TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 250
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....006-07 for example. There is no dispute that the latter contributions already stand assessed. The issue however remains to the extent of former head only. The assessee claimed these sums as exempt from being taxed since it had received the relevant contributions from members for their collective benefits without any intention of making profits. The Assessing Officer took notice of its section 12A non-registration. He observed that the impugned mutuality was only an afterthought one anticipating rejection of its charitable organization aspect. 3. The assessee preferred appeal. The CIT(A) rejected assessee's contentions in the lower appellate common order inter alia by holding that it had been adopting different stand throughout, it did not disclose true and correct facts till 2010-11 scrutiny, assessee was accused for having raised claim of section 11 exemption without section 12A registration after its conversion to a section 25 companies, its objects did not provide for the mutuality principle application, the assessee's income had been derived from mainly carrying out property shows in India and abroad in the nature of trade on commercial lines. The CIT(A)'s views is that this m....
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....n members. We disagree with this argument. The fact remains that it is the overall nature of the contribution that matters for applying mutuality concept which acts as an exception to the general principles of the assessee's income. Therefore, we observe that the assessee's contribution do not satisfy the abovestated preposition of complete identity between contributors and participators since the non members identity is nowhere in picture after they have made the impugned contribution. 10. We come to the second feature of the mutuality concept as to whether action of the participators and contributors is in furtherance to mandate of the association or not. Their lordships observe that the same can be determined from the memorandum of articles of associations, rules of membership and rules of the organisation etc. The assessee's objects stand reproduced hereinabove. Clause "J" thereof stipulates that the assessee may collect and accept contributions from members as and when required as determined by the association and to make and create therefrom a fund for office maintenance, salary to employees, provide essential services to members and raise a sinking fund for eme....
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....s club received amounts towards charges for privileges and provided to members as per its rules. There was no element commercial embedded therein. Their lordships held that surplus received arising from the abovesaid facilities were exempt on mutuality concept. The same has been held as not applicable in the facts of the instant case as indicated in the preceding paragraphs. The next case law is that of Chelmsford Club v/s. CIT (2000) 243 ITR 89. This assessee-club owned a club house providing recreational and refreshment facilities exclusively to its members on no profit no loss basis as against facts of the instant case. The same is accordingly distinguished. The third judgement quoted before us is that of (2015) 59 taxmann.com 104 (Guj.) CIT vs. Prabhukunj Cooperative Housing Society Ltd., This society received contribution from outgoing members as premium on sale of plots. The hon'ble jurisdictional high court observed that since this amount was to be utilized for benefits of the members of the society and not taxable income. We are of the view that there is no similarity of facts of issue involved between this case law and the one in hand. We hold the same as not applicabl....
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....ects and also received contributions from members and non members. We accordingly conclude that the assessee's arguments claiming its v receipts from members as covered by mutuality concept have to be rejected. We order accordingly. The assessee's corresponding grounds raised in all six appeals are declined. The CIT(A)'s orders under challenge are confirmed." 5. We have heard both the parties. Case files perused. Learned representatives appearing at both parties behest strongly reiterate their respective cases for and against the maintainability of the instant applications. Shri Soparkar vehemently argues that these miscellaneous applications are very much maintainable since our order suffers from mistake apparent on the face of record as per case law of (2008) 305 ITR 227 (SC) CIT vs. Saurashtra Kutch Stock Exchange holding therein that rectification of an order flows from the fundamental principle putting justice above all technicalities. Shri Rajdeep Singh is learned Departmental Representative appearing for the Revenue. He invites our attention to the order sought to be rectified and contends that the same has taken into account all the material facts as well as c....
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.... that our order under challenge does not deal with the above stated third aspect of mutuality. 8. We stay back on the relevant portion of our order reproduced hereinabove. Our view therein is that the moment assessee's members contributions combines with the non-members contributions, proposition of complete identity between contributors and participators is lost. We notice that our finding goes contrary to hon'ble jurisdictional high court's decision in case of Junagarh Gymkhana (2015) 56 taxmann.com 281 (Guj) holding therein that non-mutual transactions in dispute involving non-members do not destroy the principle of mutuality. A learned co-ordinate bench in the said case had not disputed application of mutuality qua various sums received from these club members. Our order in para 12 did not notice this fine distinction whilst dealing with assessee's members contributions only. We conclude qua the former aspect that not only an order not considering an hon'ble jurisdictional high court suffers from an error apparent on the face of record, but also an order in not applying the correct ratio stands on the same footing. We accept assessee's argument qua our findings on the first es....