1966 PLP 491 (PTD)
COMMISSIONER OF INCOME‑TAX, DELHI, ETC. Versus DELHI STOCK EXCHANGE ASSOCIATION LTD.
| Citation | 1966 PLP 491 (PTD) |
| Forum / Court | Delhi (India) |
| Bench Members | Bhandari, C. J. and Khosla, J |
| Parties | COMMISSIONER OF INCOME‑TAX, DELHI, ETC. Versus DELHI STOCK EXCHANGE ASSOCIATION LTD. |
| Primary Law | STATEMENT OF CASE |
Q1: What are the key laws and sections cited in 1966 PLP 491 (PTD)?
This judgment primarily cites: STATEMENT OF CASE as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 1966 PLP 491 (PTD)?
The case was heard and decided by the Delhi (India) bench comprising: Bhandari, C. J. and Khosla, J.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 1966 PLP 491 (PTD) (COMMISSIONER OF INCOME‑TAX, DELHI, ETC. Versus DELHI STOCK EXCHANGE ASSOCIATION LTD.). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Representation
- The learned counsel for the assessee‑company contends that his client is not liable to pay any income‑tax in respect of entrance fees paid by members as the company is a mutual concern which is exempt from the payment of income‑tax. The learned counsel for the Department controverts the correctness of this allegation and contends that the entrance fees payable by the members fall within the ambit of section 10(1) of the Income‑tax Act inasmuch as they are profits or gains of business, profession or vocation; or, in the alternative, that the assessee‑company is liable to pay the tax under the provisions of subsection (6) of section 10 of the statute which declares that a trade, professional or similar association performing specific services for its members for remuneration definitely related to those services shall be deemed for the purposes of this section to carry on business in respect of those services, and the profits and gains there from shall be liable to tax accordingly.
Headnotes / Summary
Indian Income‑tax Act (XI of 1922), S. 10(1), (6) ‑Company doing stock exchange business‑Admission fees received from trading members and their agents‑Profits distributed to trading as well as non‑trading members Income, whether exempt under S. 10(l)‑Exemption of income of mutual concerns‑Test of mutuality ‑ Identity between contributors and participators ‑Admission fees, whether remuneration paid for services Assessability under S. 10(6). The true principle underlying the assessment of the income of mutual concerns is that the surplus arising from mutual transactions is not assessable where there is complete identity between the contributors and participators, or where the ownership of the surplus is restricted to those who provided it as a class. On the other hand, surplus arising from such transaction is assessable where the parties are not identical or where the surplus is distributed wholly or partly among persons other than in their character of persons subscribing the surplus, for example, as shareholders receiving a dividend or as debenture‑holders deriving interest; or where all of the participating policy‑holders are not members of the society. The assessee, the Delhi Stock Exchange Association, Ltd., was formed to promote and regulate the business of exchange of stock and shares. It had a capital of Rs. 5,00,000 divided into 250, shares of Rs. 2,000 each, on which dividends were earned. Any person could become a shareholder by purchasing a share but a shareholder could become a trading member only if he was duly admitted as such and had paid an admission fee of Rs.
250. Every member was entitled to nominate two persons as his authorised agents on payment of a registration fee of Rs. 125 and monthly subscription of Rs. 50 for each agent. The question being whether the admission fees received by the assessee from its members and authorised agents, was taxable income in the assessee's hands: Held, that as the real object of the company was to make profits, and the profits were also distributed to the shareholders who invested the capital and not only to the trading members and their authorised agents, who paid ‑the admission fees, the cardinal requirement of a mutual concern whose profits are exempt from tax, namely, identity of the contributors and participators, was absent and the income in question was taxable in the assessee's hands. Obiter: Entrance fees and subscriptions, being arbitrary sums charged as the price of the privilege of membership or quasi membership and not remuneration definitely related to any services performed by the company, are not assessable under section 10(6) of the Income‑tax Act. [Case‑Law referred to.] These four applications under section 66(1) of the Indian Income‑tax Act, 1922, by the Commissioner are granted as in our opinion a question of law does arise out of the orders of the Tribunal.
