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

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

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ct on the basis of legal enunciations on the issue. Therefore, 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 : .....

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ITA No. 690 of 2005 is condoned. 3. ITA No. 690 of 2005 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 da .....

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by the assesseeclub on its FDRs with banks was not liable 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 A .....

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of law at (a) to (c) in para 4 above. 6. ITA No. 331 of 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 .....

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for adjudication of the present appeal as narrated therein 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 Commis .....

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ed an appeal before the Commissioner of Income Tax (Appeals) [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 .....

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iation which is as under:- 5(d). If upon the winding up or 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 enti .....

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Chelmsford Club v. Commissioner of Income Tax (2000) 243 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 .....

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oner of Income Tax v. Haryana C.M. Relief Fund (2009) 309 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 c .....

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mmon fund and as such neither considered income nor taxable. 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, .....

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