1. The assessee before us is the Surat District Cotton Dealers' Association, which was established to develop local cotton business and to remove difficulties in its development and to further the interest of all persons concerned in cotton business. The membership of the association is open to persons who purchase or sell cotton and to owners of ginning and pressing factories. The entrance fee is Rs. 501 and the annual subscription is Rs. 25. Members of the Association can do business only through brokers who are registered as such with the Association. Tolats (persons in charge of weighing), chhapmars (persons in charge of putting labels or writing on bales) and sikkamars (persons who draw samples) were also to get themselves registered with the Association. The bye-laws provided that the Association was to provide the services of tolats, chhapmars and sikkamars and for these services payments were to be made by the members according to the rates laid down in the bye-laws. There was also an obligation upon every seller to pay to the Association half an anna per bale which has been described as laga. Under the Cotton Control Order passed in 1950, a distribution committee was set up and the Association rendered certain services to this distribution committee and person nominated by this distribution committee were required to pay 1/4% from the commission charged to the textile mills by the nominees at the rate of 1 1/4%. Now three questions arose before the Tribunal. One was with regard to the entrance fee and the annual subscription received by then Association; the second was with regard to the laga; and the third was with regard to the amounts received from the nominees. The Tribunal decided in favour of the assessee with regard to the entrance fee and the subscription and held that amounts received in respect of the entrance fee and the annual subscription were not liable to tax. With regard to the lagas and receipts on account of nomination commission, the Tribunal held against the assessee. On an application made by the assessee, the Tribunal has referred to us the two questions with regard to the lagas and the receipts on account of nomination commission.
2. Now, with regard to the lagas, there can be no doubt on the facts that this is a mutual association and mutuality has been established with regard to the lagas. The test of mutuality has been often laid down in past references and the test is that identity must be established between the persons contributing to a fund and the persons contributing to a fund and the persons entitled to the fund. Now in this case, it is true - and that is the point which Mr. Joshi has emphasised on behalf of the Commissioner - that the liability to pay lagas is only upon the sellers, although Mr. Joshi concedes that, as far as the fund of the Association is concerned, it belongs to all the members and all the members have the right to participate in it. Therefore, it is urged by Mr. Joshi that the necessary identity is not established because the right to contribute to the fund is restricted to the sellers. Now, we have had occasion to point out that it is not necessary for the purpose of this identity that there must be an actual contribution by all the members. It is sufficient if all the members have a right to make a contribution. From that point of view, it is clear that every member of the Association may be a seller and can be a seller, and if he is a seller he is bound to contribute to the fund. Therefore, it would not be true to say that the right to participate in the fund by paying lagas is restricted to any section of the Association. Therefore, in our opinion, as far as the receipt of lagas is concerned, it does not constitute income inasmuch as this is a receipt derived by a mutual association. But the Tribunal took the view that the case of the Association fell under section 10 (6) of the Income-tax Act. Now, in order to attract the application of that section, it must be established by the Department that the Association concerned performs specific services for its members for remuneration definitely related to those services. In this case there is no finding whatever that, in return for the lagas which it receives, the Association performs any specific service. Mr. Joshi rather faintly urged that, when a seller paid a laga, he received the services of the tolats, chhapmars and sikkamars. But the answer to that contention is that the services of tolats, chhapmars and sikkamars was rendered, not in return for the lagas paid by the members, but in return for the specific charges which the members had to pay for utilising the services of these officials. In our opinion, therefore, the Tribunal was in error in taking the view that the lagas received by the Association was liable to tax.
3. Coming to the receipts on account of nominees' commission, the position here is very different. There is clearly no mutuality as between the nominees and the Association, and, apart from that, every member has not a right to be a nominee and pay the commission decided upon. It is only the persons nominated by the distribution committee who have to pay a commission in return for services rendered by the Association. Therefore, the element of mutuality is lacking as far as this particular contribution is concerned. But the assessee sought to escape tax with regard to these receipts by contending that their case fell under section 4 (3) (vii). Turning to section 4 (3) (vii), it deals with receipts which are of a casual and non-recurring nature, and the rather extraordinary argument put forward by Mr. Kolah with marked tenacity is that, because an emergency in the cotton trade might arise only once and an order like the Cotton Control Order might arise only once, therefore the monies received by the Association in respect of work done by it under that Order must be looked upon as casual income. In our opinion, that contention is wholly untenable. The test of casualness of a receipt is not merely that it must be of a non-recurring nature, but it must also be casual. The test of casualness is this, that the receipt is fortuitous in the sense that it is not anticipated or foreseen. How can it possibly be said in this case that the receipt was not anticipated or foreseen The Association solemnly agrees to render services for which it has to be paid a certain amount and before it starts rendering services it knows fully well that it is going to be paid. So there is nothing unforeseen or unanticipated about this receipt. Another test that might be applied with regard to an income being casual and non-recurring is that the income must depend upon the caprice or him of the person who pays the amount which constitutes the receipt in the hands of the assessee. Again in this case there is no element of caprice or him. The distribution committee could not have told the Association that it would pay or not pay the commission agreed upon at its own sweet will. There was an agreement - if not express, but implicit - that for the services rendered the nominees, at the instance of the distribution committee, will pay a certain amount to the Association. Under these circumstances, in our opinion, it is impossible to urge that the income received by the Association, because it happened to be for a short duration and because it happened to be only once in the history of the Association, becomes a casual and non-recurring income.
