2016 (5) TMI 68

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ear under consideration. However, the assessee claimed exemption on the principle of mutuality. The Assessing Officer, in fact, accepted the claim of the assessee under the concept of mutuality. However, in respect of interest income earned by the assessee on fixed deposits was subjected to tax. The Commissioner of Income-tax (Exemptions) in exercising of powers under section 263 of the Act found that the beneficiaries of the trust are general public without any restriction of caste, religion, colour, etc., therefore, he found that there is no question of exempting the income under the concept of mutuality. According to learned counsel, the trust enrolled members for conducting poojas and the members are contributing their respective shares .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... s are entire human beings and the beneficiaries could not be identified individually, the concept of mutuality cannot be applied. The learned Departmental representative clarified that the principle of mutuality can be applied when the transactions are between the identifiable individuals. Once a third party come into play then the principle of mutuality cannot continue. In this case, even the individuals cannot be identified, therefore, there is no question of applying any concept of mutuality hence, the Commissioner of Income-tax (Exemptions) has rightly revised the order of the Assessing Officer in exercise of his jurisdiction under section 263 of the Act. 4. We have considered the rival submissions on either side and also perused the m .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... judgment of the apex court in CIT v. Bankipur Club Ltd. [1997] 226 ITR 97 (SC). The assessee before the apex court claims that it is a mutual concern to carry out a particular business. Admittedly, the assessee before the apex court is a club. The assessee-club had transaction with its members and also transacted with non-members. The apex court found that in respect of transaction with members the concept of mutuality will be applicable. However, in respect of transaction with non-members, the concept of mutuality may not be applicable. In the case before us, it is not a club. It is a trust established by three individuals and the trust is administered by three trustees. The object of the trust is to perform poojas by installing padhugas o .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X