In Brief
The Bangalore Club, an unregistered social club founded in 1868, challenged a wealth tax assessment. The Supreme Court held that an 'association of persons' under Section 21AA of the Wealth Tax Act comprises only those banded together for a common business purpose to earn profits. A social club providing members with cultural and recreational facilities is not such an association. Even if it were, Section 21AA applies only where members' shares in assets are indeterminate. Under the club's rules, liquidation proceeds are distributed equally among all members, making shares determinate on that date. The Court overruled prior decisions treating clubs as taxable associations and allowed the appeals.
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