Law:

Section:

Section 28(i) of the Income-tax Act, 1961 [Corresponding to section 10(1) of the Indian Income-Tax Act, 1922] - Business income - Chargeable as - Assessment years 1947-48 to 1950-51 - Assessee-company was incorporated with objects, inter alia, to promote and regulate business of exchange of stocks, shares and debentures, etc. - As per memorandum of association of assessee, income, if any, which accrued from its business was distributable amongst shareholders - According to articles of association, members included shareholders and members of exchange and according to rules and bye-laws of assessee, "member" meant an individual, body of individuals, firms, companies, corporations or any corporate body as may be on list of working members of stock exchange for time being - In articles of association, provision was made for election of members by board of directors in accordance with procedure laid down for that - Entrance fees were payable by trading members elected under rules and bye-laws of association, who alone with their associates, could transact business in stocks and shares in association - Whether in view of decision of Supreme Court in CIT v. Calcutta Stock Exchange Association Ltd. [1959] 36 ITR 222, admission fees paid by members on account of authorised assistants was taxable income - Held, yes - Whether further, since body of trading members and shareholders were not identical and element of mutuality was lacking, amount of members' admission fees was also taxable income in hands of assessee - Held, yes FACTS The assessee-company was incorporated with the objects, inter alia, to promote and regulate the business of exchange of stocks and shares, debentures and debenture stocks, Government securities, bonds and equities of any description and with a view thereto, to establish and conduct stock exchange. The assessee claimed deduction of amount received on account of members' admission fees and authorised assistants' admission fees. The ITO, however, disallowed same and added back the amount so received to the income returned by the assessee. On appeals, the AAC decided the appeals in respect of years 1947-48 to 1949-50 in favour of the assessee…

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