TaxTMI 
TaxTMI 
1980 (1) TMI 61
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....mstances of the case, the Tribunal is right in law in holding that the provisions of section 28(iii) are not applicable in this case and that the income of the assessee is not tax-able ? " The facts found by the AAC, Jullundur, and which were not controverted by the Tribunal are that all the truck owners of Hoshiarpur district who had permits to ply their trucks on the hill routes formed a union in order to cut down the competition amongst themselves and set up a device to regularise the working of the trucks for the maximum benefit of its members. Any truck owner could get himself registered with the union on payment of Rs. 4. As and when any load was received by the union, it was allocated to its members turn by turn on payment of Re. 1,....
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....competition amongst themselves. The primary object of the union was, therefore, not to carry on business itself, but only to regulate the working of the various, members in such a way so as to avoid unhealthy competition amongst themselves. Such an activity does not constitute a trading activity and hence the surplus arising out of such activities is not chargeable to income-tax. The answer to the question depends on the interpretation of clause (iii) to s. 28 of the I.T. Act, which reads as under: " 28. 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 memb....
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.... sub-section further requires that the remuneration should be 'definitely related' to the specific services. In other words, it should be shown that those services would not be available to the members or such of them as wish to avail themselves of those services; but for specific payments charged by the association as a fee for performing those services." Similarly, in Indian Tea Planters'Association v. CIT [1971] 82 ITR 322, a Division Bench of the Calcutta High Court held that a trade association, rendering specific services to its own members for remuneration will come within s. 10(6) of the Indian I.T. Act, 1922, (now s. 28(iii) of the I.T. Act, 1961). From the perusal of these two authorities, it is evident that income from a trade a....