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2010 (12) TMI 643 - HC - Income TaxConcept of Mutuality - assessee company is running a recreation club for its members - income earned from their members - The case of the assessee was that the income from FDRs in bank, dividend income, income from Government securities and profit on sale of invest, etc. would also attract the "doctrine of mutuality" and therefore, no tax was payable thereupon. - Held that: - Such company claiming to be mutual concern or club whose object is to carry on particular business or where the income is generated from members and non-members through the business carried on by it, then only it would be treated as tainted with commerciality. Profit earning has to be the prime motive behind such activities, which are business like activities. Obviously in the present case, this cannot be attributed to the assessee. The AO got influenced by the fact that the assessee had let out part of the premises to its members and was receiving rents and also giving the convention centre to non-members. That is not sufficient to clothe the activity of the assessee as commercial activity, which is not the object with which the assessee society is formed. - Therefore in view of SATURDAY CLUB LTD. versus ASSTT. COMMR., SERVICE TAX CELL, CALCUTTA (2004 -TMI - 206 - HIGH COURT CALCUTTA) and Dalhousie Institute Vs. Asstt. Commissioner, Service Tax Cell (2004 -TMI - 204 - HIGH COURT CALCUTTA) Decided in favor of assessee.
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