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TMI Blog1987 (11) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... nevolent Fund and to other Charitable Institutions", and that no part of the surplus funds were to be added to the club fund. He further found that certain receipts and expenses were shown out of gate receipts of the exhibition match in the subsequent assessment year and the actual surplus as reflected in the accounts submitted by the assessee for the year ending 30-9-1978 worked out to Rs. 9,29,542. According to the CIT (Appeals), the resolution adopted in the Special General meeting of the club created an obligation in the nature of a trust of applying the income arising from the Exhibition Match for the benefit of local charities as also for making payment to the Distressed Players' Benevolent fund. There was thus, a diversion of the income for charitable purposes before it reached the assessee. In the CIT (Appeals)'s opinion the facts of the assessee's case "bear analogy" to the facts of the case of CIT v. Tollygunge Club Ltd. [1977] 107 ITR 776 (SC). 2. The department is in appeal against the said order of the CIT (Appeals) raising the following two grounds : "1. That, on the facts and in the circumstances of the case, the Learned Commissioner of Income-tax (Appeals) was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intends to make donations out of the proceeds of the exhibition match to certain Football Association and charitable funds. This will be clear from the following passage of the report : "The final accounts of the Mohun Bagan-Cosmos Club match played on the 24th of September, 1977 has not been finalised within the 30th September, 1977 as we are yet to receive final accounts from the Government of West Bengal who were responsible for the printing and distribution of some tickets. We may perhaps take the pride in accounting the following funds out of the gate proceeds of the above match : Rs. 1. Prime Minister's National Relief Fund 50,000 2. Chief Minister's Relief Fund 50,000 3. Dr. B.C. Roy Memorial Fund for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 Chief Minister's Relief Fund 60,000 Prime Minister's Relief Fund 50,000 Women's Football Association 5,000 It also reveals that after appropriating the aforesaid sums against the net surplus of Rs. 9,29,543 the assessee was left with a balance of Rs. 4,49,367.89 which remained deposited with United Commercial Bank. There is a difference between an amount which a person is obliged to apply out of his income and an amount which by the nature of the obligation cannot be said to be a part of the income of the assessee. This has been explained by the Supreme Court in the case of CIT v. Sitaldas Tirathdas [1961] 41 ITR 367/374 as follows : "Where by the obligation income is diverted before it reaches the assessee, it is deductible but where the income is required to be applied to discha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised by the department. The CIT (Appeals) while scanning the facts relating to the objection of the assessee that the ITO was wrong in holding that the assessee made a profit of Rs. 5,29,832 through organisation of exhibition match, found that the net surplus arising from the said exhibition match appeared to be Rs. 9,29,542 and not Rs. 5,29,832. According to him, the account produced by the assessee did not truly reflect the actual surplus inasmuch as, neither the full receipts nor the expenditure could be accounted for in the accounting period under consideration as the match took place on the 24th September, 1977 whereas, the accounting period of the assessee ended on the 30th September, 1977 and there was as such a spill over both on the receipt side and expenditure side to the next year. In view of such finding of the CIT (Appeals), the revenue has come with an objection that the CIT (Appeals) failed to exercise the power of enhancement vested in him by virtue of section 251. The contention of the learned Departmental Representative is that the CIT (Appeals) should have fate due notice to the assessee enhanced the amount of profit from exhibition match. This objection is oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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