TMI Blog2001 (9) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Revenue, has referred to the facts in Income-tax Reference No. 3 of 1998. These may be briefly noticed. The assessee filed its return of income for the assessment year 1983-84. It declared a loss of Rs.19,21,534. This amount consisted of the loss of Rs.10,81,580 for the year under question and the unabsorbed loss of Rs.8,39,954 for the earlier year. The accounting period tallied with the calendar year and ended on December 31, 1982. The assessee claimed to be a mutual benefit association. It was constituted to advance, promote and protect the interests of dealers of motor-cycles and tractors, etc., manufactured by Escorts Ltd. The amounts received from the members by way of entrance fee or contributions and the forfeited amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss thereby deleting the addition of Rs.3,88,904?" On behalf of the Revenue, it has been contended that the assessee is a company. It is totally distinct from the members. Therefore, the principle of mutuality cannot be invoked. Learned counsel has placed reliance on the decision in CIT v. Dharmavaram Mutual Benefit Permanent Fund Ltd. [1968] 67 ITR 673 (AP). Secondly, it has been submitted that the principle of mutuality could not have been invoked as the contributions were charged from the dealers at the rate of Rs.10 per motor-cycle and Rs.40 per tractor, respectively. A corresponding contribution was made by the manufacturer. All the funds were used for advertisement and, thus, for the benefit of manufacturers. Similarly, the forfeited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solely for the promotion of its objects as set forth in the memorandum". It was also laid down that "no portion of this income or property aforesaid shall be paid or transferred directly or indirectly by way of dividend, bonus or otherwise by way of profit to persons who, at any time are/ or have been members of the company or to any one or more of them or to any persons claiming through any one or more of them." In view of these provisions in the memorandum of association, the Tribunal has recorded a firm finding in favour of the assessee. There appears to be no ground to take a different view. Another fact which deserves mention is that C. W. P. No. 6397 of 1987 had been filed by the assessee. A copy of an affidavit filed on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties have proceeded on that basis. Thus, it cannot be said that the assessee is different from its members. Mr. Sawhney referred to the decision of the Andhra Pradesh High Court in the case of CIT v. Dharmavaram Mutual Benefit Permanent Fund Ltd. [1968] 67 ITR 673. In this case, it was found as a fact that the element of mutuality was absent. The members who contributed to the profits were different from the beneficiaries. Such is not the position in the present case. Thus, counsel can derive no advantage from this decision. In view of the above, we hold that the assessee is a mutual benefit association. The Revenue having not raised the question that the assessee is different from its members, the argument as now sought to be raised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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