INCOME TAX ACT, 1961

Section 4

Income - Mutuality principle - Applicability - Income earned by the club from deposits made in banks

Petitioner challenged orders passed for the assessment years 2001-02, 2002-03, 2003-04, 2004-05 and 2007- 08. It was seen that order brought to tax, in the re-assessment proceedings, income earned by club from deposits made in banks that were claimed to be exempt, applying the principles of mutuality. Held:Supreme Court in case of Bangalore Club v. CIT and Others [(2013) 350 ITR 509 (SC) : 2013 TaxPub(DT) 0434 (SC)] held that interest earned by clubs from banks would not fall within the ambit of the principles of mutuality and would thus be liable to tax in the hands of the clubs. Even in this case, exemption was sought on identical facts, that is, on income that was earned by Petitioner-club from its investments made with banks. Thus, petitions were liable to be dismissed.

Followed: M/s. Bangalore Club v. CIT & Anr. (2013) 350 ITR 509 (SC) : 2013 TaxPub(DT) 0434 (SC); CIT v. Bankipur Club Ltd. (1997) 226 ITR 0097 (SC) : 1997 TaxPub(DT) 1250 (SC) and CIT v. Kumbakonam Mutual Benefit Fund Ltd. (1964) 053 ITR 0241 (SC) : 1964 TaxPub(DT) 0347 (SC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. :

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