Law: Income Tax Act, 1922

Section: 10

Section 28(i) of the Income-tax Act, 1961 [Corresponding to section 10 of the Indian Income-tax Act, 1922] - Business income - Changeable as - Assessment year 1953-54 - Whether entrance fees received by assessee - Society doing banking business was an income from business and same was not assessable under section 10 of 1922 Act - Held, yes Circular's and Notifications : Notification dated 25-8-1925 FACTS The assessee was a co-operative society doing banking business. The assessee received during the previous year a sum as entrance fees. and claimed Exemption as being income falling under the head 'profits or gains from business, profession or vocation' within the meaning of section 10 of 1922 Act, by virtue of the relevant notification dated 25-8-1925, issued under section 60 of 1922 Act. The ITO disallowed the assessee's claim holding that the entrance fee fell within the connotation of the expression 'other source' in section 12 of 1922 Act. On appeal, the AAC upheld the order of the ITO. On further appeal by the Tribunal affirmed the order of the AAC. On reference : HELD It is plain from section 12(1) of 1922 Act, that it is only cases that do not fall under the preceding sections, viz., sections 8, 9 and 10, that are attracted by section 12 of 1922 Act. If the income comes within the purview of section 10 of 1922 Act, then section 12 of 1922 Act, cannot govern the instant case. There can be little doubt that the exemption granted under the notification related to profits and gains of business envisaged by section 10 of 1922 Act. The main object of the assessee, as can be gathered from clauses (1) to (4) of bye-law No. 1, were to organise, supervise and to finance co-operative societies registered either under Act X of 1904 or Act II of 1912 or Madras Act VI of 1932; to carry on general business of banking not repugnant to the provisions of the Co-operative Societies Act and the rules framed thereunder; to start branches in the operative jurisdiction of the bank wherever necessary and to appoint necessary staff and incur other expenditure for the conduct of the business; and to develop, assist and co-ordinate the work of the affiliated supervising unions and…

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