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4.2 The above submission is considered. The A/R has not been able to adduce any evidence :c show that providing the facility or letting out property to outsiders for putting up hoarding and advertisement/ sponsorship is an object of the club or is it supported in any way by the Rules governing the club. The AR's reliance on the concept of mutuality is somewhat misplaced in-as-

much as the preponderant judicial view is that the income accruing to a club in the circumstances where it deals with its members alone and does not carry on any commercial activity as such may be covered by the principle of mutuality. In the instant case, the assessee club is engaged in some real, systematic and regular activities of letting out properties to outsiders and exploited the said properties for commercial advantage or gain. There will be no difference even if some of the outsiders are members of the club as long as both members and non-members are dealt with alike. In the case of CIT Vs. Royal Western India Turf Club Ltd. [1953] 24 ITR 551, the Hon'ble Supreme Court found that the assessee, which was an incorporated company, The Saturday Club Limited carried on the business of race course and that of licensed victuallers and refreshment purveyors and dealt with non- members as well in the ordinary course of business carried on with a view to earning profit as in any other commercial concern. It gave to its members the same or similar amenities as it gave to non-members, like the use of unreserved seat in a stand, the facility to watch the races and to bet on the horses in the races, use of the totalisator in that stand and the facility of refreshment. The facilities were given to members and non-members alike for a price and the dealing in both cases disclosed the same profit earning motive and were tainted alike with commerciality. It held that in the circumstances, the four items of receipt from members which were in dispute were to be taken into account in computing the total income of the company.

In view of the above, it is held that the rental income amounting to Rs.55,87.395/- earned by the assessee is not covered by the concept of mutuality. Therefore the rental income of Rs.55,87,395/- is assessed as income from other sources u/s.56 of the Act.

Addition : Rs.55,87,395/-

It is observed that during the year the assessee earned Service fees amounting to Rs.40,88,325/- for providing case services from Reliance Industries Ltd. The assessee was to show cause why the service fees from Reliance Industries should not be charged to tax as income from other sources, In response, the A/R stated that the above income .is not taxable since amount was received from a corporate member.

5.2. In view of the above, it is held that the service fees received amounting to Rs.40,88,325/- earned by the assessee is not covered by the concept of mutuality. Therefore, the Service fees of The Saturday Club Limited Rs.40,88,325/- is assessed as income from other sources u/s.56 of the Act.

[ Addition :Rs.40,88,325/-]

10. Dissatisfied with this addition, the assessee carried the matter in appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) has deleted this addition by recording the following finding:-

The Saturday Club Limited The principle of mutuality relates to the notion that a person cannot make a profit from himself. An amount received from oneself is not regarded as income and is therefore, not subject to tax; here the Reliance Industries Ltd is club member like all other member but at the same time Reliance Industries Ltd has taken a premises on rent for his business purpose and earning profit. Here the Reliance Industries Ltd has dual capacity one as member and another as tenant of the club. The rent and service fee which has been taxed by the AO is paid by the Reliance Industries Ltd as tenant and not as member of the club. The concept of mutuality has been extended to define groups of people who contribute to a common fund, controlled by the group, for a common benefit. Here the situation is different. The Reliance Industries Ltd is paying contribution to common fund and enjoy the benefit the membership. The Reliance Industries Ltd. as tenant is also paying rent and service fee for doing business. The rent and service fee as paid by the Reliance Industries Ltd is for the business use of the premises. The amount of rent and service fee earned by the assessee from the Reliance Industries Ltd as tenant will not fall within the ambit of the mutuality principle and would therefore, be taxable in the hands of the assessee-club. .