Case: The Commissioner Of Income-Tax, West Bengal Vs. The Calcutta Stock Exchange Association Ltd

of sub-s. (6) of S. 10 to associations like the one before us.12. The other case to which our attention was drawn is 1955-27 ITR 585 (Trav-Co) (supra). The facts of that case are not similar to those of the case before us, but the ratio decidendi of that case are relevant. That case referred to the Alleppey Chamber of Commerce. The Chamber inaugurated a produce section with the object o promoting the interests of merchants in general, and of those engaged in the produce trade, in particular; of acting as arbitrators and collecting and publishing information relating to the produce trade. Members were admitted to the produce section on payment of admission fees, monthly fees and contributions at certain prescribed rates. The question which was referred to the High Court, was whether the receipts by way of fees and contributions, could be chargeable under S. 10(6) of the Act, and it was answered in the affirmative.13. Though cases in England, by way of precedent or the decision of the case in hand, have not been cited at the Bar, apparently because the scheme of the Income-tax law in England is different and the words of the statute are not in pari materia yet there are some cases which throw some light on the controversy before us. For example, the case of Carlisle and Silloth Golf Club v. Smith, (1952) 6 Tax Cas 48 related to a golf club which was not incorporated. It was admittedly bona fide members club, but under one of the terms of its lease, it had to admit non-members to play on its course on payment of "green fees" at certain prescribed rates. Those fees were paid by non-members, Receipts from those fees were entered in the general accounts of the Club, thus, showing an annual excess of receipts over expenditure of the Club as a whole. It was held by Hamilton J. (as he then was), that the Club carried on a concern or business in respect of which it received remuneration which was assessable to income-tax. He pointed out that the receipts from non-members went to augment the funds of the Club, and the revenue thus received was applied for the purposes of the Club - towards its general expenditure. The case was taken up to the Court of Appeal, and the decision of that Court is reported in the same Volume at P. 198. The Court of Appeal affirmed the decision and dismissed the appeal.14. The judgment of the Kings Bench Division in Liverpool Corn Trade Association Ltd. v. Monks, 1926-10 Tax Cas 442 was based on facts which are similar to the facts of the present case. In that case, The Liverpool Corn Trade Association, Limited, was an incorporated body under the Companies Act, with the object, inter alia, of protecting the interests of the corn trade, and of providing a clearing house, a market, an exchange, and arbitration and other facilities to the trade. Membership of the Association was confined to persons engaged in the corn trade. Each member was required to have one share in the company, an had to pay an entrance fee and an annual subscription. Non-members could also become subscribers. Payments were made to the Association by members and others for services rendered through the clearing house, etc. The assessee was taxed on the excess of its receipts over expenditure. On appeal to the Special Commissioners, they upheld the assessment. One of the points raised before the Special Commissioners, was that transactions with its members were mutual ones, and that any surplus arising from such transactions, was not a profit assessable to income-tax. On appeal, the High Court agreed with the determination of the Special Commissioners, and held that any profit arising from the Associations transactions with members, was assessable to income-tax as part of the profits of its business, and that the entrance fees and subscriptions received from members must be included in the computation of such profits.15. It was suggested that the service in this case, if any, was extremely trivial and the remuneration which was large was for that reason not definitely related to the service.It was held by Upjohn, J. in Bradbury (H. M. Inspector of Taxes) v. Arnold, (1957) 37 Tax Cas 665 at p. 669, that the extent of the services was of no materiality. There, the question was being dealt with under Case VI of Schedule D of the Income-tax Act, 1918.The learned Judge observed:"There is no doubt that a contract for services may, and clearly does, form a matter for assessment under Case VI of Schedule D, and not the less so that the services to be rendered are trivial or that they are to be rendered once and for all so that the remuneration may be regarded as a casual profit arising out of a single and isolated transaction."The same view was expressed by Harman, J. in Housden (Inspector of Taxes) v. Marshall , 1958-3 All ER 639. In that case, a well-known jockey contracted with a newspaper company to make available to its nominee "reminiscences of his life and experiences on the turf for the purpose of writing a series of four articles", and to provide photographs, press cuttings, etc. He was paid ? 