TMI Blog1944 (10) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... in securities, so that it becomes what is referred to in the Act as a recognised Stock Exchange. Being a mutual association not formulated for the purpose of making profits it does not pay income-tax unless its activities come within Section 10(6) which is as follows:- A trade, professional or similar association performing specific services for its members for remuneration definitely related to those services shall be deemed for the purpose of this section to carry on business in respect of those services, and the profits and gains therefrom shall be liable to tax accordingly. The question referred to us concerns the assessment year 1940-41 or the accounting year, which is the calendar year 1939. The question submitted is:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the remuneration does not definitely relate to any services rendered to the member paying them. On the other hand, Mr. Setalvad on behalf of the Commissioner submits that the answer is to be found by asking the question, for the remuneration paid, what, if any, are the services performed? He draws our attention to some of the rules which he says show a definite scheme for the admission and supervision of the authorised clerks and which confer definite advantages to the members who pay the fees. Turning to the rules the relevant group of rules commences with rule 47, which is headed, Authorised Clerks and is as follows:- 47. (a) The Board shall from time to time fix the number of authorised clerks a member may be allowed to employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me in respect of each authorised clerk employed by him. No such subscription shall be payable in respect of a member who acts as an authorised clerk. This is the background of the scheme. The next rule in chronological order which is relevant for the present reference is rule 50(a) and is as under:- 50. (a) The Secretary of the Association shall keep a register for authorised clerks and shall enter in such register the name of the clerk and of the member who employs him, the dates of the beginning and termination of his employed or the withdrawal of his authorisation. Then comes rule 53 which provides as follows:- 53. (a) A member and his authorised clerk when in the market must wear a badge. No clerk without such bad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e employment or withdrawing the authorisation of such clerk shall give notice in writing to the said Secretary of the name of such clerk and of the date of the beginning or termination of his employment or the withdrawal of his authorisation and the said Secretary shall forthwith post the notice of such employment, termination or withdrawal upon the notice board of the Association. In my judgment these rules lay down a definite scheme and provide an organised arrangement, controlled and supervised by the Association for the benefit of its members. In my opinion the carrying of their scheme into effect is performing services for its members of the Association. No doubt the benefit of the scheme would redound to the benefit of all member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not taxed because it does not carry on business. Section 10(6) is an exception in respect of associations of this kind. Broadly speaking, the object is that although the Association may not ordinarily be carrying on business, if for a stated remuneration it renders specific services to its members, it is admitted to be carrying on business for that portion of its activities and is liable to be taxed accordingly. In order to answer the two questions which I have formulated at the commencement it is therefore necessary to examine the rules and determine whether by reason of those rules the Association is performing specific services for its members. A perusal of the rules referred to in the judgment of the learned Chief Justice shows that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has undertaken certain obligations by the rules towards its members in accepting these fees. By the rules the Board and the Secretary have to perform certain duties as prescribed by the rules in respect of authorised clerks. It is therefore futile to contend that they amount merely to facilities and do not constitute performance of services by the Association. A question was raised as to whether these are specific services to be performed for particular members or whether the rules amount to performance of duties towards members in general. It is true that several of the services to be rendered may be helpful to the other members for their business. Taken as a whole I consider that as a performance of services by the Association for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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