9911796707
TMI Blog1982 (2) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... In addition to these notices, notices under s. 14 of the Act have been issued to the club on 11th March, 1970, for, the assessment year 1969-70, calling upon the club to file a return of net wealth. A similar notice has been issued for the assessment year 1978-79 on 17th March, 1979, to the assessee-club by the WTO. The petitioner-club seeks to have these notices quashed on the ground that the club is not a taxable unit under s. 3 of the Act and all the notices are, therefore, without jurisdiction. It is the case of the petitioners-club that it is a non-proprietary members' club and though it is assessed for the purpose of income-tax as an association of persons, an association of persons not being a taxable entity contemplated by s. 3 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re liable under s. 3 because, though there are more than one trustee, they would be treated as a body of individuals and would be covered by the word " individual which must also include a body of individuals. Mr. Dastur has objected to this new ground on which the notices were sought to be defended. However, since we do not find that any additional facts than what were already on record were necessary for decision on the contention raised by Mr. Joshi and a decision on the contention turned mostly on the construction of the rules of the petitioner club, we have permitted this additional ground of liability as trustees to be raised. It is not in dispute that the petitioner-club is an unincorporated members club, and the relations betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stees shall be indemnified out of the club's property against all liabilities, risk and expense incurred by them as such trustees." We have considered at some length the question of the liability of an unincorporated members' club to wealth-tax in the case of Orient Club v. CWT, Wealth-tax Reference No. II of 1972, decided on 8th February, 1982, [since reported in [1982] 136 ITR 697 (Bom)], and we have, in that case, taken the view that in the case of an unincorporated members' club the property of the club vests in the members for the time being. On the same principle, the assessee-club being an unincorporated members' club, the property of the assessee-club will be owned by the members for the time being. We have also held in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of management of the property. Under r. 7 it is obligatory on the trustees to follow and abide by any direction which is given by the general committee to the trustees. Rule 7 requires the trustees to obey every direction and such direction has to be given in the form of a resolution and the rule provides that when such a resolution is forwarded to the trustees, it " shall be obligatory upon and a justification to the trustees as to anything to be done by virtue of such resolution ". The rule does not stop there, but further provides for an indemnification of the trustees against all liabilities, risk and expense incurred by them as trustees " out of the club's property ". Therefore, even r. 7 recognises the fact that the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they have no transmissible or assignable interest in the property and their interest ceases when they cease to be members of the club. Therefore, apart from r. 20 indicating that the property does not vest in the trustees in ownership, it further indicates that the beneficial interest of the property vests in the members. If the property does not vest in the trustees as owners, it is not necessary to consider the further argument advanced by Mr. Dastur that even if the property is owned by the trustees, the assessment cannot be made under s. 3 but it will have to be made under s. 21(1) of the Act. In the view which we have taken and in view of the decision in Orient Club's case [1982] 136 ITR 697 (Bom), we find that the notices issued to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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