Mutuality exemption denied where contributors and profit participants are different, making the company's income taxable business income.

Exemption on the ground of mutuality applies only where there is complete identity between the contributors to a common fund and the persons participating in its surplus. The assessee, a public limited company carrying on business on terms comparable to an ordinary banking concern, failed that test because the contributors were not the same as the shareholders receiving the distribution. The return to shareholders was therefore not a mutual return of their own money in law. The income was held to constitute taxable business income and was not exempt from tax.

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Issues: Whether the income of the assessee-company was exempt from tax on the ground of mutuality.

Analysis: Exemption on the basis of mutuality applies only where there is a complete identity between those who contribute to the common fund and those who participate in its surplus. On the facts, the assessee was a public limited company carrying on business on terms comparable to an ordinary banking concern, and the contributors to the fund were not the same persons as the participators in the distribution of profits. The return distributed to shareholders was not a return of the contributors' own money in the mutual sense recognised by law. The income therefore fell within taxable business income under the relevant Act.

Conclusion: The income of the assessee-company was not exempt from tax and the answer was against the assessee and in favour of the Revenue.

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