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2012 (6) TMI 468 - HC - Income TaxPrincipal of mutuality - Association - Scope of section 28(iii) - purchase and distribution of tyres, automobile spares, etc., to its own members. - the only test to consider whether the principle of mutuality applies is whether the contributors to the club or the organisation are the participants in the benefit derived from it. - Admittedly, the beneficiaries of the little profit derived by the respondent-association as in the case of the clubs are the members. In other words, the purchases made by the members lead to profit to the association which in turn goes to the members or for their own benefit. - the principle of mutuality squarely applies to the case of the respondent-association for the transactions carried on by them. Scope of section 28(iii) - held that:- the above provision does not apply to the facts of this case. The only other exception for assessment of mutual benefit concerns is only the income falling under section 2(24)(vii) which provides for assessment of profits and gains of any business of insurance carried on by a mutual insurance company or by a co-operative society, computed in accordance with section 44 or any surplus taken to be such profits and gains by virtue of the provisions contained in the First Schedule to the Act. - This provision has no application so far as the respondent association is concerned. - Tribunal rightly upheld the respondent's entitlement for exemption from payment of income-tax by applying the prin- ciple of mutuality. - Decided in favor of assessee.
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