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2011 (9) TMI 44 - AT - Income TaxMutual Association - Concept of Mutuality - Specific services rendered by a Registered society to its members - taxability of amount received from members - Held that: - It is undisputed that the assessee has not been registered u/s 12A of the Act and, therefore, it cannot be considered eligible for the benefit granted by Section 11 of the Act. The assessee in its return of income had claimed that benefit only. Therefore, the claim of the assessee has to be considered de hors the claim made by it u/s 11 of the Act. Provisions of Section 44A have overriding effect and therefore to be read independent to other provisiosn - it is an association related to trade and, therefore, it is not outside the scope of Section 44A of the Act - the assessee is not an association or institution referred to in clause 23A of Section 10 - the amount expended by the assessee for the purpose of protection or advancement of the common interest of its member will be allowable as deduction. - addition made by the AO for an amount of Rs.6,18,750/- received by the assessee from its members has been considered taxable is not justified. - Benefit of Section 44A allowed. - However amount not expended for the purpose of protection and advancement of the common interest of its members has not been granted exemption u/s 44A of the Act Surplus arrived at by the assessee (society) from the transactions with its members - Section 44A does not grant the exemption to the assessee with regard to the surplus shown by it being receipt excess of expenditure. It only describe that if such receipts fall short of expenditure, then, deduction regarding expenditure has to be allowed. - However, the resultant surplus is allowable on the basis of principle of mutuality as no material has been brought on record by the Assessing Officer to show that any of the receipt of the assessee pertains to non-members. Regarding interest on FDR - interest on FDRs has also been held to be covered by the doctrine of mutuality (COMMISSIONER OF INCOME TAX .VERSUS DELHI GYMKHANA CLUB LTD. (2010 -TMI - 205800 - DELHI HIGH COURT). Therefore, looking from any angle, we find no infirmity in the order of the CIT (A) vide which it has been held that no part of the income of the assessee is exigible to tax on the principle of mutuality.
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