TMI Blog2004 (12) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... on has been formed to promote and protect the interest of its members and it also provided that upon dissolution the surplus shall be distributed amongst the members of the organisation on the basis of their contribution. There is no finding that the respondent-organisation was catering to the need of any outsider - We answer both the questions referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue - - - - - Dated:- 1-12-2004 - Judge(s) : R. K. AGRAWAL., PRAKASH KRISHNA. JUDGMENT The judgment of the court was delivered by R.K. Agrawal J.- The Income-tax Appellate Tribunal, Allahabad, by separate orders has referred the following two questions of law under section 256(2) of the Income-tax Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained objects is reproduced below: "(i) To promote and protect the trade, commerce, industry and agriculture in which the members of the association are or may be concerned and to impose restrictive conditions on the conduct of such trade, commerce, industry and agriculture. (ii) To formulate and recommend to members common administrative policies and to settle questions of common interest and to protect the members of the association against competition. (iv) To formulate and regulate terms and conditions of employment of the employees of its members and to start, organise, establish and maintain labour relations and labour welfare organisation. (v) To consider all questions affecting trade, commerce, industry and agriculture in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be rendered by the association or on the basis of a lump sum or on any other basis or partly on one basis and partly on another or on varying basis in respect of different members." Rule 17 provides that a general meeting of the members shall be held in each year (not later than 30th June) at which the subscriptions fixed by the Central Board for the ensuing year and the accounts of the previous year shall be laid on the table for information. Rule 26(b) provided that all moneys on account of subscriptions, fines or other contributions, which it is obligatory on the members to pay, shall be credited to the general fund and that no expenditure from such fund shall be made in contravention of section 15 of the Indian Trade Unions Act, 192 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erative Labour and Construction Federation Ltd. v. CIT [2001] 252 ITR 265 (P H). Learned counsel for the respondent, however submitted that from the perusal of the rules and regulations of the organisation it is absolutely clear that the object was to confine to looking after the interest and welfare of its members and even after dissolution the surplus was to be distributed amongst the members. Therefore, the principle of mutuality is fully attracted and the income is not liable to be taxed at all. Having heard learned counsel for the parties we find that the object of the respondent organisation was to promote and protect and to further the interest of its members. In the event of the organisation being dissolved, rule 35 provided f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction Federation Ltd. [2001] 252 ITR 265 the Punjab and Haryana High Court has held that where the assessee was under no obligation to return the funds to the contributors, the principle of mutuality is not attracted. Applying the principle laid down by the apex court in the case of Royal Western India Turf Club Ltd. [1953] 24 ITR 551 and followed in the case of Chelmsford Club [2000] 243 ITR 89 (SC) to the facts of the present case, we find that the organisation has been formed to promote and protect the interest of its members and it also provided that upon dissolution the surplus shall be distributed amongst the members of the organisation on the basis of their contribution. There is no finding that the respondent-organisation was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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