1989 (5) TMI 154

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....) that the assessee is a mutual fund not liable to the levy of income-tax in the asst. yrs. 1980-81, 1981-82 and 1982-83. Shri M. Narayanan, Departmental Representative, appeared for the Department and Shri K. Srinivasan & Shri Quadir Roseyen, Advocates, for the assessee. 2. The assessee claimed before the Assessing Officer that the business of the Naidhi was restricted to shareholders and that....

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.... mutuality was not satisfied in this case inasmuch as dividend was paid to shareholders who did not have any transaction during the period year relevant to the assessment years. There was no complete identity between the contributors and the participants in the common fund. Shri K. Srinivasan, Advocate, on the other hand, argued that there was such complete identity between the contributors and th....

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.... the test of mutuality laid down by the Supreme Court in the case of CIT vs. Kumbakonam Mutual Benefit Fund (1964) 53 ITR 241 (SC). If all shareholders were to participate in the dividends irrespective of their having transactions with the Nidhi or not, then as explained by the Supreme Court, the position of the Nidhi would not have been different from that of an ordinary bank. A shareholder in th....