Ratnam, J.
1. The assessee in these tax references is a society registered under the Societies Registration Act, and formed with the object of promoting and popularising the sport of polo and horse-riding and encouraging horse-breeding as well. Under the rules of the society, the assessee is prohibited from paying any dividends or share of profits to any of its members and in the event of its winding up, its surplus funds or assets are to be handed over to another institution. Before the return of income of the assessee for the assessment year 1965-66 became due on June 30, 1965, on June 14, 1965, the assessee filed a petition for securing the approval of the Government of India under clause (iii) of the proviso to section 10(23) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). In respect of the assessment years 1965-66 and 1966-67 (in relation to the assessee's previous years ended on June 30, 1964 and June 30, 1965) the assessee returned Rs. 41,175 and Rs. 1,58,398 and in the context of the petition filed for approval of the Government of India referred to earlier, the assessee claimed exemption from tax under section 10(23) of the Act in respect of its income for the assessment years 1965-66 and 1966-67.
2. The Income-tax Officer held that the assessee was not entitled to claim exemption under section 10(23) of the Act and in that view, orders of assessment were passed on an income of Rs. 48,640 for the assessment year 1965-66 and on Rs. 1,71,230 for the assessment year 1966-67. On appeal by the assessee to the Appellate Assistant Commissioner, the orders of the Income-tax Officer were upheld and the appeals were dismissed. Thereupon, the assessee preferred appeals to the Tribunal.
3. Meanwhile, the Government of India, in exercise of the powers conferred under section 10(23) of the Act, approved the assessee-institution for purposes of that section by two orders. In the first order F. No. 197/21/75-II(AI) dated 4-3-1976, it was stated that in supersession of the order passed on May 15, 1975, the Central Government, in exercise of the powers conferred by the provisions of section 10(23) of the Income-tax Act, 1961 (43 of 1961), approved the following sports institution for the purposes of the said : The Madras Polo and Riders Club (the assessee). In the second order dated August 26, 1976, the Government of India stated that in exercise of the powers conferred by the provisions of section 10(23) of the Income-tax Act, 1961 (43 of 1961), the Central Government made the firstorder referred to above the assessee, viz, the Madras Polo Riders Club, under section 10(23) of the Income-tax Act, 1961, effective April 1, 1965.
4. In the appeals before the Tribunal, the assessee claimed that though the second order of the Government of India referred to the date, April 1, 1965, the approval granted under section 10(23) of the Act was effective and applicable for the assessment years 1965-66 and 1966-67 and, therefore, the income of the assessee for the assessment years 1965-66 and 1966-67 was not taxable, as the date April 1, 1965, represented an absolute point of time beyond which no tax was leviable on the income of the assessee. However, the Revenue maintained that the twin orders of approval of the Government of India would apply only for the accounting periods commencing from April 1, 1965, onwards and not for the assessment years commencing from April 1, 1965, i.e., 1965-66 and 1966-67. Considering this, the Tribunal referred to the filing of the petition by the assessee for approval of the Government of India under section 10(23) of the Act even on June 14, 1965, and held that the specification of the date April 1, 1965 was only to avoid any confusion that is likely to arise in the concept of 'assessment year' and 'previous year' in the Act and the date April 1, 1965, had been indicated as a definite date marking the beginning of the assessment year 1965-66, whatever might have been the previous year of the assessee relevant for the said assessment year. It was also further pointed out by the Tribunal that the interpretation of the circulars in the manner contended for by the Revenue would lead to the anomalous result of exempting the income of the assessee only for a period of three months from April 1. 1965, to June 30, 1965, and denying its benefits with reference to the income for nine months between July 1, 1964, and March 31, 1965, and for the earlier year as well as and that there was no justification whatever for adopting such a narrow line of reasoning and to import the idea of previous year commencing from April 1, 1965, in the matter of the construction of the order of approval passed by the Government of India. In that view, the Tribunal found that the assessee was entitled to the benefits of the order of approval of the Government of India under section 10(23) of the Act for both the assessment years 1965-66 and 1966-67. Ultimately, the Tribunal set aside the orders of the Income-tax Officer and the Appellate Assistant Commissioner and directed the Income-tax Officer to allow exemption to the assessee under section 10(23) of the Act in respect of its income for the two assessment years, after verifying the factual position regarding the fulfilment by the assessee of the conditions specified in clauses (i) and (ii) of the proviso to section 10(23) of the Act.
