2008 (4) TMI 475

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....aised in this case is whether the receipt of interest on FDRs and Bank deposits is covered by principle of mutuality and hence is liable to tax even though it does not constitute business activity of the club? 2. The Income-tax Tribunal disposed of two appeals by a consolidated order dated October 24, 2006 relating to assessment years 2003-04 and 2004-05. Grievance raised by the assessee f....

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....nt. The order of the Assessing Officer was upheld by the Commissioner of Income-tax and later by the Tribunal. Aggrieved by the same, this appeal has been preferred. 3. Contention raised was that since the assessee was a club, taxability of its income was governed by the principles of mutuality. It was pointed out that judgment of the Supreme Court in CIT v. Bankipur Club [1997] ....

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.... make the deposit in Bank or in FDRs. The principle of mutuality could be applied only if the interest was earned for advances/facilities of loan given to the members of the club. The assessee had claimed exemption in respect of interest income where source of receipt was Bank and not the members of the club. In Chelmsford Club v. CIT [2000 -TMI - 5787 - SUPREME Court], the Apex Cou....