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Commissioner of Income-Tax Versus Chamber of Commerce, Alleppey

1955 (2) TMI 16 - TRAVANCORE-COCHIN HIGH COURT

Income-Tax Reference No. 9 of 1954 - Dated:- 22-2-1955 - P. K. Subramania Iyer And M. S. Menon, JJ. For the Commissioner : G. Rama Iyer For the Assessee : N. Varadaraja Iyengar and K. Parthasarathi Iyengar JUDGMENT M. S. Menon, J. This is a reference by the Income-tax Appellate Tribunal, Madras 'B' Bench, on the application of the Commissioner of Income-tax, Mysore, Travancore-Cochin and Coorg, Bangalore, the question referred being:- "Whether the sums of ₹ 22,621 and ₹ .....

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accordingly," and the contention of the Alleppey Chamber of Commerce which found favour with the Income-tax Appellate Tribunal, Madras 'B' Bench, was that the two amounts in question do not form remuneration definitely related to specific services performed and so cannot be taxed under the provisions of sub-section (6) of section 10 as was done in the assessment order dated 15th September, 1952, for the years 1950-51 and 1951-52. The order of the Appellate Tribunal, Madras 'B&# .....

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maintaining the status of an association and presenting a united front in its dealings with the outside world. No specific services appear to have been rendered by the produce exchange to its members. The only specific service rendered is in respect of arbitration for which a separate fee is charged. The learned advocate admitted that the receipts under the head are chargeable to income-tax. The general collection of so many pies per candy of pepper, etc., is only a general collection. Moreover .....

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ons included in the assessments, already referred to above. 2. The appeals are allowed." 3. It is admitted that only members of the Alleppey Chamber of Commerce can be members of the produce section and there is no dispute on the ground that the services performed are not "services for its members". The only questions, therefore, that arise for consideration are: (1) Can the contribution of six pies per candy on the total turnover of the monthly transactions be considered as " .....

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rules for answering question No. (1). They as well as rules 4, 6 and 7 come under the general heading "Membership Fees" and read as follows: "3. An Admission fee of ₹ 25 and a monthly fee of ₹ 5 shall be paid along with an advance of three months' fees before enrolment. 4. Subsequent monthly fees of ₹ 5 per mensem shall be paid by every member within a week of the receipt of the monthly bill and in any case before the end of the month for which the bill has b .....

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rom that deposit amount at the time of refund or withdrawal as the case may be." On a reading of rules 3 to 7 we entertain no doubts that the admission fee of ₹ 25, the monthly fee of ₹ 5 and the contribution under rule 5 all form part of the levy for the services rendered to the members of the produce section and should be considered as "remuneration definitely related to those services." The contention of the assessee that such is not the case is clearly unsustainabl .....

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ch trade, and to make rules and regulations conducive to just and honourable practices therein, and to consider all questions affecting the interests of produce trade. (b) to adjust controversies, to arbitrate upon and settle disputes of all kinds, to appoint arbitrators, umpires and experts, to make awards and decisions and generally to encourage and stimulate fair and honourable trading; (c) to collect, print, publish and circulate statistics and other information relating to the produce trade .....

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r membership; and (2) those additional services to which they are entitled by becoming members of the produce section and paying the additional subscription, namely, the fees and contribution specified in rules 3 and 4 of the rules of the produce section. 6. What we are called upon to decide is whether the latter can be styled as "specific services" within the meaning of section 10(6) of the Indian Income-tax Act, 1922, and we see no reason why they should not be so considered. The wor .....

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ific service on the part of the Chamber and the provisions of rules for the conduct of trade, the settlement of disputes and the dissemination of correct and up-to-date information cannot also be considered as anything other than specific. That extra fees may have to be paid for some of the services will not make the services fully covered by the fees and contributions under rules 3 and 4 any the less specific and the argument on behalf of the assessee that an inference to the contrary is implic .....

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