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2015 (9) TMI 378 - AT - Income TaxApplicability of principle of mutuality - interest earned by the assessee from the financial institutions who are members of the assessee Club treated as taxable income of the assessee - Held that:- No merits in the arguments submitted by the Ld. A.R. The decision of the Tribunal in the assessee’s own case for A.Ys 2002-03 to 2007-08 the Bench had followed the decision of the Hon’ble Apex Court in the case of CIT Vs. Vegetable Products Limited in (1973 (1) TMI 1 - SUPREME Court) wherein it was held that when two views are possible on the same issue by the two different High Courts, then the view in favour of the assessee has to be upheld. However, in the present situation the Hon’ble apex Court in the case of Bangalore Club (supra) has categorically held that the interest earned by the assessee from the financial institutions who are members of the assessee Club will not fall within the ambit of mutuality principle and therefore will be exigible to income tax in the hands of the assessee club. In the case before us the situation is much worse than the case of Bangalore Club, because the financial institutions from whom the interest is received by the assessee are not members of the Assessee Company but third parties. The relation between them is only as clients of the financial institutions and there is no scope of mutuality existing between them. Further it an income earned by the assessee company from its resources out of the transactions with third parties which are available for the members of the assessee company for their collective enjoyment though not available for distribution as dividend. For these reasons in the case of the Bangalore Club, the assessee itself had admitted, that the interest received from the financial institutions who are not members of the assessee Club, as its income. Therefore, respectfully following the elaborate order of the Hon’ble Apex Court, we hereby confirm the orders of the Revenue. - Decided against assessee.
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