TaxTMI 
TaxTMI 
2006 (2) TMI 80
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....the assessee from non-members was not taxable?" The Trivandrum Club, the assessee, is a private club situated at Trivandrum. The bye-laws of the club show that it was formed mainly to provide entertainment to its members by providing accommodation, library, reading room, etc., and by encouraging sports and games among members. Return of income for the year 1988-89 was filed by the assessee along with a covering letter from M/s. Suri and Co., Chartered Accountants, Trivandrum, showing the details of income, but at the same time pointing out that it is not an assessable entity. The assessee's representative had taken up the stand that the assessee is governed by the "doctrine of mutuality" and therefore its income is not taxable. The asses....
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....examine as to whether CIT v. Trivandmm Club [1989] 177 ITR 550 (Ker) would apply so far as the assessment year 1988-89 is concerned. In Trivandrum Club's case [1989] 177 ITR 550, this court was dealing with the assessment year 1974-75. In that year the assessee had claimed exemption of the income on the doctrine of mutuality. The Income-tax Officer rejected the plea and held that the rules and bye-laws of the club enabled it to allow non-members to enjoy the facilities of the club. The Commissioner of Income-tax (Appeals), however, noticed that the club had not allowed any person other than a member to occupy the club during the year ending December 31, 1973, and so the facilities available in the club were used exclusively by the members. ....
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....e purpose of entertainment by themselves and in the course of that activity they wanted to earn some income by letting out the marriage hall on hire and also for various activities. Real contributors of income by availing of the facilities of the marriage hall are not the members but non-members. In order to enable them to avail of the facilities of the club, non-members are to be given temporary membership only for the purpose of availing of this benefit. The application of doctrine of mutuality was considered by the apex court in CIT v. Bankipur Club Ltd. [1997] 226 ITR 97. The court held in order to apply the doctrine of mutuality there must be complete identity between the contributors and the participators. The court quoted with app....
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....tribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to those persons cannot be regarded in any sense as profit. There must be complete identity between the contributors and the participators. If these requirements are fulfilled it is immaterial what particular form the association takes. Trading between persons associating together in this way does not give rise to profits which are chargeable to tax. Where the trade or activity is mutual, the fact that, as regards certain activities, certain members only of the association take advantage of the facilities which it offers, does not affect the mutuality of the enterprise. The l....