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2013 (2) TMI 500 - AT - Income TaxPrinciples of mutuality – Whether member will include guests and relatives of the members and members of the affiliated clubs - Held that:- Principles of mutuality are available to the assessee on the aspect of treating the income derived by the assessee as exempt from tax. For the purpose that the term “member” includes guests and relatives of the members and members of the affiliated clubs etc – As decided in Bhubaneswar Club Limited [2006 (8) TMI 237 - ITAT CUTTACK ] concept of “member” is spacious enough to include guests and relatives of the members and members of affiliated clubs and if it is so, then in the case of the assessee the income derived by letting out its premises or by allowing the guests and relatives of the members and members of affiliated clubs will not be subjected to tax – The services offered to the guests, relatives and affiliated clubs cannot be treated as trading activity and cannot be tainted with commerciality – Against the revenue. Interest on deposits and investments - Whether interest on deposits and investments will form part of the taxable income - Held that:- Interest earned by the assessee out of the bank deposits and investments made by the assessee out of out of surplus contributions made by its members, is also covered under the principles of mutuality and as such - Mutuality offers a tax exemption as long as its mutual association is retained and its income is not tainted by commerciality - As held in Chelmsford Club vs. CIT [2000 (3) TMI 4 - SUPREME COURT] principles of mutuality applies to interest income derived by the assessee-co-operative society from the deposits made by it out of the contributions made by the members of society – Therefore, Once the income is found to be covered by principle of mutuality, the same cannot be brought to tax even under the provisions of s. 115JB – In favour of assessee.
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