Court in the case of CWT v. Ellis Bridge Gymkhana [1998] 229 ITR 11 has held that an association of persons was not assessable entity under the Act prior to insertion of section 21AA with effect from 1-4-1981 and therefore in our considered opinion the Tribunal was justified in annulling the assessment. We accordingly answer the questions of law referred to us in affirmative i.e., in favour of the assessee and against the revenue.