assessee's
income was not chargeable to tax on the principle of mutuality. It was brought to our
notice that upto A.Y.2004 ... which is treated as income
because of non applicability of the mutuality principle will still be entitled to claim
that income is not chargeable
mutuality,
member banks engaged in commercial operations with third
parties outside of the mutuality, rupturing the 'privity of
mutuality', and, consequently, violating ... mutuality, the amount of interest earned
by the assessee from the member banks will not fall within the
ambit of the mutuality principle and would
exemption u/s. 11A."
7. Regarding the applicability of principle of mutuality to the said surplus
receipts, the CIT(A) examined this issue ... submitted that the
said excess is exempt in view of the principles of mutuality. Per contra, the
CIT(A) observed that entrance fees, the membership
following three mutual
I.T.A. No. 888/Hyd/2016
:- 5 -:
principles of mutuality, the Learned Assessing Officer
should have given the benefit of mutuality ... agreement with the findings of the
AO on the following fundamental principles of mutuality:-
1. The varied nature and identity of the contributors
charges permissible under the
notification dated 09.08.2001, stands excluded from the
principle of mutuality and was taxable. The order was upheld
by the Commissioner ... member at the time of such payment and, therefore, the
principles of mutuality did not apply. The High Court set
5
aside the finding that
holding that the activities of the Society were governed by the
principle of mutuality, as such it was a mutual concern and its
profits ... also
corporate members of the assessee is not covered by the mutuality
principles and would therefore, be chargeable to tax in the hands
incoming members. These assessees claimed
the same as exempt under Mutuality Principles and the same was rejected by
the tax authorities on the reasoning that ... principles.
14. On the contrary, the Ld D.R placed reliance on the orders passed by Ld
CIT(A).
15. Since the Principle of mutuality
basis of mutuality principles and doctrine of mutuality.
3. APPLICABILITY OF MUTUALITY PRINCIPLE AND DOCTRINE OF MUTUALITY:-
The funds of the Sabha in bank deposits ... ground of mutuality.
A mutual association is an association of person who agree to contribute funds for some
common purpose mutually beneficial and receive back
part of the income of the
appellant is exempt under the principle of mutuality, interest income not
being covered under principle of mutuality is taxable ... even if part of the income is exempt on the principle of mutuality.
4 The Ld. Commissioner of Income Tax (Appeals) erred in not considering
deviating from computation of income of the appellant
on the 'principle of mutuality'. Since the records/bifurcation of deficit
amount is not available ... claimed and the income of the appellant has been
computed on principle of mutuality' from year to year, It is noted in the
assessment
