Mutuality

The benefit of the mutuality principle is available only as regards transactions with members. Where the assessee a club, running on mutuality basis, had collected amounts from non-members for use of the assessee’s premises as floor charges for trading in shares and stocks, the prl of mutuality can have no application to receipts of such charges. Investors Club Trichur v CIT 318 ITR 427(Ker)

Co-operative housing society receiving amount on account of damages for wrongful proceedings : Contribution by third party who is not a member of society : Not covered by principle of mutuality : Jai Hind Co-op. Housing Society Ltd. v. ITO (Mumbai) 318 ITR(AT) 407

Co-operative housing society receiving transfer fee from transferee of flats revenue receipt : Jai Hind Co-op. Housing Society Ltd. v. ITO (Mumbai) 318 ITR(AT) 407

2009-TIOL-415-HC-MAD-IT

M/s Madras Gymkhana Club Vs DCIT,Chennai (Dated: July 30, 2009)

Income tax - Sec 2(24) - Doctrine of mutuality - Assessee is a club - offers sports,

recreational and other facilities to its members - receives donations, contributions and

membership fee from members - invests surplus fund in FDRs with corporate

members of the clubs - claims exemption for huge interest income on the ground of

mutuality - AO disallows - CIT(A) and Tribunal agree with the AO - held, the basic

requirement of the concept of mutuality is the principle of identity between the

contributor and the participator which is not fulfilled in this case as donations and

contributions were accepted and kept in banks without any specific plans of

expenditure and interest earned on such deposits cannot be said to satify the

mutuality concept - Assessee's appeal dismissed