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TMI Blog2016 (1) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... ople who contribute to a common fund, controlled by the group, for a common benefit. Any surplus amount to that needed to pursue the common purpose is said to be simply an increase of the common fund and as such neither considered income nor taxable. We find that the Tribunal had not recorded any definite finding of fact on the basis of legal enunciations on the issue. Therefore, in such a situation, the issue being considered to be primarily a question of fact relating to applicability of doctrine of mutuality, it would be appropriate to set aside the order of the Tribunal and remand the case back to the Tribunal to adjudicate the same and pass a speaking order after hearing both the sides. - ITA No. 690 of 2005 (O&M) - - - Dated:- 30- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her in the facts and circumstances of the case the ld. ITAT was right in law in holding that the interest income derived by the assesseeclub on its FDRs with banks was not liable to tax? b) Whether in the facts and circumstances of the case, the ld. ITAT was right in law in treating the charges received from non-member guests as not liable to tax? c) Whether in the facts and circumstances of the case, the ld. ITAT was right in law in observing that the miscellaneous income on account of sale of various items and commission is not taxable being incidental to the providing of facilities to the members, though the AO had made the addition on this count treating it as not covered by the doctrine of mutuality? d) If the above issues are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as charitable institution on 31.10.1995 for the assessment year 1997-98 declaring nil income. The case was taken up for scrutiny and notices under Sections 143(2) and 142(1) of the Act were issued. It had applied for its registration as charitable institution under Section 12A of the Act. However, the claim of the assessee for being declared a charitable institution was rejected by the Commissioner of Income Tax, Panchkula vide order dated 9.3.1998. The said order was not challenged by the assessee any further. During the year in question, the assessee earned ₹ 19,95,509/- on account of interest on bank deposits, ₹ 3501/- on sale of empty bottles and other receipts aggregating to ₹ 73,304/-. Accordingly, the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the objects of the society at or before the time of dissolution. 10. It was also contended that the assessee was not mutuality concern and was, thus, not entitled to exemption on that ground. It was also pleaded that inspite of the fact that the revenue had cited certain judgments of Apex Court and various High Courts before the Tribunal but the Tribunal had preferred to follow its own decision dated 20.9.1985 in the case of Commissioner of Income Tax, Haryana, Rohtak v. Sirhind Club Ltd., Ambala, ITA No. 451/Chandi/84, for the assessment year 1982-83. Support was gathered by the learned counsel for the revenue from the decisions of the Apex Court in Chelmsford Club v. Commissioner of Income Tax (2000) 243 ITR 89 (SC), Bangalore Club v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the High Court on the subject, it has been laid down that principle of mutuality relates to the notion that a person cannot make a profit from himself. The concept of mutuality has been extended to defined groups of people who contribute to a common fund, controlled by the group, for a common benefit. Any surplus amount to that needed to pursue the common purpose is said to be simply an increase of the common fund and as such neither considered income nor taxable. Broadly, the following conditions have been laid down for the applicability of doctrine of mutuality:- (i) The first condition to invoke the principle of mutuality requires that there must be a complete identity between the contributors and the participators; (ii) the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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