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Doctrine of mutuality undermined where non members contribute or a dominant member exercises overriding discretion, affecting tax exemption.
The court applies the doctrine of mutuality by testing identity between contributors and beneficiaries, the entity's obedience to member mandate, and the impossibility of profit from self contribution; it finds that non member contributions, discretionary parental payments, parental control of management, lack of entitlement to surplus by contributors, and the entity's commercial operations defeat mutuality and preclude treating surplus as non taxable. (AI Summary)
Author
Date 30 Apr 2020
Satyajeet Goel
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April 2020