9911796707
TMI Blog1981 (4) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... ss Association was not a profit chargeable to tax ?" The assessment year involved is 1964-65. The business of the assessee is of pressing of jute bales and the assessee is a member the Calcutta Hydraulic Press Association. A number of other concerns engaged in pressing of jute into bales are also members of that association. Each of the members contributed to the fund of the association at 9 paise per bale pressed. The subscription paid by the assessee had been allowed as deduction in the computation of the income of the earlier years. The association maintained a fund styled as the " operating fund ", the source of which was the subscription received from its members. The association also had income from dividend and interest. The associ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m which the association made the refund but depended upon the fact whether the refund had been made upon capital basis, i. e., it depended upon the intention of the association with which the refund was made. The Tribunal found that the managing committee in their report had stated that the refund was made to the members proportionate to their contributions. The Tribunal drew the inference that the basis for the refund was not the entire capital of the association and the refund proportionate to the subscription showed that the receipt was a remission out of the contributions and it was a revenue receipt which fell within the purview of s. 41(1). The Tribunal negatived the plea of the assessee that s. 41(1) did not apply on account of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by him or the value of benefit accruing to him, shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not. " " 86. Other incomes.- Income-tax shall not be payable by an assessee in respect of the following -.... (v) if the assessee is a member of an association of persons, or body of individuals other than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 14(2)(b) comes under exemptions of a general nature. Thus, it is, contended that a special provision was made in 1955 for controlling the general provision made in 1939. Next, it is argued by Mr. Mitra that, to attract s. 86(v), two conditions would be necessary. First, the section applies in the case of partners of an unregistered firm; secondly, the partners' share of profits which is exempt under this clause is to be computed in the manner laid down in s. 67, that is, it includes any interest, salary, commission or remuneration payable to him by the firm in addition to his share in the balance of the firm's profits. The result is that any interest, salary or commission or remuneration received by a partner from his firm, would be ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rview of s. 41(1) of the Act. Though the provision of s. 41(1) of the Act was applicable, yet the applicability of that section, according to the Tribunal, was excluded because the provision of s. 41(1) is of general nature. It is argued by Mr. Mitra that these two provisions being not repugnant to each other, they can stand together or, in other words, both the sections can operate together. Reliance is placed on the decision of the Supreme Court in the case of Municipal Corporation of Delhi v. Shiv Shanker, AIR 1971 SC 815. In paragraph 5 of the report, it is laid down by their Lordships that the provisions must be wholly incompatible with each other so that the two provisions operating together would lead to absurd consequences, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections, the court shall not be guided by the principles and reasons for introduction of the corresponding sections in the earlier Act of 1922. Lastly, it is contended by Mr. Mitra that the provision of s. 86(v) will apply subject to the provision of s. 41(1). Mr. N. C. Mukherjee, learned advocate for the assessee, on the other hand, contends that on the facts and circumstances of the case, the provision of s. 41(1) of the Act has got no application at all. The subscription received by the association from its members had been subjected to income-tax in the hands of the association. The association refunded Rs. 5 lakhs to its members out of its fund in proportion to their contribution to the fund. Such receipts in the hands of the membe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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