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TMI Blog1983 (2) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... s and exhibitors, carrying on business in Punjab, Haryana, Himachal Pradesh, Jammu and Kashmir and Chandigarh, as its members. The members contribute to the assessee-association in the shape of an admission fee and periodical subscription against which they are entitled for general services to be rendered by it in respect of protecting their rights. In addition to providing such general services, the assessee-association renders specific services to members against which it charges separately. The various specific services undisputedly rendered by the assessee are following : " 1. Print Examination Fee. 2. Letter Circulation Fee. 3. Arbitration of claims. 4. Registration of claims. 5. Appeals from awards. 6. Change of constituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned. The Tribunal held that on the principle of mutuality the receipts under the head 'others' were exempt. However, for the assessment years under appeal now the controversy is whether two items of income, though classified by the assessee under the head 'others', really belong to the other head of income, namely, relating to the receipts on account of performing of specific services by the assessee for its members. It was from this angle that the AAC had dealt with the issue when he disposed of the appeals on the first occasion and the Tribunal found his treatment to be of confused nature and set aside those orders of the AAC. Instead of the AAC, now the seven set aside appeals have come to be disposed of by the Commissioner (Appeals) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was accounting for whatever is now described as 'penalty' and ' re-admission fee' together under a common head of 'penalty'. The Commissioner (Appeals) has noted the assessee's authorised representative's explanation that the assessee was collecting two kinds of payments described as penalties. One kind was a penalty where the member dealt with a non-member in connection with the exhibition or distribution rights of films. The penalty was payable at prescribed rates as per circular dated 19-1-1970 issued by the association. In these appeals, this kind of penalty is described as 'penalty'. The second kind of payment to be made by the members was as per circular of the assessee-association dated 26-3-1958, which was later on modified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that a common set of principles will apply for deciding both the types of appeals as the issue involved is a common one, namely, whether the payments received by the assessee and the consequent income derived therefrom arises from performance of specific services to its members. It will be thus important to know as to what is the scope of the words 'specific services performed for its members' used in section 28(iii). Fortunately, so far as this aspect is concerned, similar words were used in section 10(6) of the 1922 Act, which have received interpretation from the Supreme Court in the case of CIT v. Calcutta Stock Exchange Association Ltd. [1959] 36 ITR 222 and we quote the relevant passage of the judgment : " It has to be observed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'remuneration' with 'wages'. The sub-section further requires that the remuneration should 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. After these observations bearing on the interpretation of the crucial words, we shall now examine each of the three items of income, separately, to determine the question whether they answer, or any of them answers, the description of 'services' contemplated by the sub-section." (pp. 227-28) On a reading of the above passage, it appears to us that performa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reverse the decision of the Commissioner (Appeals) on this point and hold that the amounts held by him to be taxable under the head 'penalty' for all the seven assessment years are not taxable under section 28(iii) and allow the seven appeals of the assessee. 6. In regard to the five appeals of the revenue, we have considered the submissions of both the sides, which are of similar nature. The revenue's emphasis was that according to it the penalty considered earlier was for rendering specific services and the same was true about a penalty charged from a suspended member when he was reinstated. On behalf of the assessee, Shri Vaish submitted that this was a case of re-admission of a suspended member and the amount paid was in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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