2013 (3) TMI 695

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....) erred in deleting the addition of Rs. 54,07,484/- made by holding that the contribution received from members and invested in Mutual Funds is not the object of the Association, without appreciating the fact that there is no official gazette which covers the professional Air Cargo Agent as specified in section 10(23A) and further provisions of section 44A of the I.T. Act are not applicable in assessee's case as the assessee is having positive income." 3. Facts necessary for the purpose of appreciating the issue on hand are stated in brief. The assessee is an association of Air Cargo Agents in India. In the year under consideration it received subscription in three forms, i.e. annual subscription, members' annual convention and members' ....

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....oss' basis. It received membership subscription from its members every year apart from specific contributions from members for special occasions such as training programmes, etc. Since all these contributions are for the benefit of the members wherein the contributors and participants are the same class of persons, i.e. members of the assessee company, principles of mutuality is applicable in which event the contributions received from the members are covered by the principles of mutuality. Reliance was placed upon several decisions in support of its contention that the learned AO had wrongly appreciated the issue; the issue involved herein was with regard to members' subscription and not regarding the income earned on the investments made ....

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....nking operations and to that extent there is no principles of mutuality. The learned D.R. submitted that in the light of the aforecited decision the assessee is not entitled to the benefit of mutuality. 8. On the other hand, the learned counsel for the assessee submitted that the facts of the aforecited decision are distinguishable. That was a case where the assessee was an AOP. The concerned banks are all corporate members of the club. The interest earned from the fixed deposits kept with non-member bank was offered for taxation. Under these circumstances the court had to examine the case of the assessee in relation to the interest earned on fixed deposit with the member banks on the principles of three cumulative conditions, namely,....

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.... the funds with a bank or a financial institution, the assessee assumes the character of a customer of the bank or institution and the relationship with that is engendered is that between a banker and its customer. The fact that the funds which are invested have their source in the contribution by the members of the assessee cannot be dispositive of the nature of the receipt obtained by the assessee on account of the interest payments on the deposits made. The learned counsel for the assessee thus strongly relied upon the order passed by the learned CIT(A). 10. We have carefully considered the rival submissions and perused the record. As correctly pointed out by the learned counsel for the assessee we are concerned here with the contribu....