2. The applications arise nut of four appeals which related to the assessments for 1947‑48, 1948‑49, 1949‑50 and 1950‑
51. Three of the appeals were by the Income‑tax Offcer, against orders of the Appellate Assistant Commissioner who had set aside supplemental assessments made under section 34 in respect of the first three assessment years above mentioned: The last appeal was by the assessee against the assessment for 1950‑
51. The appeals were heard together and disposed of by a common order and as the point raised is the same in all these applications, we make a consolidated statement of the case.
3. The assessee is the Delhi Stock Exchange Association Ltd., Delhi. It was incorporated in 1947 and commenced business on 1st March 1948. The assessee‑company was established to acquire and take over as a going concern the activities, functions and business of the Delhi Stocks and Shares Exchange Ltd., and the Delhi Stock and Share Brokers Association Ltd., and to continue similar business. The earliest assessment in this case was for 1947‑
48. The return for that assessment year (for the account year ending with December 1946) was submitted by the present assessee, viz., the Delhi Stock Exchange Association Ltd., Delhi in its capacity as successors to the Delhi Stocks and Shares Exchange Ltd. The return was dated 8th October 1948. The income returned was of a sum of Rs. 13,
388. In Part IV of the return the profit as per profit and loss account was shown as Rs. 28,539‑5‑0 and two items of expenditure of Rs. 781 and Rs. 42‑I1‑0 were added back by the assessee itself as in admissible. From the total sum of Rs. 29,363, a sum of Rs. 15,975 described as "admission fees" was deducted and the resultant figure of Rs. 13,388 was the returned income. It appears that the Delhi Stocks and Shares Exchange Ltd. which was the predecessor of the assessee‑company had included the admission fees in its income and expenditure account and therefore, also in its profit and loss account for the year ending 31st December 1946. The details in the profit and loss account appended to the directors' report show that the members admission fees amounted to Rs. 9,000, that the authorised assistant's admission fees amount ed Rs. 6,875 and the unauthorized assistants' admission fees amounted to Rs. 100, total Rs. 15,
975. The Income‑tax Officer who made the original assessment for 1947‑48 on 28th October 1948, put down the figure of net profit as per profit and loss account and deducted "Admission fees charged from members etc. being of capital receipts"; Rs. 15,975; and after adding back inadmissible, completed the assessment on a total income of Rs. 13,
813. The return for the assessment for 1948‑49 was also submitted by the present assessee, again in the capacity of successors to the Delhi Stocks and Shares Exchange . Ltd. This return was also dated 8th October 1948. But the income shown was for a period of 14 months, i.e., for the whole of 1947 and for the months of January and February 1948. In this return also the profit as per profit and loss account was shown as Rs. 30,745‑1‑9 and deductions were claimed of Rs. 7,135 admis sion fees and Rs. 5,594‑13‑0 profit on land. The details given in the profit and loss account show that the admission fees were, from members Rs. 6,125, from authorized assistants Rs. 1,000 and from unauthorized assistants Rs.10, total Rs.7,
135. The income returned was, therefore, of a sum of Rs. 18,
015. The Income‑tax Officer who made the original assessment for 1948‑49 oil 24th November 1948, allowed the deductions claimed from the profit shown in the profit and loss account, which, as above said, included the admission fees amounting to Rs. 7,
135. The assessee‑company, as above said, commenced business on 1st March 1948. It submitted its return for the assessment year 1949‑50 for the period ending 31st December 1948, i.e., for a period of 10 months. The assessee did not commit the error of showing admission or entrance fees paid by members and authorized assistants in its income and expenditure account as used to be done by its predecessor. On the other band, the amount of admission fees realized from members and assistants amounting to Rs. 13,085 was taken directly to its balance sheet as on 31st December 1948, under the heading "General Fund". Therefore, there was no occasion to make any deduction from the profit shown as per the profit and loss account when the assessee made its return of income on 14th May 1949 for the assessment year 1949‑50 at Rs. 17,
246. After disallowing some expenses as inadmissible, the assessment was completed on 24th May 1949, on a total income of Rs. 17,
