Law:

Section:

Section 28(iii) of the Income-tax Act, 1961 [Corresponding to section 10(6) of the Indian Income-tax Act, 1922] - Business income - Trade association - Assessment years 1948-49 to 1950-51 and 1954-55, 1955-56, 1957-58 to 1959-60 - Whether every trade, profession or similar association which renders specific services to its own members for remuneration related to those services would come within purport of section 10(6) of 1922 Act - Held, yes - Whether where assessee levied charges for rendering specific services to its constituent members, such charges were remunerations within meaning of section 10(6) of 1922 Act definitely related to those services and assessee must be deemed to carry on business in respect of those services and surpluses remaining in its hands after meeting its expenses in connection with those services must be considered to be profits and gains within meaning of section 10(6) of 1922 Act and were, as such, taxable - Held, yes FACTS The assessee was a registered society consisting of all Indian tea companies as members. The assessee used to render services to its constituent members by way of supply of paddy, rice and food-grains for the consumption of labour and also provided medical facilities to its members. It charged fees for both the services. The ITO held that the assessee was a trade association rendering specific services to its members for remuneration definitely relatable to such services, and, therefore, the surpluses resulting from those activities were assessable as its business profits under section 10(6) in the status of AOP. On appeal, the AAC held that the assessee was a mutual concern receiving contributions from its members for their common benefit, and there was complete identity between the contributors and the participators in the surplus. He was of the view that the surpluses were not related to any specific services rendered to the members, and, therefore, the provisions of section 10(6) were not attracted. On revenue's appeal, the Tribunal upheld the ITO's view. On reference, the assessee argued that the association was like a members' club or a kind of mutual concern and the taxing laws applicable to such clubs or…

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