TMI Blog2016 (9) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... es concerned should be in furtherance to mandate of the association and there should not be any scope of profiteering by the contributors from a fund made by them which could only be expanded or retuned to themselves. We deem it appropriate to observe that our order under challenge does not deal with the above stated third aspect of mutuality. As extracted clause reveals that assessee has to make and create from its members contributions a fund for above purposes. It is nowhere stipulated therein that these purposes would form the sole object for collection of funds from members whereas we interpreted the same on these lines only. We reiterate that the assessee has rather suffered losses in organizing the impugned fiestas negating possibility of having organized the same on commercial lines. Its purpose for having organized the activities as stated in the case records are annual get togethers for promoting brotherhood between members only. We observe in these peculiar facts that our appreciation of this clause is not as per the language incorporated in the relevant object clause. We admit our two findings hereinabove to be suffering from mistakes apparent on the face of record i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that this mutuality principle applies to non-commercial activities only. He further opines that a mutual organization s essential elements constitute association of people called members formulating a common cause involving contributions without any aim to earn profits and gains. He upheld Assessing Officer s action on this reasoning. 4. The assessee filed six main appeal hereinabove in as many assessment years from 2006-07 to 2011-12. We declined all these cases by a common order subject matter of the instant miscellaneous applications as follows:- 9. We have heard both the parties and perused the case files. There is no dispute that the assessee-company is registered u/s. 25 of the Indian Companies Act, 1956. Its memorandum of objects already stands reproduced. It has carried out some fiestas, property shows and cricket tournaments resulting in contributions in question received from members and non members. It seeks to apply mutuality concept in case of members contributions. Hon'ble apex court in case of Bangalore Club v/s. CIT (2013) 350 ITR 509 (SC) considers all the relevant case law right from Styles (Surveyor of Taxes) v/s. New York Life Insurance Co.(188 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and raise a sinking fund for emergency and or other contingencies. There is no mechanism provided in the abovestated objects for raising receipts from non members. And also in carrying out any activities of fiestas, property shows and cricket tournaments. The assessee's explanation does not prove any live nexus between objects and impugned activities. These activities carried out are more in the nature of commercial exercises performed in view of contributions received from members and non members than services being performed in furtherance to the mandate of the association. We accordingly hold that the assessee's activities involving action of the participators and contributors do not satisfy its objects/mandate of the association. Thus, the assess fails qua this second feature. We quote case law of CIT v/s. Royal Western Turf Ltd.,(1953) 24 / ITR 551 (SC) holding money realised from both members and non-members in lieu of the very services rendered in course of the same business thereby denying mutuality exemption. Their lordships quote absence of any mutual dealing between the members interse and no putting up of a common trend for discharging common obligations under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in hand. We hold the same as not applicable in peculiar facts in instant case. We proceed further and find that next judicial precedent quoted is (2015) 56 taxmann.com 281 (Guj.) Junagadh Gymkhana vs. ITO. This club's members had paid guest charges and utilized it for benefit and development of themselves. The hon'ble jurisdictional high court held this case to be covered by mutuality concept on the ground that the same created an identity between the participants and contributors. Just because some transactions are non mutual would not destroy mutuality factor. We find that the non members therein were only brought to the club and they had not paid any amount as against facts of the instant case. We distinguish this case law accordingly. The assessee quotes next judgment of ITAT Kolkata bench (2012) 139 ITD 675 (Kol) Belvedere Estates Tenants Association v/s. ITO wherein the assessee was formed by tenants of a building. It was working for common interest of the members and rendered services as against the assessee before us whose activities in question are not as per its objects being commercial in nature. This case law also does not rescue the assessee's case. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en into account all the material facts as well as case laws whilst rejecting asssessee s mutuality plea in question. He accordingly submits that any modification therein would amount to review of our earlier order as held by a co-ordinate bench in (2009) 32 SOT 356 (Mum) Adarshveer P. Jain vs. ACIT. We put a specific query as to whether he disputes the legal proposition settled by hon ble apex court hereinabove. Shri Singh s case is that the same applies only if any apparent error on the face of record is made out in the order under challenge. 6. We have given our thoughtful consideration to rival contentions. Hon ble apex court has very much settled the law (supra) that such a rectification u/s. 254(2) of the act is maintainable by treating justice above all technicalities. Their lordships elaborately discuss scope and ambit of section 254(2) of the act to hold first of all that a patent, manifest and self evident error not requiring any discussion of evidence or argument can be said to be an error apparent on the face of record. Hon ble court is of the view that such a rectification does not require any long drawn process of travelling beyond the records. We keep in this fine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept assessee s argument qua our findings on the first essential aspect of mutuality. 9. We now proceed to examine correctness of our latter finding holding that the assesseee s activities are not as per mandate of the association. We heavily relied on clause j of its objects to conclude that the members contributions in question arise in case of as and when basis required for the purpose of meeting office maintenance, employees salary, essential services and for creation of a sinking fund. This clause reads as under- (j) To collect and accept contributions from members as and when required and determined by the association and to make and create there from a fund for office maintenance, salary to employees, provide essential service to the members, and raise a sinking fund for emergency and/or contingency expense. 10. A bare perusal of the above extracted clause reveals that assessee has to make and create from its members contributions a fund for above purposes. It is nowhere stipulated therein that these purposes would form the sole object for collection of funds from members whereas we interpreted the same on these lines only. We reiterate that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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