897. The return for the next assessment, i.e., for the year 1950‑51 (the account year being the calendar year 1949), was made by the assessee company on 30th May 1950, showing a total income of Rs. 10,
099. Here again, as is expressly mentioned in the directors' report in April 1950: "The working of the Stock Exchange during the year showed receipts of Rs. 8,125 as admission fee from members and assistants which have been directly transferred to the General Fund thus strengthening the reserves of the association." The Income‑tax Officer who completed the assessment for (950‑51, however, took the view that the admission fee taken direct to balance‑sheet, Rs. 8,125, must be added back and he completed the assessment on a total income of Rs. 18,
578. The same Income‑tax Officer also issued notices under section 34 and made supplemental assessments in respect of the three preceding assessment years also, including the admission fees above mentioned as the taxable income of the assessee. On appeal by the assessee, the learned Appellate Assistant Commissioner set aside the supplemental assessments on the ground that the cases did not fall within section 34, but he upheld the assessment made for 1950‑51 agreeing with the view of the Income‑tax Officer that admission fees were taxable income of the assessee. The Income‑tax Officer appealed to the Tribunal against the Appellate Assistant Commissioner's orders setting aside the supplemental assessments in the first three years and the assessee appealed against the assessment for the fourth year, i.e., for 1950‑51.
4. It is necessary here to set out the conditions on which a member or authorised assistant is admitted to do business under the aegis of the assessee, viz., the Delhi Stock Exchange Association Ltd., Delhi. A member must own a share of the assessee company. The face value of a share of the assessee company is Rs. 2,
000. The capital of the company is Rs. 5,00,000 divided into 250 shares of Rs. 2,000 each. An applicant for membership must also deposit Rs. 250 as admission fees. A member is entitled to nominate not more than two persons as his authorized assistants or agents and one person as his authorized clerk. The nomination of an authorized assistant or agent shall be accompanied with the registration fee of Rs. 125 for each nomination. There are provisions for monthly or other periodical subscriptions payable in respect of membership or of being the authorized assistant or agent and also for payment of fees on change of names, admission of partners and the like. We get these facts from the memorandum and articles of association and rules and bye‑laws of the Delhi Stock Exchange Association Ltd., Delhi, which will be part of the case but which will not be printed to save costs. The assessee undertakes to produce copies of these documents before the Court at the hearing. There must have been similar rules in respect of the business of the predecessor of the assessee, but they have not been made available to us. All the appeals proceeded on the footing that the factual and legal position as regards the admission fees of members or assistants was the same as regards both the assessee and its predecessor.
5. We, the members of the Bench who heard the appeals to the Tribunal, came to the conclusion for the reasons set out in our separate orders (copies of which are annexed hereto marked `A' and will form part of this statement of the case) that the entrance fees, described as admission fees for members and registration fees for authorized assistants and agents, were not taxable income of the assessee‑company. The Accountant Member (Mr. A. L. Sehgal) based his conclusion upon the surrounding circumstances as well as the rules and bye‑laws and had regard to .the purpose for which the admission fees were received and the manner in which they were earmarked by the assessee to be dealt with after receipt. The Judicial Member (Mr. K. N. Rajagopal Sastri) held that there was not in the receipt of entrance fees the requisite potential of periodicity to stamp it with the character of taxable income in the hands of the recipient; viz., the assessee‑company. No authority in point was cited before us; but there is a sentence in the Tribunal's statement of the case in Native Share and Stock Brokers Association v. Commissioner of Income‑tax ((1946) 14 I T R 628) which shows that it was common ground between the assessee therein and the Department that the receipts of the association from the entrance fees and membership subscriptions were not chargeable to income‑tax. But in the cases now under ,consideration, no question is raised about the periodical subscriptions paid by the members for themselves or for their assistants, which amounts have been carried into the profit and loss account.
