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The Commissioner of Income Tax, Panchkula Versus M/s Gymkhana Club, Panchkula

2016 (1) TMI 578 - PUNJAB AND HARYANA HIGH COURT

Principle of mutuality - whether the ITAT was right in law in treating the charges received from non-member/guests as not liable to tax? - Held that:- The conditions for invoking the principle of mutuality have been recently enumerated by the Apex Court in Bangalore Club's case (2013 (1) TMI 343 - SUPREME COURT) wherein after considering various other pronouncements of the Supreme Court and the High Court on the subject, it has been laid down that principle of mutuality relates to the notion tha .....

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fore, in such a situation, the issue being considered to be primarily a question of fact relating to applicability of doctrine of mutuality, it would be appropriate to set aside the order of the Tribunal and remand the case back to the Tribunal to adjudicate the same and pass a speaking order after hearing both the sides. - ITA No. 690 of 2005 (O&M) - Dated:- 30-11-2015 - MR. AJAY KUMAR MITTAL AND MR. RAMENDRA JAIN, JJ. For The Appellant : Mr. Yogesh Putney, Advocate For The Respondent : Mr. S.K .....

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has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (in short the Act ) against the order dated 15.12.2004 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Chandigarh Bench A , Chandigarh (hereinafter referred to as the Tribunal ) in ITA No. 376/CHANDI/2001 for the assessment year 1997-98. All the appeals except ITA Nos. 209, 295, 553, 883 of 2008 and 331 of 2015 were admitted by this Court vide order dated 29.10.2007 for determination of the following substan .....

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e to tax? b) Whether in the facts and circumstances of the case, the ld. ITAT was right in law in treating the charges received from non-member guests as not liable to tax? c) Whether in the facts and circumstances of the case, the ld. ITAT was right in law in observing that the miscellaneous income on account of sale of various items and commission is not taxable being incidental to the providing of facilities to the members, though the AO had made the addition on this count treating it as not .....

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2015 was admitted by this Court vide order dated 28.10.2015 for determination of the substantial questions of law as referred to in para 6 of the appeal which are to the following effect:- i) Whether in the facts and circumstances of the case, the Ld. ITAT was right in law in holding that the assessee club is a mutual concern disregarding the finding of the A.O. that the financial and administrative control over the assessee club is in the hands of HUDA and that there is no identity between the .....

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n may be noticed. The assessee filed its return as charitable institution on 31.10.1995 for the assessment year 1997-98 declaring nil income. The case was taken up for scrutiny and notices under Sections 143(2) and 142(1) of the Act were issued. It had applied for its registration as charitable institution under Section 12A of the Act. However, the claim of the assessee for being declared a charitable institution was rejected by the Commissioner of Income Tax, Panchkula vide order dated 9.3.1998 .....

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ls) [for brevity the CIT(A) ]. The CIT(A) vide order dated 13.2.2001 (Annexure A-2) following her earlier order in the case of the assessee for the assessment year 1995-96 allowed the appeal. Against the order, Annexure A-2, the revenue filed an appeal before the Tribunal. The Tribunal vide order dated 15.12.2004 (Annexure A-3) dismissed the appeal of the revenue following its earlier decision in the case of the assessee for the assessment year 1995-96. Hence, the present appeal by the revenue. .....

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r dissolution of the society there remains after satisfaction of all its debts and liabilities any property whatsoever, the same shall not be paid to or distributed among the members of the society, but shall be given or transferred to some other Institution having objects similar to the objects of the society at or before the time of dissolution. 10. It was also contended that the assessee was not mutuality concern and was, thus, not entitled to exemption on that ground. It was also pleaded tha .....

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ITR 89 (SC), Bangalore Club v. Commissioner of Income Tax and another (2013) 350 ITR 509 (SC), of this Court in Haryana State Cooperative Labour and Construction Federation Ltd. v. Commissioner of Income Tax (2001) 252 ITR 265 (P&H) and of Karnataka High Court in Commissioner of Income Tax and another v. Bangalore Club (2006) 287 ITR 263 (Karn). Additionally, certain judgments of other High Courts were also relied upon by him. It was next urged that there were certain incidental issues as w .....

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ITR 275 (P&H), Delhi High Court in Commissioner of Income Tax v. Delhi Gymkhana Club Ltd. (2011) 339 ITR 525 (Delhi) and Karnataka High Court in Canara Bank Golden Jubilee Staff Welfare Fund v. Deputy Commissioner of Income Tax (2009) 308 ITR 202 (Karn). 12. We have heard learned counsel for the parties. 13. The conditions for invoking the principle of mutuality have been recently enumerated by the Apex Court in Bangalore Club's case (supra) wherein after considering various other prono .....

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le. Broadly, the following conditions have been laid down for the applicability of doctrine of mutuality:- (i) The first condition to invoke the principle of mutuality requires that there must be a complete identity between the contributors and the participators; (ii) the second feature demands that the action of the participants and the contributors must be in furtherance of the mandate of the association. However, in the case of a club, the steps have to be taken in furtherance of activities t .....

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