UPPER INDIA SUGAR EXCHANGE LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question referred to this court under Section 66(1) of the Income-tax Act, 1922 (hereinafter referred to as the Act), relates to the taxability of the sum of Rs. 4,042 as the income of the applicant for the assessment year 1959-60, THE facts of the case agreed to by both the parties as set out in the statement of the case submitted by the Appellate Tribunal are as follows.

(2.) THE applicant, M/s. Upper India Sugar Exchange Ltd., Kanpur (hereinafter referred to as the assessee or the Exchange), is a public limited company. It manages the business of forward transactions of its constituent members in sugar, etc. Such transactions are carried on through the agency of approved brokers who are registered with the Exchange. THE members are not permitted to deal directly with one another in such transactions. For the services rendered the assessee charges from the members commission at prescribed rates. THE assessee also realises from its constituents brokerage " for and on behalf of the brokers " besides a small amount as contribution towards dharmada or charitable purposes. THE rates are specified ,ih bye-law 130 of the assessee-Exchange which runs as follows :

(3.) AS already stated, the present reference relates to the assessment year 1959-60, the corresponding accounting year being the financial year ending on the 31st March, 1959. In this financial year the amount of such surplus brokerage was Rs. 13,350, which was treated by the Income-tax Officer as profit of the assessee for that year. Daring this year, however, the assessee paid a sum of Rs. 9,308 to brokers in respect of last year's transactions, out of the previous surplus amounting to Rs. 12,420 mentioned above. The Income-tax Officer allowed deduction in respect of the payment of Rs. 9,308 against this year's surplus of Rs. 13,350 and added the balance of Rs. 4,042 to the total income of the assessee for the assessment year 1959-60. The assessee again appealed and the addition was knocked off by the Appellate ASsistant Commissioner as before, but the Appellate Tribunal again confirmed the action of the Income-tax Officer and sustained the addition.