6. The question for decision by the High Court is: "Whether the admission fees of members or authorised assistants received by the assessee is taxable income in: its hands?"
7. The draft statement of the case was laid on the table. The Commissioner writes that the facts as stated therein are not disputed. The assessee points out some clerical slips which are corrected. He also wants a reference to the applicability of section 34 but that question has not been decided by us and it will become necessary for the Tribunal to consider that question only in the event of the High Court's decision on the merits going against the assessee.
8. The statement of the case will now be submitted to the High Court. A. N. Kirpal and C. D. Khosla for the Commissioner. Kirpa Ram Bajaj and J. L. Bhatia, for the Assessee.
Judgment & Decree
A. N. Kirpal and C. D. Khosla for the Commissioner. Kirpa Ram Bajaj and J. L. Bhatia, for the Assessee. The following question has been referred to us under section 66(1) of the Income‑tax Act, namely: "Whether the admission fee of members or authorised assistants received by, the assessee is taxable income in its hands'?" The assessee in' this case is the Delhi Stock Exchange Association Limited, Delhi. It was incorporated in the year 1946 to acquire and take over as a going concern activities, functions and business of the Delhi Stock and Shares Exchange Limited and the Delhi Stock and Share Brokers Association Limited and to promote and regulate the business of exchange of stocks and shares.. It commenced business on the 1st March 1948. The membership is limited by the number of shares issued by the company since every member has to be a shareholder. A member is entitled to nominate not more than two persons as his authorised assistants or agents and one person as his authorised clerk on payment of a registration fee of Rs. 125 for each nomination. Monthly and other periodical subscriptions are payable by members, authorised assistants and agents. While submitting its return for the assessment year 1950‑51 the assessee‑company transferred a sum 'of Rs. 8,125 received as admission fees from the members and authorised agents directly to the balance sheet instead of including it in the pr6fit and loss account. The Income‑tax Officer came to the conclusion that as the admission fee payable by a member or an agent is not refundable and constitutes the assessee's income it is a receipt of a revenue nature which is assessable to income‑tax. This order was upheld by the Assistant Commissioner in appeal. When the appeal was taken to the Appellate Tribunal it was argued on behalf of the assessee‑company that all sums recovered as entrance fees were being accumulated in order eventually to purchase lands and to erect a suitable building and consequently that the said sums were exempt from taxation as capital receipts. This argument appears to have found favour with the members of the Tribunal. Mr. Sehgal was of the opinion that as the membership is limited to the number of shares issued by the company and as the. assessee had from its very inception' to arrange for funds sufficient to provide a building and other permanent fixtures including proper housing space and furniture for the use of the members and their assistants, it had to charge not only an admission fee from every member but also a monthly subscription of Rs.
