TaxTMI 
TaxTMI 
2013 (7) TMI 136
X X X X Extracts X X X X
X X X X Extracts X X X X
....s that the Commissioner of Income Tax (Appeals) grossly erred in holding that the appellant is not a mutual organization and erred in confirming the addition in respect of the amount transferred to common good fund and disallowing certain expenses. 2. Brief facts of the case are that the assessee is a society registered under the Societies Registration Act, 1860. The assessee filed returns for these two assessment years claiming the status of mutual organization. For the assessment years 2000-01 and 2004-05, the claim of the assessee was denied by the Assessing Officer. On appeal, the Commissioner of Income Tax (Appeals) held that the assessee is a charitable society and not a mutual concern. On further appeal by the assessee as well as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see are inconsonance with the concept of mutuality. But, the Assessing Officer denied the status of mutuality holding that because the assessee made donations to third parties, incurred expenses and earned interest income from banks, the assessee is not a mutual concern. The Assessing Officer was of the view that the assessee received income from third parties and third parties were benefitted by the payments made by the assessee towards donation and expenses incurred and therefore, the assessee is not a mutual concern. As far as the interest is concerned, the counsel for the assessee fairly conceded that the issue is decided against the assessee by the Hon'ble Supreme Court in the case of Bangalore Club Vs. CIT (350 ITR 509). In respect of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....presentative submits that during original assessment proceedings vide letter dated 19.11.2007 on behalf of the assessee it was stated that non-production of diesel expenses vouchers and other vouchers was due to the reason that the same were relatable to more than seven years at that point of time. The Departmental Representative submits that during the reassessment proceedings out of the said claim of Rs. 13,82,600/-, xerox copies of 14 vouchers dated 16.12.2000 for Rs. 3,000/- each amounting to Rs. 42,000/- only were furnished. The other expenses incurred under the heads of Miscellaneous expenses and Meeting expenses, the assessee could not produce details during the reassessment proceedings. The Departmental Representative submits that i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ear on the concept of mutuality requires identity between the contributor and that of participators. The lower authorities were of the view that since the members are benefitted from the third parties or surplus common good fund of the assessee is applied for charity, the concept of mutuality is vitiated. We find that during these assessment years the assessee received interest income on deposits from banks and the assessee made donations to Kargil fund, P.M. relief fund and Gujarat relief fund etc. The assessee also incurred expenses under the head 'diesel expenses', 'miscellaneous expenses' and 'meeting expenses' in the course of carrying on its objects. As far as the expenses are concerned, we are not in agreement with the authorities th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Bench of this Tribunal in the case of The Lodge of Universal Charity 273 EC Charitable Trust Vs. Director of Income Tax (Exemptions) (23 ITR (Trib) 25), wherein it was held as under:- "The legal character of the organization of the Club of Masons was that of mutual concern. The status as a separate identity, quite different from association of persons, was based on the principle of mutuality. If this mother body itself carried out any charitable activities, even though the activities were laudable, there would be a clash between the legal character of the mother entity and the charitable activity. When the Club of Masons itself carried out charitable activities, that defeated the principle of mutuality and the mother body would be treat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessing Officer, we direct the Assessing Officer to look into this aspect and allow the deduction to the assessee in accordance with law. 9. With regard to the addition made towards common good fund, we find from the assessment order that the assessee introduced in the liability side of the balance sheet an amount of Rs. 21,21,488/- and Rs. 18,22,720/- as a common good fund and during the assessment years 2000-01 and 2003-04 respectively. The assessee has not produced any details for the said amounts said to have been received from its members and the assessee has not filed any details correlating the amounts with the names of the members etc., from whom the said fund was received by the assessee, except furnishing xerox copy of a ledger....