TMI Blog2019 (10) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... ts members, membership received from its own members comes within the principle of mutuality. To this extent, it does not admit any doubt and the catena of decisions relied upon by the assessee hold so. Once the assessee is governed by the principle of mutuality, even if there are difference class of members, some of whom are not entitled to vote, the club would not be cease to be governed by principle of mutuality. In this case, as already stated, the assessee had offered to tax the income derived from the receipts from the non members. In so far as the members are concerned, there is no dispute as to the identity between the contributors and the participators. Case law relied upon by the ld. AR supports the view taken by the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income on 25.9.2009 declaring nil income. Learned AO, however, during the course of assessment proceedings, observed that there is variance in the fee received from the members. Assessee had received fee from nonmembers also and has been dealing with both the members and nonmembers. He, therefore, denied exemption u/s 11 of the Act and assessed their income at ₹ 9,04,40,180/-. 4. Aggrieved by the said addition and denial of deduction u/s 11 of the Act, assessee preferred appeal. Learned CIT(A) by way of the impugned order uphold the contentions of the assessee that the assessee is governed by the principle of mutuality and, therefore, any variance in the subscription fee or voting rights are relevant while cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipts received from members based on the principle of mutuality but ld. AO is justified in denying exemption on the basis of violation of principle of mutuality since ld. AP on facts held that the case falls under the purview of Section 2(15) of the Act, which was brought through Finance Act, 2008. It is further submitted by her that the factual finding of the ld. AO is that the surplus was generated through all the activities which was invested in FDRs and saving accounts and, therefore, no charity was being done by the assessee. According to her, the membership fee and admission fee charged from the members clearly fall under the provisions of Section 2(15) of the Act. Lastly, ld. DR contended that the difference in annual subscription fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the ld. CIT(A). 9. It is not in dispute that the income of the assessee is received from members as well as non members. The income from the non members has been offered to tax by the assessee whereas membership fee from its own members is claimed as exempt on the principle of mutuality. Ld. CIT(A) held that the assessee being a trade association of software industries, it s main object being to promote and protect the interest of its members, membership received from its own members comes within the principle of mutuality. To this extent, it does not admit any doubt and the catena of decisions relied upon by the assessee hold so. 10. In so far as the objection of the ld. AO based on the variance in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he receipts from the non members. In so far as the members are concerned, there is no dispute as to the identity between the contributors and the participators. 12. During the course of arguments, the question as to the way of disposal of the funds, if any, had arisen and by placing reliance on the decision in the case of Bankipur Club Ltd. (supra), ld. AR submitted that in that case also vide clause 7 of the Memorandum of Association, it was provided that upon winding up and dissolution of the association, the remaining property after the satisfaction of its debts and liabilities, shall not be paid or distributed amongst the members but shall be given or transferred to such other institution or institutions having similar o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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