Indian Kanoon - Search engine for Indian Law

7. The assessee states in the course of hearing that both the lower authorities have wrongly denied mutuality exemption by holding that section 12A registration is not available in its case. It submits that this registration is only relevant in case an assessee claims itself to be a charitable institution performing alike activities as prescribed u/s. 2(15) of the Act and not for entertaining mutuality plea. The assessee's claim is that it fulfils all essential conditions of the mutuality concept. It is contended that this mutuality claim is confined only qua contributions made by its members towards property shows and other activities carried out. And those derived from non members already stand declared as income in the corresponding assessment years. A catena of case law is also quoted in support of this mutuality argument. The same shall be discussed hereunder. The assessee accordingly prays for acceptance of its appeal.

ITA Nos.1051 to 1056/Ahd/2015 Asstt.Years: 2006-07 to 2011-12 - respectively. The Gujarat Institute of Housing & Estate Developers.

8. The Revenue strongly supports the lower authorities reasoning as narrated in the preceding paragraphs and prays for confirmations thereof.

9. We have heard both the parties and perused the case files. There is no dispute that the assessee-company is registered u/s.25 of the Indian Companies Act,1956. Its memorandum of objects already stands reproduced. It has carried out some fiestas, property shows and cricket tournaments resulting in contributions in question received from members and non members. It seeks to apply mutuality concept in case of members contributions. Hon'ble apex court in case of Bangalore Club v/s. CIT (2013) 350 ITR 509 (SC) considers all the relevant case law right from Styles (Surveyor of Taxes) v/s. New York Life Insurance Co.(1889)2 TC 460 (HL) till the relevant point of time in reiterating three basic features for application of this mutuality concept. The first one is that there has to be a complete identity between the class of contributors and participators and the particular lable or form by which a mutual association is known is of no consequence. Second feature is that action of the participators and contributors must be in furtherance of the mandate of the mutual association. Third feature is that there should not be any scope of profiteering by the contributors from a fund made by them which could only be expended or returned to themselves. Their lordships are of the view that mutuality ITA Nos.1051 to 1056/Ahd/2015 Asstt.Years: 2006-07 to 2011-12 - respectively. The Gujarat Institute of Housing & Estate Developers.

applicable in the facts of the instant case as indicated in the preceding paragraphs. The next case law is that of Chelmsford Club v/s.CIT (2000) 243 ITR 89. This assessee-club owned a club house providing recreational and refreshment facilities exclusively to its members on no profit no loss basis as against facts of the instant case. The same is accordingly distinguished. The third judgement quoted before us is that of (2015) 59 taxmann.com 104 (Guj.) CIT vs. Prabhukunj Cooperative Housing Society Ltd., This society received contribution from outgoing members as premium on sale of plots. The hon'ble jurisdictional high court observed that since this amount was to be utilized for benefits of the members of the society and not taxable income. We are of the view that there is no similarity of facts of issue involved between this case law and the one in hand. We hold the same as not applicable in peculiar facts in instant case. We proceed further and find that next judicial precedent quoted is (2015) 56 taxmann.com 281 (Guj.) Junagadh Gymkhana vs.ITO. This club's members had paid guest charges and utilized it for benefit and development of themselves. The hon'ble jurisdictional high court held this case to be covered by mutuality concept on the ground that the same created an identity between the participants and contributors. Just because some transactions are non mutual would not destroy the mutuality factor. We find that the non members therein were only brought to the club and they had not paid any ITA Nos.1051 to 1056/Ahd/2015 Asstt.Years: 2006-07 to 2011-12 - respectively. The Gujarat Institute of Housing & Estate Developers.

members' contributions. The same have been held to be covered by mutuality concept. We again revert back to the facts of the present case wherein the assessee has carried out property fairs, fieastas and cricket tournaments without proving nexus thereof with the above extracts objects and also received contributions from members and non members. We accordingly conclude that the assessee's arguments claiming its receipts from members as covered by mutuality concept have to be rejected. We order accordingly. The assessee's corresponding grounds raised in all six appeals are declined. The CIT (A)'s orders under challenge are confirmed.