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2020 (3) TMI 221 - AT - Income TaxExemption u/s. 11 - Charitable activity u/s 2(15) - mutuality concept applicability - as per revenue assessee has declared interest and miscellaneous income received from banks - HELD THAT:- When the assessee was providing services to its members as well as non members, it can never be categorized under mutuality concept. The mutuality concept can be applied only when a mutual concern or AOP, who agree to contribute funds for common purpose and receive back the surplus left out in the same capacity in which they made the contribution. Therefore, the capacity as contributors and participants remain same. When they cannot separate the activities of participants and non members, they can never be considered as mutual concern. Therefore, in our considered view, the activities carried on by the assessee can never be assessed under the concept of mutuality. We notice that assessee company was established under section 25 of the Companies Act with the motive to carry on charitable activity and we also notice that assessee was granted registration u/s 12A of the Act. Since, assessee was carried on its affairs not keeping separate data for its members as well as non members and also we take note of the object clause para 1 of Memorandum of Association based on which, even Ld. CIT(E) has granted registration u/s 12A recognizing it as a charitable institution. We notice that AO has invoked the ratio of Banglore Club [2013 (1) TMI 343 - SUPREME COURT] simply considering the fact that assessee has filed its return of income based on mutuality concept overlooking the actual facts. We are inclined to remit this issue back to the file of AO to verify the books of accounts and analyze with its objects and re-do the assessment as per law. It is not necessary that the assessment should be completed based on the return of income filed by the assessee or what stand taken by the assessee and we direct the AO to complete the assessment as per law. Therefore, we direct the AO to evaluate the facts of the case by considering the complete facts on record like assessee was granted registration u/s 12A of the Act and also assessee carried on activities based on its charitable objectives and needless to say, assessee should be given proper opportunity of being heard. - Decided in favour of assessee for statistical purposes
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