TMI Blog2016 (4) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed that the income earned on account of investments made in Mutual Funds has been offered to tax. The respondent has in effect followed the decision of the Apex Court in Bangalore Club, however as held in Bangalore Club (2013 (1) TMI 343 - SUPREME COURT ), it cannot result in the respondent being charged to tax on the contribution received from its members. In fact the decision of this Court in Common Effluent (2010 (6) TMI 52 - BOMBAY HIGH COURT ) concludes the issue in favour of the respondent assessee. - Income Tax Appeal No. 2455 of 2013 - - - Dated:- 31-3-2016 - M. S. Sanklecha And A. K. Menon, JJ. For the Petitioner : Mr Ashok Kotangale i/b Ms Padma Diwakar For the Respondent : Mr B V Jhaveri JUDGMENT 1. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot being the object of the association, the concept of mutuality would not apply. In the circumstances by the Assessment Order dated 20th November, 2009 the Assessing Officer brought the entire contribution of ₹ 54.07 lakhs received from its members as income chargeable to tax. 4. Being aggrieved the respondent-assessee carried the issue in appeal to the Commissioner of Income Tax (Appeals). By order dated 14th December, 2011 the Commissioner of Income Tax (Appeals) allowed the appeal holding that the petitioner has been assessed as mutual concern for earlier assessment years beginning from A.Y. 200120-02 upto 2006-07 in assessment orders passed under Section 143(3) of the Act and the contribution from its members was not brought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable to the respondentassessee. This is for the purpose that some part of its excess of income over expenditure has been invested in Mutual Funds. On the other hand, Mr. Jhaveri, the learned counsel for the Assessee reiterates the reasoning in the impugned order of the Tribunal and further points out that the dividend received on the Mutual Funds have been offered to tax. 7. We find that the contributions made by the members to the respondent-assessee cannot be a subject matter of tax merely because the part of its excess of income over expenditure is invested in mutual funds. It is also not the case of the Revenue that the dividend received from mutual funds have not been offered to tax by the respondent-assessee. The concept of Mutu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers/contributors, the complete identity between contributors and participants continued. However the moment the funds are invested in fixed deposits with the banks and the funds are used for advancing loans etc. by the Bank to its customers, the identity of participants and contributors is sapped. Thus the interest earned on fixed deposits is to be brought to tax. However, it is to be noted that it did not result in the Bangalore Club being taxed on all contributions of its members. The case of the Revenue here is that having invested excess amounts in mutual funds the concept of mutuality would not extend to the contribution made by the members of the association even though the contributions are used to achieve the objectives of the asso ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
