Listowel Race Company Ltd had appealed a Revenue decision that it did not qualify for what is known as the "sporting exemption" under the 1997 Taxes Consolidation Act.
This exemption can be granted in relation to certain income of any approved sporting body, which Revenue is satisfied exists for the sole purpose of promoting athletic or amateur games or sports.
Tax appeal commissioner Charlie Phelan decided Listowel Races was not established for the sole purpose of promoting an athletic or amateur game or sport. It had not shown to the Revenue's satisfaction that its income has been, or will be applied, solely for promoting those activities, he found.
Mr Phelan took no view on whether horse racing was a sport, amateur or otherwise, but decided the "gateway requirement" that the body be established for and existing for the sole purpose of games or sports was not met.
He said this was because Listowel had significant income from other sources and because he found it is Horse Racing Ireland, not Listowel, that carries out and controls every element of racing at Listowel.
The appeal commissioner agreed to state a case on his decision by way of appeal to the High Court.
The Revenue Commissioners, as respondents in the case, said the appeal commissioner was correct and his findings were based on evidence.
Listowel Races argued the appeal commissioner erred in his decision and that the findings of fact that led him to such a conclusion were not based on evidence.
Ms Justice Marie Baker ruled the appeal commissioner was not correct in determining Listowel Race Company did not exist for the sole purpose of promoting athletic games or sports.
The "sporting exemption" provision of the Taxes Consolidation Act was not confined to amateur sports only, to the exclusion of professional sports, she said.
The judge found horse-racing was an "athletic" sport. Revenue had contended that horse racing was an activity that involved the breeding and training of horses, she said.
That approach to interpretation, she said, failed to have regard to the fact that horse riding is a sport or physical activity engaged in by hundreds, if not thousands, of people in the country, young and old.
Any of those people would, if asked, identify their activity as a sport, she said.
She did not accept the argument made by Revenue that horse racing, that is, riding horses at speed in competition, was not an athletic activity if by that description it was intended to exclude from the definition a sport which is played professionally.
She considered it wrong to say that horse racing was the activity of breeding and training horses for competition. The breeding and training of the horses was ancillary to the activity of riding those horses at competitive speed, she said.
She also did not accept the argument of Revenue that an athletic sport must be understood as one where the player has no prop or equipment. That definition “immediately excludes cycling, which suggests an absurdity".