5. Thereupon, the Revenue sought a reference under section 256(1) of the Act and the following question of law has been referred for our opinion :
'Whether, on the facts and in the circumstances of the case, the order of approval of the Government of India under section 10(23) of the Act was available for the assessment years 1965-66 and 1966-67 ?'
6. Learned counsel for the Revenue contended that the approval granted by the Government of India in respect of the assessee under section 10(23) of the Act was not effective from any assessment year as such and there was no scope whatever for the assessee complying with the conditions under clauses (i) and (ii) of the proviso to section 10(23) of the Act and, therefore, the benefit of exemption resulting from the approval should be held to be available to the assessee only for the accounting periods commencing from April 1, 1965, onwards. We may immediately point out that the question whether the assessee could have fulfilled clauses (i) and (ii) of the proviso to section 10(23) of the Act does not at all arise for consideration having regard to the scope of the reference. Moreover, the Tribunal, after holding that the assessee is entitled to the exemption under section 10(23) of the Act, had directed the Income-tax Officer to give the benefit of exemption to the assessee, after verifying the factual position regarding the fulfilment of the conditions specified in clauses (i) and (ii) of the proviso to section 10(23) of the Act. There is, therefore, no need whatever in this reference to consider the question whether the assessee could not have complied with the conditions specified in clauses (i) and (ii) of the proviso to section 10(23) of the Act in respect of the two assessment years in question. We cannot, therefore, accept the contention of learned counsel for the Revenue that there was no scope for the assessee to comply with the requirements of clauses (i) and (ii) of the proviso to section 10(23) of the Act in these two assessment years and, therefore, the assessee is not entitled to claim the benefit of exemption.
7. In so far as the contention that the benefit of exemption would be available to the assessee only for the accounting periods commencing from April 1, 1965, onwards is concerned, it is seen that the assessee's previous years ended on June 30, 1964, and June 30, 1965, relevant for the assessment years 1965-66 and 1966-67, respectively. The second order of the Government of India dated August 26, 1976, referred to earlier, rendered effective the approval granted to the assessee under section 10(23) of the Act from April 1, 1965. If the contention of learned counsel for the Revenue that the benefit of exemption would be available only for the accounting periods commencing from April 1, 1965, onwards is to be accepted, then, that will lead to the anomalous position that a portion of the income referable to the last three months of the previous year ending June 30, 1965, relevant for the assessment year 1966-67, alone would qualify for exemption, while the income of the earlier twenty-one months would be liable to tax. This certainly could not at all have been either intended or contemplated by the issue of the orders of the Government of India referred to already. It should also be borne in mind that the assessee filed the petition for approval before the Government of India under clause (iii) of the proviso to section 10(23) of the Act on June 14, 1965, even before its return of income for the assessment year 1965-66 became due on June 30, 1965, under section 139(1) of the Act. We are of the view that the assessee had claimed exemption under section 10(23) of the Act in respect of its income even in respect of the two assessment years 1965-66 and 1966-67 and that had also been granted under the orders referred to above. Apart from it, it is seen that the specification of the date as April 1, 1965, was done only with the idea of making the approval effective from April 1, 1965, which marked the commencement of the assessment year 1965-66 irrespective of the previous year. The 'assessment year', according to section 2(9) of the Act, is a period of twelve months commencing on the 1st day of April every year. The 'previous year' under section 3 of the Act need not necessarily commence from the 1st day of April every year, but may vary, according to the choice of the assessee, and it is only with a view to clear any confusion that may result in construing the approval orders granting exemption that the date April 1, 1965, had been specified as a clear, unambiguous and definite date without reference to the previous year. We do not see any basis whatever for restricting the scope of the approval orders by importing the idea of previous year commencing from April 1, 1965. We, therefore, hold that the Tribunal was right in its interpretation of the orders of the Government of India referred to earlier and in holding that the assessee is entitled to the benefits of the order of approval for both the assessment years 1965-66 and 1966-67. We answer the question referred to us in the affirmative and against the Revenue. The assessee will be entitled to the costs of this reference. Counsel's fee Rs. 500. One set.