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TMI Blog1976 (11) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... t at the specified rate and directed its members to export the respective portions of each of the aforesaid quantities allowed to them. The members in their turn arranged for the exports, but the bills were negotiated through the assessee-association for the sake of convenience and the proceeds on realisation were distributed among the members. The assessee-association received from the members in pursuance of the resolution passed by the managing committee of the association from time to time contributions to its general welfare fund and its building fund, which were fixed at a certain amount per ton of salt exported by each member. For the years under appeal the assessee returned "nil" income in the ground that it is not liable to assessment. Though the assessee derived some income from house property and had certain other business income, it did not exceed the maximum amount not chargeable to income-tax for any of the five years under appeal. The Income-tax Officer added back for each of the years under appeal certain income of receipts like contributions from members of the assessee-association received and credited to building improvement account fund, general welfare fund and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed the appeals. It is against this consolidated order of the Appellate Assistant Commissioner that these five appeals are laid before us. 3. The learned counsel for the assessee Shri K. Srinivasan submitted that the appellate Assistant Commissioner has not found that the contributions to the fund are referable to any specific service to justify the conclusion reached by him. He pointed out that the assessee-association did not render any specific service to its members, that the exports on behalf of the members were arranged to avoid multiplicity of separate arrangement between them and the State Trading Corporation direct, that the agency which actually negotiated the arrangements with the foreign importers was the State Trading Corporation which had collected the charges for the services provided by it, that no income or profit arose to the assessee and that even the small service, if any, that was rendered by the assessee was not done with any profit making motive. He added that in short the assessee was acting like a post office and the services rendered by it are practically nil. In any event he submitted that the income of the assessee is not liable to be taxed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to salt business and industry. (6) To consider all questions affecting salt business and industry and formulate opinions and make such representations to the authorities and persons concerned as would further the interests of the salt industry and business. (7) To address the grievances of the salt business and industry as a whole or, of the individual members in their dealings with the Government, the Salt Department, Railway, Stramer Companies, Customs and Port Authorities and other authorities. (8) To encourage and promote a friendly feeling and unanimity among salt merchants and manufacturers on all subjects involving there common good. (9) To promote or oppose the measures affecting, or likely to affect the salt business or industry. (10) To act in co-operation with similar associations, corporations chambers of commerce, etc., in all matters likely to promote, or, protect the interests of the salt trade or industry. (11) To bring about uniformity in the usages of the local salt trade and industry and to modify and publish them for the information of all concerned. (12) To make rules and regulations concerning the salt business and industry to be observed by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n: Resolved that the export of 20,000 tonnes of salt agreed for shall be allocated to the members on the basis of distribution that has been fixed already for the export of 40,000 tonnes and to collect for the general welfare fund at 75 paise per tonne including donation to the building fund excluding the usual service charges at 1% to the State Trading Corporation. (2) (5th April, 1966) Sub : Other affairs: Resolved that the balance of Rs. 20,873 as on date out of the amounts collected and remitted on account of the State Trading Corporation from the members in respect of salt export to Ceylon shall be transferred to Central Welfare Fund. (3) (16th Feb., 1967) Sub : Correspondence with regard to salt export to Ceylon: Resolved that on account of Jawan's Fund contribution at 31 paise per tonne be collected separately apart from the collection for the General Welfare Fund of the Association @ 75 paise per tonne. (4) (16th Feb., 1967) Sub : Correspondence with regard to salt export to Ceylon: Resolved to recommend for payment of a donation at 25 paise per tonne towards the Varushabishekam Expenditure Fund that is being conducted on behalf of the Association at the local Sankar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions. In this Act, unless the context otherwise requires: (24) "income" includes (v) any sum chargeable to income-tax under clauses (ii) and (iii) of s.28 or s. 41 or s. 59." s. 28 (iii) reads thus: "28. Profits and gains of business or profession. The following income shall be chargeable to income tax under the head "Profits and gains of business or profession" -- (iii) income derived by a trade, professional or similar association from specific services performed for its members." In order that an item of receipt constitutes income under the above provision it should be established that the same was derived by trade association from specific services performed for its members. Indeed the Appellate Tribunal by its aforesaid order has restored the appeal to the file of the Appellate Asst. Commissioner for the purpose of finding out whether any specific services were rendered by the assessee-association to its members. The Tribunal in the said order had also referred to a copy of the contract form entered into between the assessee-association and the State Trading Corporation and found that there was no prohibition therein to the effect that the members could not straight aw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contributions to the various funds are made after the exports of salt by the State Trading Corporation of India and the measure of such contribution is fixed with reference to the tonnage of the salt exported. The negligible services that were rendered by the assessee-association for its members for the export of salt, it not referable to any agreement for payment of any fee and there is, therefore, no profit-making motive in the activities carried on by the assessee-association. The cases cited by the learned departmental representatives are not relevant to the issue before us. Further the facts in those case were also different from the facts in the instant case. Shri Gopinath, the learned departmental representative, laid considerable stress on the decision of the Mysore High Court in the case of Bellary District Mine Owners' Association Ltd. vs. Commissioner of Income-tax, Mysore (7). The said decision would not apply to the facts of the instant case. The association in that case was formed with the object of securing contracts from foreign purchasers and buying of the mine owners. Further the association in that case had charged commission for the services rendered. The fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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