5. The accounts showed that the amounts received as admission fees had been kept separately earmarked and had not been expended in the normal running of the business. Mr. Sehgal accordingly came to the conclusion that the amount received as admission fees were intended to be and were in fact treated as .receipts in the nature of capital receipts and he accordingly directed that these sums should be excluded from the assessments. The other member, Mr. Rajagopal Sastri, was somewhat doubtful whether the intention of the assessee‑company as to the use to which it would put the membership and entrance fees collected by it can afford any guidance in the decision of the question whether the receipts are of capital nature. He was of the opinion that there is not in the receipts of entrance fees the requisite potential of periodicity to stamp it with the character, of taxable income in the hands of the assessee company. The members of the Tribunal accordingly allowed the appeal preferred by the assessee‑company and held that the admission fees received by the company were not liable to payment of income‑tax. At the request of the Commissioner of Income‑tax the Tribunal have referred to us for opinion the question which has been set out at the commencement of this order. The learned counsel for the assessee‑company contends that his client is not liable to pay any income‑tax in respect of entrance fees paid by members as the company is a mutual concern which is exempt from the payment of income‑tax. The learned counsel for the Department controverts the correctness of this allegation and contends that the entrance fees payable by the members fall within the ambit of section 10(1) of the Income‑tax Act inasmuch as they are profits or gains of business, profession or vocation; or, in the alternative, that the assessee‑company is liable to pay the tax under the provisions of subsection (6) of section 10 of the statute which declares that a trade, professional or similar association performing specific services for its members for remuneration definitely related to those services shall be deemed for the purposes of this section to carry on business in respect of those services, and the profits and gains there from shall be liable to tax accordingly. Now, what exactly is a mutual society which is exempt from the payment of income‑tax? A mutual society is usually a voluntary association organised or conducted for the mutual benefit of its members. It is not formed with a view to the accumulation of wealth and the making of profit but solely for the purpose of reciprocal support, aid and assistance between the associates. The main object of an association of this kind is to accumulate from the contributions of members, a fund to be used in their own aid or relief in the misfortunes of sickness, injury or death and the fund raised is practically a trust fund made up of their contributions. An insurance company is a mutual company when there is no group but the policy‑holders who have interest in it or over it. In Ohio Farmers Indemnity Co. (36 U S BTA 1152 affirmed 108 F (2d) 665 (GCA 6th 1940)) it was said: "The theory of a mutual insurance company is, that the premiums paid by each member for the insurance of his property constitute a common fund, devoted to the payment of any losses that may occur . . . . . The cash premium may as well represent the insured in the common fund as the premium note and the mutual principle is not abrogated by the taking of cash premiums: Union Insurance Co. v. Hoge 62 U S 45, 65 and State v. Manufacturer's Mutual Fire Insurance Co. 91 Mo. 311,
318. A person paying a cash premium to mutual insurance company at the time a policy is issued becomes a member of the company and interested in its fund in proportion to the amount of the policy, and to the extent of that interest he is an insurer of all other members. The term `mutual' as applied to an insurance company does not import any peculiar or exact method of producing mutuality in the sense of equality among its members, but . . . . . is simply significant of an association for the purposes of insurance, whose fund for the payment of losses consists; not of a capital mutually contributed by any uninsured parties, but of the premiums mutually contributed by the person insured . . . . . ." In the absence of a specific provision to the contrary the surplus accruing to a mutual organisation is exempt from the. payment of income‑tax. Income‑tax, as the name implies, is a tax based on income, gross or net. The concept of income requires the realisation of gain and pre‑supposes the existence of two parties, namely, the person who makes the income and the person from whom income is made. When these two parties are identical, no assessable income can arise, for no person can make a profit out of himself. It follows as a corollary that ‑any surplus arising from transactions of any mutual associations is returnable to the members and no income‑tax can be charged on the said surplus. This proposition ' was brought out with admirable clarity in the well‑known case of Styles v. New York Life Insurance Co. ((1899) 2 T C 460), where the House of Lords expressed the view that when a number of individuals agree to contribute funds for a common purpose, such as the payment of annuities, or of capital sums, to some or all of them, on the occurrence of events certain or uncertain, and stipulate that their contributions, so far as not required for that purpose, shall be repaid to them, they cannot be regarded as traders, and the contributions returned to them cannot be regarded as profits. , Before