HOSIERY INDUSTRY FEDERATION Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is a registered society and its members are six different associations of hosiery manufacturing concerns. THE receipt of the asses-see consists of annual subscription, special subscription and allocation charges, collected from various hosiery manufacturing units. Special subscriptions were raised by the assessee from its members when funds were required for a special item of expenditure other than the routine expenditure, the allocation charges are received by the assessee at 25 paise per kilogram of woollen yarn allocated by it to its various members. THE assessee is allotted by the Union of India a bulk quota of woollen yarn, imported as well as indigenous which is further allocated by the assessee to its various members. In this process, the assessee has to incur expenditure for procuring bulk quota as well as in making allocation to its members. During the accounting year ending on March 31, 1969, special subscription received was Rs. 24,176.12, annual subscription Rs. 1,300 and allocation charges Rs. 69,329.82. During the next accounting year, the annual subscription was Rs. 5,600 and the allocation charges, Rs. 1,19,419.71. THE ITO on these facts held that the receipts of the assessee constituted income, as contemplated under Clause (iii) of Section 28 of the I.T. Act, and were assessable to tax as such. He further repelled the plea of the assessee that it was entitled to exemption from tax on the said income by virtue of the provisions of Section 11(1)(a) of the I.T. Act. On appeal, the AAC confirmed the said findings but reversed the order of the ITO qua the amount of Rs. 1,300 and Rs. 5,600 holding that the amounts of annual subscriptions were not covered by Clause (iii) of Section 28 of the Act.

(2.) THE Tribunal, after taking into consideration the memorandum of association of the assessee, dismissed the appeal with the following finding :