https://www.taxtmi.com/caselaws?id=70286 The mutuality principle was applied to an assessee-Nidhi because deposits were accepted only from members and interest was paid on those deposits, while dividends were confined to shareholders who had dealings with the Nidhi during the year. Non-contributing shareholders had no right to participate in the dividend, so the surplus was returned only to persons who contributed to the common fund. That identity between contributors and participants satisfied mutuality and distinguished the arrangement from an ordinary banking structure where all shareholders benefit irrespective of transactions. On that reasoning, the surplus was treated as not liable to income-tax. en-us Mon, 29 May 1989 00:00:00 +0530 Fri, 15 Apr 2011 12:25:10 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=70286 The mutuality principle was applied to an assessee-Nidhi because deposits were accepted only from members and interest was paid on those deposits, while dividends were confined to shareholders who had dealings with the Nidhi during the year. Non-contributing shareholders had no right to participate in the dividend, so the surplus was returned only to persons who contributed to the common fund. That identity between contributors and participants satisfied mutuality and distinguished the arrangement from an ordinary banking structure where all shareholders benefit irrespective of transactions. On that reasoning, the surplus was treated as not liable to income-tax. Case-Laws Income Tax Mon, 29 May 1989 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=70286