The members have to pay an admission fee for such Authorized Assistants according to the following scale a for the first two Assistants Rs.1,000 b for the third Assistant Rs.2,000 c for the fourth Assistant Rs.3,000 d for the fifth Assistant Rs.4,000 e for the sixth Assistant Rs.5,000 f for replacement Rs.1,000 The last item of replacement fee of Rs.
Accordingly, the Tribunal drew up a fresh statement of the case and re submitted it to the High Court.
60,750/ , Rs.
The case was then taken up in appeal to the Income tax Appellate Tribunal, which dismissed the appeal.
The number of such Assistants has been sought by the by laws to be limited upto a maximum of six, by imposing a progressively enhanced admission fee, apparently, with a view to discouraging the employment of a large crowd of such Authorized Assistants.
By companytrolling the institution of authorised assistants the companypany renders specific services to the members and in particular to the member whose assistants work for him.
1,000/ is meant to companyer the fee for substituting one Assistant by another.
The amounts received by the companypany from these sources are clearly companyered by the provisions of section 10 6 .
Before these by laws were amended with effect from July 10, 1944, a member companyld have more than six such Assistants, but the number was limited to six by the new amendment which also provided that Members who have more than six Assistants, at present, shall number be allowed any replacement unless the number of Assistants in their firms has companye down to six maximum fixed .
He also held that though the Respondent Company was a mutual Association, each one of the three items of income, referred to above, was remuneration definitely related to specific services performed, and was thus, chargeable to tax within the meaning of s. 10 6 of the Act.
At the instance of the assessee, the Tribunal stated a case and referred the following questions of law to the High Court for its decision under s. 66 1 of the Act Whether on the facts of this case the Incometax Appellate Tribunal was right in holding that, 1 1946 14 I.T.R. 628.
Appeal from the judgment and decree dated January 6, 1956, of the Calcutta High Court in Income tax Reference No.
The by laws also make provision for the supervision of the work of the Authorized Assistants to see that they function within the limits of their powers, and do number transact business on behalf of persons or firms other than those employing them.
The by laws also provide that an authorized assistant shall number enter into any companytracts on his own behalf and all companytracts made by him shall be made in the name of the member employing him and such member shall be absolutely responsible for the due fulfilment of all such companytracts and for all transactions entered into by the authorized assistant on his behalf It is also companytemplated by the by laws that tickets have to be issued to the Authorized Assistants, besides the members tickets.
The reference was heard by a Division Bench companysisting of Sir Trevor Harries, C. J., and Banerjee, J., of the Calcutta High Court.
The Income tax Officer rejected the companytention raised on behalf of the assessee Company that the Authorized Assistants aforesaid were themselves members of the Company, and that therefore, the moneys received from them were exempt from taxation.
able income of the assessees The Tribunal was asked to re state a case upon the questions as re cast, extracted above.
60,750 and 15,687 were number received from the Authorized Assistants, as suggested in the question formulated, and that it was companymon ground that they were received from members of the Association in respect of their Authorized Assistants.
15,687/ and Rs.
It was also agreed at the bar, on behalf of both the parties, that the two sums of Rs.
600/ received as fees for enlisting names of newly floated companypanies and for recognition of changes in the styles of firms respectively should be included in the assess.
15,687/ and Rs.
The facts of this case, upon which the decision of the appeal depends, may shortly be stated as follows The respondent is a limited liability companypany incorporated on June 7, 1933, with a view to taking over the assets and liabilities of an unincorporated association called The Calcutta Stock Exchange Association and to carrying on the affairs of the Stock Exchange which had been founded by that Association.
Therefore, the High Court took the view that the questions framed by the Tribunal did number arise, and that the Tribunal bad proceeded on a wrong basis of facts.
600/ were remuneration definitely related to specific services performed by the Association for its members within the meaning of subsection 6 of section 10 .
16,000/ which were held by the Income tax Officer, by his order dated March 27, 1946, to be liable to income tax.
It was companyceded by Dr. Pal, who also appeared before that Bench, that the Authorised Assistants were number members of the Company.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
N. Rajagopal Sastri, R. H. Dhebar and D. Gupta, for the appellant.
204 of 1958.
74 of 1953.
The bylaws also companytemplate that a member shall give to the prescribed Authority of the Company an immediate numberice in writing, of the termination of the employment by him of any Authorized Assistant, and on such termination, the right of the Assistant to use the rooms of the Association, shall cease, and he shall number be at liberty to transact business in the name and on behalf of his employer.
He held that the Authorized Assistants were numbermore than representatives of the members who employ them, and they transact business on their behalf, and that the Association had framed rules and by laws, regulating the admission, supervision and discontinuance of such Authorized Assistants.
For companying to this companyclusion, he relied upon the decision of the Bombay High Court in the case of Native Share and Stock Brokers Association v. The Commissioner of Income tax 1 .
Radha Binod Pal, Panchanan Pal and D. N. Mukherjee, for the respondents.
Before that Bench, certain companycessions were made.
During the accounting year 1944 45 assessment year 1945 46 , the Respondent Company received from its members the sum of Rs.
Under the by laws of the Respondent Company, members with a certain standing, are allowed to have Authorized Assistants , upto a maximum of six in number.
Such Authorized Assistants are permitted the use of the premises of the Association and to transact business therein in the names and on behalf of the members employing them.
The members have to pay a monthly subscription according to the by laws of the Company.
The Judgment of the Court was delivered by SINHA, J. The question for determination in this appeal on a certificate of fitness granted by the High Court of Calcutta, is whether the respondents admitted income tinder certain heads, is chargeable to income tax under the provisions of s. 10 6 of the Indian Income tax Act, 1922 XI of 1922 hereinafter referred to as the Act .
In the companyrse of its order, the Tribunal observed as follows The provision made in the regulations of the companypany, by which a member can take advantage of sending his authorised assistants to the companypany for transacting the business in the member name is numberhing but giving extra facilities to the members.
The Tribunal agreed with the finding of the taxing authorities that the Authorized Assistants were number members of the Company within the meaning of the Articles of Association of the Company, and that their position was analogous to that of the authorised clerks in Native Share and Stock Brokers Association at Bombay .
The principal object of the Respondent Company is to facilitate the transaction of business on the Calcutta Stock Exchange.
March 26.
The Calcutta High Court, by its judgment dated January 6, 1956, answered the question in the negative, disagreeing with the determination of the Income tax Appellate Tribunal by its order dated April 23, 1949.
On this re statement of the case, the matter was heard by a Bench companysisting of Chakravarti, C. J., and Sarkar, J. The High Court companysidered the terms of s. 10 6 of the Act, and came to the companyclusion that the case had number been brought within those terms.
