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2016 (4) TMI 530 - PATNA HIGH COURT

2016 (4) TMI 530 - PATNA HIGH COURT - TMI - Interest income received by the club from fixed deposit in bank - house property or income is from other sources - Held that:- The principle of mutuality is not available to the assessee. We do not find that any such inference can be drawn from the order of the Supreme Court in Cawnpore Club Ltd. [1998 (2) TMI 591 - SUPREME COURT OF INDIA ] if read along with the order passed in Banikpur Club Ltd (1997 (5) TMI 392 - SUPREME Court). We find that the int .....

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the Appellant : Mr. Ajay Kumar Rastogi, Adv For the Respondent : Mrs. Archana Sinha, Sr. Standing Counsel, Mr. Alok Kumar, Adv. & Ms. Shalini Bihari, Adv JUDGMENT ( Per: Honourable Mr. Justice Hemant Gupta ) The assessee is in appeal under Section 260A of the Income Tax Act, 1961 arising out of an order passed by the Income Tax Appellate Tribunal, Patna Bench, Patna (for short, 'the Tribunal') pertaining to assessment years 1997-1998 and 1998-1999. M. A. No. 541 of 2007 arises out o .....

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d in the circumstances of the case the Tribunal is justified in not considering the submission that interest cannot be treated as income from other sources and also in giving a complete go by to the judicial decisions relied upon in this regard vide submission dated 11.11.2003? (iii) Whether the Tribunal is justified in upholding separate and independent taxation of interest from bank even though there is a loss of ₹ 23,870/- after considering the interest of ₹ 2,44,232/- ? 3. As per .....

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her hand, argument of learned counsel for the Revenue is that the income derived from interest is from other sources and principle of mutuality does not apply to the income so derived from the fixed deposit. She has placed reliance upon a Division Bench judgment of Gujarat High Court in the case of Sports Club of Gujrat Limited Vs. Commissioner of Income Tax 171 ITR 504 which has been referred to by the Commissioner, Income Tax (Appeals) as well as by the Tribunal. 5. We do not find any substant .....

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group of seven cases falling in Group -E was decided by separate order reported as (2004) 140 Taxman 378 - Commissioner of Income tax Vs. Cawnpore Club Ltd. The order reads as under:- "1. One of the questions which the High Court had decided in other cases relating to the same assessee was that the doctrine of mutuality applied and, therefore, the income earned by the assessee from the rooms let out to its members could not be subjected to tax. No appeal had been filed against the said deci .....

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n examined by Gujarat High Court in Sports Club of Gujarat Ltd.'case supra, where the court held as under:- "8. We now revert to the question whether the income derived by way of interest on fixed deposits from banks is exigible to tax notwithstanding the finding that the principle of mutuality applies to the assessee club. We have already pointed out earlier that one of the essentials of mutuality is that the contributors to the common fund are entitled to participate in the surplus, t .....

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y them. Under this clause, the investment need not be confined to investment by way of fixed deposits with banks. It can take any other form or shape, such as investment in shares, real estate, etc. When income is derived from such investment, whether by way of interest, dividend or rent, it is derived from a third party and is not by way of contribution from the members of the club. .….9. It was lastly argued by counsel for the assessee that the investment of the unutilized surplus in fi .....

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