Law: Income Tax Act, 1922

Section: 10(6)

Income-tax Act, 1922 -Section 10(6) --Trade Association -Assessee-company forming association of trades-men, businessmen or manufacturers -Main objects, assistance to members to obtain essential machinery and materials for promotion and development of thread ball industry -Assessee-company, whether a Trade Association -Held yes -Distribution of quota of imported or local yarn to some members -Donations and miscellaneous receipts from such members -Whether directly relatable to the services rendered to them by assessee-company -Held yes -Whether assessable to Income-tax in the hands of assessee-company -Held yes -- Interpretation and application of -Word "remuneration" includes 'recompense', 'reward', 'payment' etc. -Service performed by Association to its members (who made contributions or gave donations): to import yarn; distribute quota of yarn and test yarn at its testing machines -Payments received by Association as donations and miscellaneous receipts -Liable to payment of income-tax under Section 10(6) -- JUDGMENT The judgment of the court was delivered by Z. A. CHANNA J. ---The following question of law has been drawn up and stated for opinion of the High Court by the Income-tax Appellate Tribunal on the directions of the High Court made on an application under Section 66(2) of the Income-tax Act by the Commissioner of Income-tax, Karachi, in respect of the income of the assessee-company for the charge years 1953-54 and 1954-55:-- "Whether on the facts and in the circumstances of the case the income of the respondent Company was liable to Income-tax or not?" The facts of this case, upon which the decision on the question referred above depends, are as follows: The assessee is a Company registered under Section 26 of the Companies Act. Its main object is to promote, develop, aid, stimulate, protect and encourge the thread ball industry, and to rise the standard of its production. Its Memorandum and Articles of Association authorised it:-- "To accept any bequest, gift, donations or subscriptions towards or to accumulate and provide a fund or an endowment or waqf and to invest the same apply the income arising therefrom or to resort to the capital thereof…

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