2012 (6) TMI 468

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.... which is engaged in purchase and sale of quality tyres, automobile spares, etc., to the members. Admittedly, the respondent is not engaged in any trade other than purchase and distribution of tyres, automobile spares, etc., to its own members. In other words, the contributors of the respondent are the beneficiaries or participants of the benefits derived by the association. Even though the respondent claimed exemption from payment of income-tax on the profit derived by it, by claiming the principle of mutuality, the Assess- ing Officer held that the assessee-association is not entitled to exemption because the surplus derived by it amounts to business income falling under section 28(iii) of the Income-tax Act. Assessments involved in these....

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....w, the only test to consider whether the principle of mutuality applies is whether the contributors to the club or the organisation are the participants in the benefit derived from it. Admittedly, the beneficiaries of the little profit derived by the respondent-association as in the case of the clubs are the members. In other words, the purchases made by the members lead to profit to the association which in turn goes to the members or for their own benefit. In our view, the principle of mutu- ality squarely applies to the case of the respondent-association for the transactions carried on by them. So much so, we do not find any ground to deviate from the view taken by the Tribunal following consistent decisions of the Supreme Court in sever....