750. The question was whether this amounted to sale of property, or was a payment for services rendered. It was held at it was the latter, and that it did not matter if the service rendered was trivial.16. In view of what we have said above as to the nature of the service which the Association performed in respect of the Assistants, the payment of the fee was definitely related to that service. It is, therefore, plain that the case fell within S. 10(6) of the Act. It must, therefore, be held that the question referred to the High Court should have been answered in the affirmative, and that the High Court was in error in giving its opinion to the contrary.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]13. Though cases in England, by way of precedent or the decision of the case in hand, have not been cited at the Bar, apparently because the scheme of the Income-tax law in England is different and the words of the statute are not in pari materia yet there are some cases which throw some light on the controversy before us. For example, the case of Carlisle and Silloth Golf Club v. Smith, (1952) 6 Tax Cas 48 related to a golf club which was not incorporated. It was admittedly bona fide members club, but under one of the terms of its lease, it had to admit non-members to play on its course on payment of "green fees" at certain prescribed rates. Those fees were paid by non-members, Receipts from those fees were entered in the general accounts of the Club, thus, showing an annual excess of receipts over expenditure of the Club as a whole. It was held by Hamilton J. (as he then was), that the Club carried on a concern or business in respect of which it received remuneration which was assessable to income-tax. He pointed out that the receipts from non-members went to augment the funds of the Club, and the revenue thus received was applied for the purposes of the Club - towards its general expenditure. The case was taken up to the Court of Appeal, and the decision of that Court is reported in the same Volume at P. 198. The Court of Appeal affirmed the decision and dismissed the appeal.14. The judgment of the Kings Bench Division inLiverpool Corn Trade Association Ltd. v. Monks, 1926-10 Tax Cas442 was based on facts which are similar to the facts of the present case. In that case, The Liverpool Corn Trade Association, Limited, was an incorporated body under the Companies Act, with the object, inter alia, of protecting the interests of the corn trade, and of providing a clearing house, a market, an exchange, and arbitration and other facilities to the trade. Membership of the Association was confined to persons engaged in the corn trade. Each member was required to have one share in the company, an had to pay an entrance fee and an annual subscription. Non-members could also become subscribers. Payments were made to the Association by members and others for services rendered through the clearing house, etc. The assessee was taxed on the excess of its receipts over expenditure. On appeal to the Special Commissioners, they upheld the assessment. One of the points raised before the Special Commissioners, was that transactions with its members were mutual ones, and that any surplus arising from such transactions, was not a profit assessable to income-tax. On appeal, the High Court agreed with the determination of the Special Commissioners, and held that any profit arising from the Associations transactions with members, was assessable to income-tax as part of the profits of its business, and that the entrance fees and subscriptions received from members must be included in the computation of such profits.It was suggested that the service in this case, if any, was extremely trivial and the remuneration which was large was for that reason not definitely related to the service.It was held by Upjohn, J. in Bradbury(H. M. Inspector of Taxes) v. Arnold, (1957) 37 Tax Cas 665 at p.669, that the extent of the services was of no materiality. There, the question was being dealt with under Case VI of Schedule D of the Income-tax Act, 1918.The learned Judgeis no doubt that a contract for services may, and clearly does, form a matter for assessment under Case VI of Schedule D, and not the less so that the services to be rendered are trivial or that they are to be rendered once and for all so that the remuneration may be regarded as a casual profit arising out of a single and isolatedsame view was expressed by Harman, J. in Housden(Inspector of Taxes) v. Marshall , 1958-3 All ERIn that case, a well-known jockey contracted with a newspaper company to make available to its nominee "reminiscences of his life and experiences on the turf for the purpose of writing a series of four articles", and to provide photographs, press cuttings, etc. He was paid ? 750. The question was whether this amounted to sale of property, or was a payment for services rendered. It was held at it was the latter, and that it did not matter if the service rendered was trivial.16. In view of what we have said above as to the nature of the service which the Association performed in respect of the Assistants, the payment of the fee was definitely related to that service. It is, therefore, plain that the case fell within S. 10(6) of the Act. It must, therefore, be held that the question referred to the High Court should have been answered in the affirmative, and that the High Court was in error in giving its opinion to the contrary.