TaxTMI 
TaxTMI 
2021 (2) TMI 360
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....ition/affidavit filed on 04-04-2018 attributing delay of 78 days to compilation of necessary records and other factors, we hold the impugned delay is neither intentional nor willful but for the circumstances beyond the assessee's control. The delay stands condoned. 3. The assessee's identical twin substantive grounds raised in all the instant six appeals challenge correctness of both the lower authorities' action(s) disallowance/adding interest on investments made in nationalised banks of Rs. 16,51,240/-, Rs. 15,64,689/-, Rs. 14,88,072/-, Rs. 17,73,263/-, Rs. 21,74,527/- & Rs. 22,31,150/- in all the assessment years followed by transfer fee payments from incoming and outgoing members of Rs. 5,10,000/-, Rs. 1,26,050/- and Rs. 3,94,000/- in only former three assessment years; respectively, thereby declining "mutuality" claim raised at its behest. We notice during the course of hearing that the instant twin issues are no more res integra. This tribunal's co-ordinate bench's common order dt. 26-08-2015 for AYs. 2007-08 and 2008-09 has upheld the assessee's mutuality claim regarding transfer fee and declined the very relief qua interest on investments as follows....
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....nce there is no identity between the contributors and the participators, with the contributors going out and the participators coming into the club. However, the judicial decisions in this regard held that the amounts collected/paid voluntarily or not would not make any difference to the principle of mutuality, as long as the same is governed by the bye-laws of the society, and the arrangements made under the bye-laws constitute a contract between the society and the members, which is voluntarily entered into and voluntarily conducted as matter of convenience for running the society. Hence, the transfer fee collected by the society, from the members on transfer of property, as per the bye-laws may not change the principle of mutuality. The other aspect referred by the Assessing Officer is class of Members, such as contributors and participators and the members as well as Associate members. As per the Assessing Officer the outgoing member, who sells the property pays the fee, but does not participate in the profits as a contributor, whereas the incoming member after purchase of plot participates in profits, as such there is no principle of mutuality. However, this issue was addresse....
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....ples of mutuality'. Such amounts were quantified at Rs. 19,02,097/- for A.Y. 2007-08 and Rs. 19,85,909/- for A.Y. 2008-09. AO relying on the decision of jurisdictional High Court in the case of Secunderabad Club [340 ITR 121] did not allow assessee's claim. Assessee tried to distinguish the status and activities of the said club from that of a housing society and argued that the decision of Secunderabad Club [340 ITR 121] (supra) does not apply to assessee's facts. Ld. CIT(A) however, based on the decision of jurisdictional High Court held that interest amount received from the banks on surplus funds does not come into the purview of 'Principles of mutuality' and therefore, the addition made by AO was upheld. Assessee is aggrieved and raised as many as 10 grounds on the issue. The grounds are more or less in the form of written submissions on the issue and the only issue being agitated is whether interest received from bank deposits/balances is covered by 'Principles of mutuality' or not? 5. After considering the rival contentions and detailed submissions made by the Ld. Counsel on the issue, we are of the opinion that the order of CIT(A) is to be uphe....
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....TR 551 (SC). As we have considered these cases in the light of the law laid down by the Supreme Court in these three judgments, we do not feel compelled to apply the ratio in Natraj Finance Corporation (1988) 169 ITR 732 (ap). We, however, hasten to add that, if an association of person receives contribution from its own members and earns interest income by lending the money to them from out of the contribution, the principle of mutuality may apply rendering such income non-taxable. As unregistered Association, like the Secunderabad club, parking their surplus funds with corporate member banks to earn interest is altogether different from an association of persons lending money only to its members. Further, as held by the Supreme Court in Bankipur Club Ltd. (1997) 226 ITR 97 (sc), "A host of factors need to be considered to arrive at a conclusion as to at what point does the relationship of mutuality end, and that of trading begin". Furthermore, the nature of the transaction between the assessee and the bank/banks would disqualify application of the principle of mutuality. We are, therefore, of the considered opinion that the impugned orders of the Income Tax Appellate Tribunal are....