a society can claim exemption from the payment of income‑tax under the rule laid down in Style's case it is essential that there should be complete identity between the contributors to the common fund and the participators in the surplus, for as pointed out by Lord Macmillan in Municipal Insurance Ltd. v. Hills ((1932) 16 T C 430, 448): "The cardinal requirement is that all the contributors to the common fund must be entitled to participate in the surplus and that all the participators in the surplus must be contributors to the common fund; in other words, there must be complete identity between the contributors and the participators. If this requirement is satisfied, the particular form which the association takes is immaterial." Our attention has been invited to a number of cases in which the requirement of identity between contributors and participators was not satisfied. The first of these cases is reported as Liverpool Corn Trade Association Limited v. Monks ((1926) ‑2 K B 110). In this case a company formed with the object of promoting the interests of the corn trade, was incorporated with a share capital upon which it had power to declare dividends. It provided a corn exchange, market, newsroom and facilities for carrying on business. Membership of the association was confined to persons engaged in the corn trade and every member was required to be a shareholder of the company. Members on joining the association had to pay an entrance fee. The company also charge the memoers another persons making use or the marxet facilities, commercial accommodation and information which the association provided, subscriptions which varied in amount according to the use made of such facilities, the subscriptions payable by members being less than those payable by outsiders. The bulk of the receipts of the company were derived from the entrance fees and subscriptions paid by members. The company having been assessed to income‑tax upon its profits, contended that it did not carry on a trade, and that so far as its transactions with its members were concerned it was a mutual association, any that the entrance fees and subscriptions paid by members should be disregarded in computing the company's assessable profits. Rowlatt, J., held that the company was not a mutual association whose transactions with its members were incapable of producing a profit; that it carried on a trade the profits of which were assessable to income‑tax; and that the entrance fees and subscriptions paid by members ought to be included in the association's receipts for the purpose of computing its profits assessable to income‑tax. The second case is reported as Municipal Insurance Ltd. v. Hills. In this case a company formed primarily for the purpose of mutual insurance against fire carried on employers' liability and miscellaneous insurance business, the fire policy‑holders alone being entitled to any surplus arising from any branch of the business. It was conceded that the fire insurance business was conducted on a mutual basis and that any surplus arising there from was exempt from payment of income‑tax. The company admitted that as regards so much of the employers' liability and miscellaneous business as was done with persons who were not fire policy‑holders any surplus arising was taxable as such surplus did not arise from business conducted on a mutual basis. The House of Lords held that any surplus arising from employers' liability and miscellaneous insurance business done with fire policy‑holders was taxable as it did not arise from mutual insurance business since there was not complete identity between the contributors to the common fund and the participators in the surplus. The third case is that of English and Scottish Joint Co‑operative Wholesale Society Limited v. Commissioner of Agricultural Income‑tax, Assam ((1948) 16 1 T R 270). In this case a co‑operative society sold the tea grown and manufactured by itself to its members at market rates. The society contended that it was a mutual association whose transactions with its members were incapable of producing a profit and it was not therefore liable to be assessed under the Assam Agricultural Income‑tax Act. Their Lordships of the Privy Council held the society to be non‑mutual concern and declared that it was not exempt from liability to income‑tax in respect of profits earned by it from the sale of tea to its members. These and several other authorities were reviewed with care by their Lordships of the Supreme Court in the case of Commissioner of Income‑tax, Bombay City v. Royal Western India Turf Club Limited ((1953) 24 I T R 551). In this case the assessee, the Royal Western India Turf Club Limited, was a company limited by guarantee and it carried on the business of a race course company and that of licensed victuallers and refreshment purveyors. The assessee had two main categories of members who on their election as members paid an entrance fee and periodical subscrip tions which were not charged to tax. Members were provided with separate enclosure to watch the races for which an admission fee was charged and non‑members were not admitted in this enclosure. The assessee gave to non‑members the same or similar amenities as it gave to members, namely, the use of an unreserved seat in a stand, the facility to watch the races and to bet on the horses in the races, use of the totalisator in that stand and the facility for refreshment. The daily ticket fee for admission into the members' enclosure was the same as that for the same into the first‑enclosure to which the public had access. The assessee claimed that