- (1.) This is an appeal filed by the assessee against the order dated 20-2-1981 of the learned Commissioner (Appeals).
(2.) The assessee, J. K. Organisation, Kamla Tower, Kanpur is an AOP. The assessment year in question is 1976-77. With the consent of both the parties, arguments were heard by us only on the preliminary point whether the assessee is constituted on the principles of mutuality and, therefore, not liable to be taxed.
(3.) The facts relevant to the point at issue are as follows. The assessee association is registered under the Indian Trade Unions Act, 1926, whose membership is confined to persons whose undertakings in business, trade, industry, and agriculture form part of or are connected with the J. K. Group of undertakings or who are trustees under a trust made by any member or members thereof. Among the objects of the association (which are specified under rule 3 of its rules and regulations) the following are also included the main object being to regulate the relations between members and their employees and between members and members : (i) To promote and protect the trade, commerce, industry and agriculture in which the members of the association are or may be concerned and to impose restrictive conditions on the conduct of such trade, commerce, industry and agriculture. (ii) To formulate and recommend to members common administrative policies and to settle questions of common interest and to protect the members of the association against competition. (iv) To formulate and regulate terms and conditions of employment of the employees of its members and to start, organise, establish and maintain labour relations and labour welfare organisations. (v) To consider all questions affecting trade, commerce, industry and agriculture in which members are or may be concerned and to the all necessary action in connection therewith. (vii) To engage the services of technical and other advisers and experts for the benefit of the trade, commerce, industry and agriculture in which the members of the association are or may be concerned. (x) To establish a fund or funds for the purpose of - (a) legal assistance (b) all activities undertaken for furthering all or any of its objects (c) payment of remuneration to technical or legal experts, secretaries and staff. (xii) To draw, accept, endorse, discount or otherwise deal with cheques, hundis, bills of exchange and other negotiable instruments and to open and operate account or accounts with any firm or firms, bank or banks in connection with the business of the association. (xiv) To invest the moneys not immediately required for the purposes of its administration. (xv) To borrow or raise any moneys required for the purposes of the association. Rule 9 provides that every member shall pay to the association such sum or sums on account of his annual subscription and such further sum or sums on account of contribution, as the Central Board may determine from time to time either on the basis of the number of persons employed or on the basis of the total emoluments paid to employees or on the basis of the capital employed or on the basis of the turnover, or on the basis of the net profits earned or on the basis of the services expected to be rendered by the association or on the basis of a lump sum or on any other basis or partly on one basis and partly on another or on varying basis in respect of the different members." Rule 17 provides that a general meeting of the members shall be held in each year (not later than 30th June) at which the subscriptions fixed by the Central Board for the ensuing year and the accounts of the previous year shall be levied on the table for information. Rule 26(b) provides that all moneys on account of subscriptions, fines or other contributions, which it is obligatory on the members to pay, shall be credited to the general fund and that no expenditure from such fund shall be made in contravention of section 15 of the Indian Trade Unions Act, 1926, but may be applied towards the carrying out of the objects of the association. Rule 35 provides that in the event of dissolution, the Central Board shall wind up the affairs of the association and after all the debts and outstanding of the association have been satisfied, the balance of the funds of the of the association representing accumulated subscriptions and interest of any other assets of the association shall be distributed amongst the members of the association as far as possible upon the basis of the scale upon which such members are contributing to the association at the time of its dissolution. Lastly, rule 37 prescribes the procedure for the amendment of the rules.;