2004 (12) TMI 81

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....lity? 2. Whether, the Tribunal was justified in ignoring that the income of the assessee-association of persons was assessable as business income under section 28(iii) of the Income-tax Act, 1961 in view of the fact that the assessee-association of persons was carrying on an organised activity of arranging meetings and conferences for discussing matters of productions, accounts, taxation, etc.?" While Reference No. 247 of 1987 relates to the assessment years 1976-77 to 1978-79, Reference No. 248 of 1987 relates to the assessment years 1979-80 and 1980-81. Briefly stated the facts giving rise to the present references are that the respondent-assessee, M/s. J.K. Organisation Ltd., Kamla Town, Kanpur, hereinafter referred to as the organisa....

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....which the members of the association are or may be concerned. (x) To establish a fund or funds for the purpose of- (a) Legal assistance. (b) All activities undertaken for furthering all or any of its objects. (c) Payment of remuneration to technical or legal experts, secretaries and staff. (xiii) To draw, accept, endorse, discount or otherwise deal with cheques, hundis, bills of exchange and other negotiable instruments and to open and operate account or accounts with any firm or firms, bank or banks in connection with the business of the association. (xiv) To invest the moneys not immediately required for the purposes of its administration. (xv) To borrow or raise any moneys required for the purposes of the association." Rule 9 of ....

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....ation have been satisfied, the balance of the funds of the association representing accumulated subscriptions and interest of any other assets of the association shall be distributed amongst the members of the association as far as possible upon the basis of the scale upon which such members are contributing to the association at the time of its dissolution. Rule 37 prescribes the procedure for the amendment of the rules. The organisation pleaded that its income could not be assessed on the ground of mutuality. The Commissioner of Income-tax (Appeals) did not accept the plea. However, the Tribunal after considering the rules and regulations of the organisation has upheld the claim. We have heard Sri Shambhu Chopra, learned standing counse....

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....ich had quoted with approval the three conditions stipulated by the Judicial Committee in the case of English and Scottish Joint Co-operative Wholesale Society Ltd. v. Commissioner of Agricultural Income-tax [1948] 16 ITR 270 (PC), which establishes the doctrine of mutuality. They are as follows: "'(1) the identity of the contributors to the fund and the recipients from the fund, (2) the treatment of the company, though incorporated as a mere entity for the convenience of the members and policy-holders, in other words, as an instrument obedient to their mandate, and (3) the impossibility that contributors should derive profit from contributions made by themselves to a fund which could only be expended or returned to themselves'." The apex....