in computing its total income the following receipts should be excluded, that is to say, receipts from reason admission tickets from members, daily admission gate tickets from members, use of private boxes by members, and income from entries and forfeits received from the members whose horses did not run in the races during the season. The Supreme Court held that an incorporated company which carries on the business of horse racing and realises money both from the members and from non‑members for the same consideration, namely, by the giving of the same or similar facilities to all alike in course of one and the same business carried on by it, cannot be regarded as a mutual concern. A careful consideration of the authorities concerning mutual trading appears to indicate that surplus arising from mutual transactions is not assessable where there is complete identity between the contributors and participators, or where the ownership of the surplus is restricted to those who provided it as a class. On the other hand, surplus arising. from such transactions is assessable where the parties are not identical or where the surplus is distributed wholly or partly among persons other than in their character of persons subscribing the surplus, for example, as shareholders receiving a dividend or as debenture holders deriving interest, or where all of the participating policy holders are not members of the society. Judged in the light of the tests propounded in the foregoing authorities 1 entertain no doubt in my mind that the assessee company is not a mutual society which is exempt from the payment of income‑tax. This company has a capital of Rs. 5,00,000 divided into 250 shares of Rs. 2,000 each on which dividends can be earned. Any person can become a shareholder of this company by purchasing a share, but every shareholder cannot become a trading member unless he is duly enrolled or admitted or elected a member of the said exchange and unless he has paid a sum of Rs. 250 as admission fee. A new member becomes entitled to exercise all rights and privileges of member ship and is liable to all the liabilities and obligations of membership. Every member is at liberty to nominate not more than two persons as his authorised assistants or agents and one person as his authorised clerk. Every authorised assistant or agent must pay a registration fee of Rs. 125 and the member nominating him must also pay a monthly subscription of Rs. 5 for such authorised assistant or agent and Re. 1 for his authorised clerk. If these conditions are fulfilled, the authorised assistant or agent is entitled to transact business like the member nominating him. The company realises money both from members and non‑members for the same consideration and in return for the same or similar facilities. These facts make it quite clear that the identity between contributors and participators which is a "cardinal requirement" is completely absent. The real object of the company is to carry on business as a stock exchange; it has issued shares carrying a right to dividends; it is an enterprise formed or operated with the object of making profits; the earnings and profits, if any, go primarily to the shareholders who have invested capital and not to authorised assistants and agents who provide the income. What comes from the trading members and their authorised assistants and agents is distributed not only among the trading members but also among others who are merely shareholders of the company. It seems to me, therefore, that this company cannot by any stretch of reasoning be regarded as a mutual society profits accruing to which are exempt from payment of income‑tax. Mr. Bajaj, who appears for the assessee, on the other hand, relies strongly upon a decision of the Privy Council reported as Commissioner of Income‑tax, Bengal v. Messrs Shaw Wallace & Company ((1932) 6 I T C 178), in which Sir George Lowndes declared that income in the Indian Income‑tax Act connotes a periodical monetary return, "coming in" with some sort of regularity, or expected regularity, from definite sources not necessarily continuously productive whose object is the production of a definite return excluding anything in the nature of a windfall. He contends that as an admission fee is paid by a member only once, it lacks the element of periodicity. I regret, I am unable to concur in this contention. A member may pay an admission fee only once but the assessee‑company receives it again and again whenever a new member, authorised assistant or agent is elected or appointed. I am clearly of the opinion that an entrance fee falls within the ambit of the expression "profits and gains of business, profession or vocation". In view of this finding it is scarcely necessary to consider the argument which was put forward by Mt. Kirpal in the alternative that even if for any reason the entrance fees cannot be assessed to income‑tax under the provisions of section 10(1) they are liable to assessment under section 10(6). . No specific services are being rendered by the company and there is no remuneration charged for any specific services. As pointed out in Calccutta Stock Exchange Association Ltd. v. Commissioner of Income‑tax, West Bengal ((1956) 29 I T R 687), entrance fees and subscriptions are arbitrary sums charged as the price of the privilege of membership or quasi membership and not as remuneration definitely related to any specific services performed. For these reasons, I am of the opinion that the question which has been referred to us by the Tribunal must be answered in the affirmative. Question answered in the affirmative.