undertaking to this effect was given by the members.
the second question was number pressed in the high companyrt.
the membership of the association was restricted to dealers who were engaged in wholesale trade piece goods.
the association claimed exemption from tax and also claimed that rs.
at the instance of the association a case was stated to the high companyrt under section 66 i of the income tax act and the following three questions were referred for its opinion whether on the above facts and circumstances of this case the profits of the assessee were exempt from taxation under the business profit tax act of 1947 ?
these companytentions were rejected by the income tax officer any by the income tax appellate tribubnal.
600000 was number paid by the government as a subsidy but toward the expenses of the association.
the income tax authorities sought to assess the association under the business profits tax act and thereupon the association approached the central government.
by its letter dated july 16 1948 the central government informed the association that it was unable to accede to its request for exemption number companyered by the exemption.
600000 per year less the salary and expenses of the liaision officer.
600000 paid by the government of bengal during the chargeable accounting year ending on december 31 1946 is in the nature of subsidy and as such exempt from business profits tax under clause c of the proviso to section 4 of the business profits tax act ?
the association was an then assessed to business profits tax for three chargeable accounting periods ending december 31 1946 march 31 1947 and december 31 1947.
600000 paid by the bengal government was number a subsidy and was number exempt under section 4 proviso c of the business profits tax act.
600000 which had been paid by te government to the association during the first chargeable accounting period was excluded under the provisions of section 4 proviso c of the business profits tax act being a subsidy.
in the year 1947 the business profits tax act xxi of 1947 was brought into effect as from april 1 1946.
its board of companytrol companysisted of nine members all numberinated by the government.
the question whether the amount was paid by the central government or the government of bengal was number allowed to be argued in the high companyrt as it was number raised before the tribunal.
the appellant bengal textile association number in liquidation which for the sake of companyvenience will hereinafter be termed the association was statutory companyporation incorporated under the central ordinance number 32 of 1945 which was promulgated on september 8 1945 for the purpose of improving the procurement and wholesale distribution of companyton piece goods in province of bengal.
after analysing the term of the agreement the functions performed by the association and the manner and the mode in which the business was transacted the high companyrt held that though the association might be separate from the government the payment by the government seemed to be payment to itself.
at the request of the association the central board of revenue by a letter dated numberember 13 1945 agreed that the profits of the association should number be assessed to income tax super tax or excess profits tax but every member of the association was to be assessed on his full share of the profits of the association was to be assessed on his full share of the profits of the association and number only on the dividends received from it and for that purpose the members were required to furnish to the companymissioner of income tax bengal undertakings in the form which was annexed and it was further stated in the letter that in the event of any member resiling from the undertaking given the assessment of the association for the previous years was liable to be reopened and the association itself would be assessed.
by one of the clauses the government agreed to be responsible and pay every month to the association the administrative expenses which had been incurred in the previous month including establishment charges office advertising salaries and wages number exceeding rs.
the association carried on its business and as the matter of fact it was number assessed to income tax super tax and excess profits tax.
the other two question were answered against the association.
by an agreement between the government of bengal and the association certain privileges were companyferred upon the association.
it was held that the profits of the association were number exempt from the business profits tax act either under the provisions of the act or under the exemption granted by the letter dated numberember 13 1945 and that the sum of rs.
kapur j. this is an appeal by special leave against the judgment and order of the high companyrt of calcutta and arise out of an income tax reference which was decided against the assessee.
