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2012 (6) TMI 292 - HC - Income TaxPrinciple of Mutuality - Co-operative Housing Society, deriving income for hiring of hall, catering services, commission etc - dis-allowance of expenses on ground that income is derived from “other sources” - dis-allowance of transfer fee - Held that:- Act recognizes the principle of mutuality and has excluded all businesses involving such principle from the purview of the Act, except those mentioned in clause (vii) of that section. The three conditions, the existence of which establishes the doctrine of mutuality are (1) the identity of the contributors to the fund and the recipients from the fund, (2) the treatment of the company, though incorporated as a mere entity for the convenience of the members, in other words, as an instrument obedient to their mandate, and (3) the impossibility that contributors should derive profits from contributions made by themselves to a fund which could only be expended or returned to themselves. By applying the aforesaid principles to the facts of the present case, it is held that dis-allowance of transfer fees stand deleted and since no part of other expenditure are in nature of capital expenditure, hence 100% of expenses are allowed as deduction. Also, net surplus of income over expenditure will not be taxable because the income of the assessee by way of interest from co-operative bank is exempt u/s 80P[ii] - Decided against the Revenue
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