THE COMMISSIONER OF INCOME-TAX, WEST BENGAL versus THE CALCUTTA STOCK EXCHANGE ASSOCIATION LTD.

Citation: [1959] SUPP. 2 S.C.R. 459 · Decided: 26-03-1959 · Supreme Court of India · Bench: BHUVNESHWAR PRASAD SINHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

(2) S.C.R. 
SUPREME COURT REPORTS 
459 
THE COMMISSIONER OF INCOME.TAX, 
WEST BENGAL 
v. 
THE CALCUTTA STOCK EXCHANGE ASSOCIA-
TION LTD. 
(B. P. SINHA, J. L. KAPUR and 
M. HIDAYATULLAH, JJ.) 
Income Tax-Stock Exchange Association-Authorised Assist-
ants-Admission fee and monthly subscriptions in respect of them 
paid by members-Fee for putting the names of companies on QHota-
tions List-Income therefrom-Assessability to tax-" Performing 
specific services", Meaning of-Indian Income-tax Act, r9zz (XI 
of r9zz), s. ro(6). 
. 
By sub-s. 6 of s. ro of the Indian Income-tax Act, r922: "A 
trade, professional or similar association performing specific ser-
vices for its members for remuneration definitely related to those 
services shall be deemed for the purpose of this section to carry 
on business in respect of those services, and the profits and gains 
therefrom shall be liable to tax accordingly." 
The members of the respondent company, whose principal 
object was to facilitate the transaction of business on the Stock 
Exchange, were enabled under the by-laws to have a certain 
number of Authorised Assistants so that the latter could use the 
premises of the company and transact business therein in the 
names and on behalf of the members who, for that purpose, were 
required to pay admission fees and monthly subscriptions in 
respect of each of them. 
The by-laws of the company also pro-
vided that no dealings in respect of the shares of any particular 
company should be permitted on the Stock Exchange, unless an 
application made by a member of the respondent company and 
accompanied by a fee of Rs. rooo, for putting the name of that 
company on the Quotations List was approved by the prescribed 
Authority of the respondent company. During the accounting 
year in question the company received from its members admis-
sion fees and subscriptions in respect of the Authorized Assistants 
and fees for putting the names of companies on the Quotations 
List. 
The question was whether the aforesaid amount was 
liable to be taxed under s. ro(6) of the Indian Income-tax Act, 
~~ 
. 
Held, that with reference to a trade, professional or similar 
association, the performing of specific sel'vices under s. ro(6) of 
the Indian Income-tax Act, r922, mean conferring on its members 
some tangible benefit which otherwise would not be available to 
them as such, except for payment received by the association in 
respect of those services. 
I959 
Marek 26. 
460 
SUPREME COURT REPORTS [1959] Supp. 
r959 
Accordingly, the income received by the respondent com-
pany towards the admission fees and the subscriptions in respect 
The Commissioner of the. Authorized Assistants. being the price paid for the services 
of Inconie-tax, 
of the respondent con1pany in making suitable arrangements for 
West Bengal 
an absentee member to transact business on his behalf and in his 
v. 
name by his representative or agent within the Stock Exchange, 
The Calcutta Stock as well as the fees received from members for enlisting the names 
Exchange 
of companies not already on the Quotations List so as to permit 
Association Ltd. transactions in respect of the shares of the companies concerned, 
was remuneration definitely related to specific services perform-
ed by the respondent for its members within the meaning of 
s. rn(6) of the Indian Income-tax Act, r922, and was assessable 
to income-tax. 
Sinha ]. 
Native Share and Stock Brokers' Association v. The Commis-
sioner of Income-tax, Bombay, [r946] r4 I.T.R. 628, approved. 
CIVIL APPELLATE JURISDICTION: 
Civil 
Appeal 
No. 204 of 1958. 
Appeal from the judgment and decree dated Janu-
ary 6, 1956, of the Calcutta High Court in Income-tax 
Reference No. 74 of 1953. 
K. N. Rajagopal Sastri, R. H. Dhebar and D. Gupta, 
for the appellant. 
Radha Binod Pal, Panchanan Pal and D. N. Mukher-
jee, for the respondents. 
1959. March 26. 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 respondent's admit-
ted income under 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). The Calcutta High Court, by 
its judgment dated January 6, 1956, answered the 
question in the negative, disagreeing with the determi-
nation of the Income-tax Appellate Tribunal by its 
order dated April 

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