THE COMMISSIONER OE' INCOME-TAX, WEST BENGAL versus ROYAL CALCUTTA TURF CLUB

Citation: [1961] 2 S.C.R. 729 · Decided: 28-11-1960 · Supreme Court of India · Bench: J.L. KAPUR · Disposal: Dismissed

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Judgment (excerpt)

2 S.C.R. SUPREME COURT REPORTS 
729 
THE COMMISSIONER OE' INCOME-TAX, 
WEST BENGAL 
v. 
ROYAL CALCUTTA TURE' CLUB 
• 
(J. L. KAPUR, M. HIDAYATULLAH and J. c. SHAH, JJ.) 
Income Tax-Expenditure for preservation of business-If 
wholly and exclusively laid out for the purpose of business-Indian 
Income Tax Act, r922 (XI of r922), s. ro (2)(xv). 
The business of the respondent club was to run race meet-
ings on a .commercial scale. The club did not own any horse and 
therefore did not employ jockeys. It. was a matter of some 
importance to the club that there were jockeys of requisite skill 
and experience in sufficient numbers who would be available to 
the owners and trainers because otherwise the running of the 
race meetings would not be commercially profitable and its 
interest would suffer and it might have had to abandon its busi-
ness if it did not take steps to make jockeys of the necessary 
calibre available. Therefore it established a school for the 
training of Indian boys as jockeys and claimed the sums spent 
on the running of the school as deductable amount under s. 10 
(2)(xv) of the Indian Income Tax Act. 
Th.e question was whether in the circumstances of the case 
the expenditure claimed was one which was wholly and exclusi-
vely laid out for the purpose of the respondent's business. 
Held, that any expenditure which was incurred for prevent-
ing the extinction of a business would be expenditure wholly 
and exclusively laid out for the purpose of the business of the 
assessee and would be an allowable deduction. 
In the instant case the amount in dispute was laid out 
wholly and exclusively for the purpose of the respondent's busi-
ness, because if the supply of jockeys of requisite efficiency and 
skill failed, the business of the respondent would no longer be 
possible. 
Eastern Investments Ltd. v. Commissioner of Income-tax, West 
Bengal, [r95r] S. C.R. 594 and Commissioner of Income-tax v. 
Chandulal Keshavlal & Co., [1960] 38 I.T.R. 6o1, relied on. 
British ltisulated and Helsby Cables v. Atherton, [1926) A. C. 
205, Morgan v. Tate 0- Lyle Ltd., [1955) A. C. 21 and Boarland v. 
Kramat Pulai Ltd., [1953] 2 AIL E. R. n22, discussed. 
Strong & Co. v. Woodifield, (1906) A. C. 448 and Smith v. 
Incorporated Council of Law Reporting, (1914) 3 K.B. 674, referr-
ed to . 
. Ward 0- Co. Ltd. v. Commissioner of Taxes, [1923] A. C. 145, 
distinguished. 
I960 
November a8. 
730 
SUPREME COURT REPORTS 
[1961] 
:c960 
CIVIL APPELLATE JURISDICTION: 
The Commission" 419 of 1958. 
Civil Appeal No. 
of Tncom!!·tax, 
West Bengal 
v. 
Royal Calcutta 
Turf Club 
Kapur J. 
Appeal by special leave from the judgment and 
order dated August 20, 1957, of the Calcutta High 
Court in Income-tax Reference No. 1 of 1956. 
Hardyal Hardy and D. Gupta, for the appellant. 
N. C. Chatterjee, Dipak Choudhri and B. N. Ghosh, 
for the respondent. 
1960. November 28. The Judgment of the Court 
was delivered by 
KAPUR, J.-This is an appeal by special leave 
against the judgment and order of the High Court of 
Judicature at Calcutta in a reference made by the 
Income-tax Appellate Tribunal under s. 66(1) of the 
Income-tax Act. The following question was refer-
red: 
"Whether in the facts and circumstances of this 
case, the Appellate Tribunal was right in holding that 
Rs. 61,818 spent by the assessee to train Indian boys 
as jockeys, did not constitute expenses of the business 
of the assessee allowable under s. 10(2)(xv)?" 
which was answered in favour of the respondent. The 
Commissioner is the appellant before us and the asses. 
see is the respondent. 
The respondent is an association of persons whose 
business is to hold race meetings in Calcutta. on 
a commercial basis. 
It holds two series of race 
meetings during the two seasons of the year. The 
respondent does not own any horses and therefore 
does not employ jockeys but they are employed 
by owners and trainers of horses which are run in 
the races. It is a matter of some importance to 
the respondent that there should be jockeys avail-
able to the owners with sufficient skill and experience 
because the success of races to a considerable extent 
depends upon the experience and skill of a jockey who 
rides a horse in a race. Because it was of the opinion 
that there was a risk of the jockeys becoming unavail-
able and that such unavailability would seriously 
affect its business which might result in its closing 
' •·
2 S.C.R. SUPREME COURT REPORTS 
731 
down the business, the 

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