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TMI Blog1980 (1) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, at the time of each loading. There was also a special provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion 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 members." It is not disputed before us that the assessee-u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould 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 association would be chargeable if the amounts paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, therefore, of no help to the assessee and the Tribunal misdirected itself and went wrong in holding that the surplus arising out of the activities of the assessee were not chargeable to income-tax because the activities of the association did not constitute trading activities. Apart from what has been stated above, even on the facts found, it is apparent that the assessee is carrying on trading activity. As a matter of fact, a truck owner who is a member of the union is not concerned with the procurement of the business directly and it is only the union which procures business for him and has direct relations with the customers. Again, a part of the income of the union is derived not from any contributions by its members but from 5 per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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