4. Mr. Kolah also wanted to urge that his case falls under section 4 (3) (vi). Although the point has not been taken before the Tribunal and the question raised does not directly deal with that sub-section, in view of what we have laid down in the past, if an assessee claims an exemption, it is open to him to claim that exemption under one or the other provision of the Income-tax Act provided all the facts necessary for the submission which the assessee wants to make are before the court in the statement of the case. In our opinion, the contention of the assessee with regard to section 4 (3) (vi) is equally untenable. The provisions of this sub-clause as it stood at the relevant time was : 'Any special allowance, benefit or perquisite specifically granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit.' Mr. Kolah's contention is that, as the statement of the case discloses that this amount was paid to the Association to cover overhead charges, and Mr. Kolah say that it is not necessary for him to establish that this amount was actually spent : it is sufficient if it was specifically granted for this purpose. Now Mr. Kolah is only thinking of the first part of section 4 (3) (vi) and he overlooks the second part. It is true that we have held, construing this section as it stood, that a specific grant is sufficient without it being necessary for the assessee to establish that that grant was in fact expended for a particular purpose. But the specific grant must be made wholly and necessarily to meet expenses incurred in the performance of the duties of an office or employment of profit. Therefore, the assessee must hold an office or an employment and he must establish that the particular grant was necessary for the performance of the duties attached to that office or employment. There is not even a suggestion, leave aside any evidence, that the Association held any office or employment which necessitated this particular grant in order that it should properly discharge its duties. It was open to the Association not to accept this commission and not to render these overhead charges. Why the grant for meeting the overhead charges was necessary in order that the Association should function as an Association it is impossible to understand. Therefore, in our opinion, there is no substance in this contention of the assessee as well.
5. Therefore, as far as the assessee's reference is concerned, we are in his favour as far as the question of lagas is concerned, and against him with regard to receipts on account of nominees' commission.
6. Before we dispose of this reference, there is a further question that we have to consider. It appears that, after the assessee had made an application for a reference, the Commissioner by his reply sought to raise the question with regard to entrance fees and annual subscription which as already pointed out, the Tribunal had decided against him; and the Tribunal came to the conclusion that the application made by the Commissioner was barred by limitation and, therefore, the application did not lie. Now, the Commissioner has taken out a notice of motion asking us to direct the Tribunal to raise the question of law with regard to the annual subscription and the entrance fee, or, in the alternative, that we should raise this question ourselves. Now, although we repeatedly asked this question to Mr. Joshi, he failed to give the answer which we sought as to under which provision of the law this application was being made. Mr. Joshi was more concerned to satisfy us that the application for reference was made properly and within time by the Commissioner suggesting this question in his reply. But that is not the question. If the Tribunal wrongly held that the application for reference was barred by limitation, the assessee must come to us under section 66 (3). There is a specific provision in law with regard to that action on the part of the Tribunal. The Commissioner has not come to us under section 66 (3) and when the motion was taken out that application was barred by limitation. Mr. Joshi says that we must entertain this application under some provision of the law which he did not specify. Now, as far as we know, a reference can only be entertained by this court either under section 66 (1) when the Tribunal makes a reference or under section 66 (2) when the Tribunal having refused to make a reference the party aggrieved can come to us and we might direct the Tribunal to make the reference. A reference cannot be entertained by this court in any other way. Section 66 (3) deals with a case where a reference has not been refused by the Tribunal, but where the Tribunal takes the view that the application for reference is out of time. Against that the law has given a remedy and that remedy is section 66 (3). That remedy the Commissioner has not availed himself of. Therefore, the position to-day is that the question which the Commissioner wishes to agitate is not before us and it cannot be before us because the procedure laid down by section 66 to bring that question before us has not been followed by the Commissioner. Therefore, we cannot give him the relief which he seeks on the notice of motion.
7. The result, therefore, is that we will answer -
Question No. 1 : In the negative.
Question No. 2 : In the affirmative.
Question No. 3 : In the negative.
8. No order as to costs of the reference.
9. Notice of motion dismissed with costs.
10. Mr. Kolah tells us that the monies collected by the Association are used for a very deserving cause and that the Association makes a large contribution for the maintenance of the Commerce College at Surat. We are sure that, if the Department has any power to exempt the Association from payment to tax on the monies received by them with regard to nominees' commission, the Department will consider whether this is not a proper case where that power should be exercised.
11. Reference answered accordingly.