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Interpretation of the principle of mutuality in the context of R.S.S. Taxability of Gurudakshina received from members and devotees. Analysis: The case involved the Commissioner of Income-tax, Bihar-I, Patna, as the applicant against the same assessee for the assessment years 1967-68 to 1975-76. The primary issues revolved around the principle of mutuality in the Rashtriya Swayamsevak Sangh (R.S.S.) and the taxability of Gurudakshina received from members and devotees. The Income-tax Appellate Tribunal referred common questions of law to the High Court regarding these matters. The Income-tax Officer initially held that Gurudakshina received by the assessee was taxable. However, the Appellate Assistant Commissioner later ruled that Gurudakshina receipts from members were exempt based on the principle of mutuality, citing instructions from the Central Board of Direct Taxes. This decision led to the cancellation of the assessments. The Revenue then appealed to the Income-tax Appellate Tribunal, Patna Bench, which upheld the Appellate Assistant Commissioner's findings based on the decision of the Bombay Bench of the Tribunal. The Revenue contended that the Patna Bench failed to consider the issue in detail, while the assessee argued that the Bombay Bench's decision was correctly adopted. The High Court noted that both parties agreed that the matter before the Patna Bench was similar to the Bombay Bench's case, which extensively analyzed the organization's constitution and affidavits, ultimately concluding that Gurudakshina was exempt based on mutuality. The High Court emphasized the relevance of a communication from the Central Board of Direct Taxes dated December 19, 1978, stating that Gurudakshina from members would be exempt on the principle of mutuality. This communication was crucial in determining the taxability of Gurudakshina received by the assessee, as relied upon by both the Bombay and Patna Benches of the Tribunal. The High Court upheld the Tribunal's decision, affirming that Gurudakshina from members was exempt from tax based on the principle of mutuality. Conclusively, the High Court answered the questions in favor of the assessee, ruling that Gurudakshina received from members was exempt from income tax. The judgment highlighted the significance of the Central Board of Direct Taxes' communication in determining the tax treatment of Gurudakshina, ultimately dismissing the Revenue's appeal and upholding the Tribunal's decision.
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