Mutuality claim and interest income require fresh scrutiny after amended bye-laws added liquidation distribution clause.

The assessee produced an amended bye-law, sanctioned by the competent authority, allowing distribution of residual assets among institutional members on liquidation in proportion to their financial contribution. Because the earlier denial of mutuality had rested on the absence of any clear winding-up provision, the existing findings on mutuality and the related treatment of interest income could not be treated as final without examining the new clause. The matter was therefore remitted to the Assessing Officer for fresh consideration in light of the amended bye-laws and the additional material on record.

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Issues: Whether, in view of the subsequent amendment to the bye-laws permitting distribution of surplus assets among institutional members on liquidation, the orders denying exemption on the principle of mutuality and deleting the interest addition should be set aside and the matters restored to the Assessing Officer for fresh consideration.

Analysis: The assessee placed on record a newly adopted bye-law clause, sanctioned by the competent authority, providing for distribution of the residual assets among institutional members in proportion to their financial contribution. The earlier denial of mutuality had proceeded on the basis that the bye-laws did not contain a clear provision for distribution of surplus assets on dissolution or winding up. Since this new material was not before the Assessing Officer, the existing findings on mutuality and the consequential treatment of interest income could not be treated as final without examining the effect of the amended bye-laws.

Conclusion: The matter was remitted to the Assessing Officer for reconsideration afresh in the light of the amended bye-laws and the additional material placed on record.

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