TaxTMI 
TaxTMI 
1981 (8) TMI 85
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....es performed. Thus, it was claimed that the subscription fee received from the members was not liable to tax. 3. The ITO was not satisfied with the contentions of the assessee. According to him, similar point was in issue in the assessment year 1974-75 and in that year also such income was taxed. The ITO invoked the decision in the case of CIT v. Calcutta Stock Exchange Association Ltd. [1959] 36 ITR 222 (SC) and held that membership fee received by the association was taxable income. Accordingly, a sum of Rs. 9,102 was included in the total income of the assessee. The ITO completed the assessment on 19-8-1978 on a total income of Rs. 74,910. 4. The assessee took up the matter in appeal and again reiterated the same points which were convassed before the ITO. The learned AAC held that the assessee was not a mutual association and as such, cannot claim exemption from tax on that ground. Thus, the learned AAC agreed with the finding of the ITO. 5. Before the Tribunal, on behalf of the assessee, it was contended that the finding of the authorities below is incorrect. The object of the association is to propagate the understanding of the law, its advantages and disadvantages, ....
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....) and CIT v. Royal Western India Turf Club Ltd. [1953] 24 ITR 551 (SC). 7. In our considered opinion, the contention of the assessee could hardly be accepted. In our opinion, a mutual association is an AOP who agree to contribute funds for some common purposes mutually beneficial and receive back the surplus left out of those funds, in the same capacity in which they have made the contributions. Their capacity as contributors and as recipients remains the same. They contribute, not with an idea to trade but, with an idea of rendering mutual help. They receive back the surplus which is left out after meeting the expenditure which they have incurred for their common purpose, in the same capacity in which they have contributed. Thus, they receive back what was already their own. The receipt thus coming in their hands is not a profit because no man can make a profit out of himself, just as a trader cannot enter into a trade or business with itself. Therefore, the main test of mutuality is complete identity of the contributors with the recipients. If such a mutual concern received any such income and the surplus goes back to those who contributed the said income, it is not liable to ....
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....we are also fortified by the ratio of the decision in the cases of Shri Jari Merchants Association and Ludhiana Central Co-operative Consumers' Stores Ltd. 10. From the aforesaid decision, it is clear that the assessee is not a mutual association. 11. The other contention of the learned counsel for the assessee was that the assessee is not a trading association and any amount received by it from the members in the shape of subscriptions or donations is not from any specific services performed for its members. As such, the receipts in question are not chargeable to income-tax under section 28 of the Act. 12. On behalf of the revenue it was contended that though it is true that in the case of the assessee, provisions of section 28 may not be attracted but nevertheless, the receipts in question are income and the same are taxable under the residuary clause 'income from other sources'. 13. In our opinion, the contention of the assessee is not correct. Before discussing the contentions of the parties, we would like to discuss the scope of word 'income', in brief. The word 'income' as used in the Act is wide and vague in its scope. It is a word of elastic import and its exten....
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....ness with any of its members. The subscriptions received by it from its members cannot, therefore, be charged to tax under the head 'Profits or gains of business or profession'. But that does not settle the question of taxability of subscriptions received by the assessee from its members because if these subscriptions amount to 'income', tax on that 'income' would be chargeable under the residuary head 'F.---Income from other sources' which relates to income from other sources. 15. Therefore, the pertinent question which would arise, and to be considered, is whether the receipt of subscription by the assessee from its members amounts to the receipt of 'income'. From the aforesaid decision, it is clear that the assessee gets the receipts with some sort of regularity or expected regularity. It is a common ground that the assessee is not a registered association under any Act. Even if it was not so registered, for the purposes of the Act, it would be a 'person' as defined under section 2(31) of the Act. According to the said definition, 'person' includes an AOP or a BOI, whether incorporated or not. The assessee is an AOP. The assessments were made in the status of an AOP. This fac....