TaxTMI 
TaxTMI 
2023 (7) TMI 466
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....nd in facts, are involved in all the three appeals. The assessment years involved are 2008-09 to 2012-13 concerning the appellant/assessee, the Saturday Club Limited. Saturday Club is a recreational club. In each of the assessment years, the appellant/assessee received on account of rent sums of money from Reliance Industries Limited for occupation of a portion of the club premises. In the assessment year 2008-09 this receipt was Rs.78,49,798/-. It may have been a little different in the other assessment years. Now, Reliance Industries Limited is also a corporate member of the assessee club. The substantial question of law, which arises, is whether this sum received by the appellant/assessee on account of rent is taxable under the hea....
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....resaid question in favour of the revenue by holding that interest earned from deposits with banks who are members of the club would not be exempt on the principle of mutuality because the tests for application of the principle of mutuality were not satisfied. The Apex Court held that no sooner any amount is invested by an association claiming to be mutual concern in a fixed deposit with the banks the complete identity between the contributors and the participants in the funds or the amounts invested in member banks is ruptured. It held that till the surplus funds were generated and was used only amongst the members/contributors, the complete identity between contributors and participants continued. However the moment the funds are invested ....
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....t the company makes profit for and on behalf of the members, it has got a distinct and separate personality from the members in the eye of law, but the members are using the company and the corporate personality for obtaining goods and services. The surplus that the company gets is held on behalf of the members and for future use of the members. The members may get it back either in the shape of reduction of price or extension of facilities that are to be provided to the members in future. The important point is that the company is not acting as a business concern or a trading company on its own for the purpose of making gain. The company is being used by the members for the purpose of obtaining goods and services as their agent. A company ....
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....) 7 SCC 678. This principle of law which was canvassed by Mr. Murarka and to be deduced from these cases is this : A club is an association of persons for certain objects and purposes. It may or may not be a body corporate but it has a distinct identity of its own. This identity is akin to that of a body corporate. It is different from that of his members. However, there is a difference between the legal identity of a body corporate and that of a recreational club in certain matters. It is in these matters that the principle of mutuality is involved. The members of the club are seen both as contributors and participators. The club and its members are seen as one person. Usually a member has to pay to avail of the services and facilities ....
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....r and the club were to be treated as one entity and that any benefit enjoyed by Reliance was to be treated as benefit enjoyed by all the members of the club. To this both learned counsel appearing for the revenue contended that the space provided by the club was in the exclusive occupation of Reliance. It was not being used as a facility of the club. It was an independent transaction between the club and Reliance. Although Reliance may be a corporate member it had entered into a lease agreement with the club not in the capacity of a corporate member but an independent body. Now, these are questions of facts. These facts had to be established threadbare before any opinion on the substantial question of law could be expressed. On examin....