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2021 (10) TMI 1290 - AT - Income TaxSet off of deficit in mutuality account as eligible for set off as a “loss” against its income from “Other” sources - HELD THAT:- Hon’ble apex court’s landmark decision in Bangalore Club case [2013 (1) TMI 343 - SUPREME COURT] has settled the law that an assessee has to satisfy the three essential ingredients for the purpose of getting mutuality benefit i.e. a complete identity between contributors and participators, their actions to be very much in furtherance to mandate of the club and that there is no scope for any kind of profiteering from the fund created by them which could only be expended or returned to themselves. It has been further made clear therein that it is only section 2(24)(vii) of the Act wherein a specific instance of a mutual organization has been held to be deriving taxable income. The legislative expression “head” of income must be taken as any of the five heads of income provided u/s. 14 of the Act i.e. salary, income from house property, profits and gains of business or profession, capital gains and income from other sources; respectively. We thus are of the opinion that once the assessee's impugned deficit arising from mutuality account is neither covered in any of the said heads as well nor u/s. 2(24)(vii) defining “income” in the very account, section 71 of the Act would not apply in isolation. We further deem it proper to refer to hon'ble apex court’s recent larger bench decision in Commissioner of Customs Vs. Dilip Kumar & Co [2018 (7) TMI 1826 - SUPREME COURT]that provisions of a taxing statutes have to be strictly construed only. As in CIT Vs. Hariprasad and Co. P. Ltd.case [1975 (2) TMI 2 - SUPREME COURT] that a loss arising from a head of income not chargeable to tax is not eligible to be set off against a taxable source - As per Kishorebhai Bikabhai Virani case [2015 (2) TMI 807 - GUJARAT HIGH COURT]a loss under an exempt source is not to be carried forward for set off against subsequent year’s income. CIT(A) had been directed to consider the assessee’s going by the corresponding statutory provisions in light of relevant facts rather than allowing the same on merits. We further make it clear that the assessee had raised the impugned argument for the first time before the learned co-ordinate bench wherein it thought it proper to redirect the same back to the CIT(A) for necessary verification and adjudication. We thus decline the assessee's instant solitary substantive grievance - Decided against assessee.
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