TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 342
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.... under section 11 & 12 of the Act. That an addition of Rs. 97,235/- was made by the then AO in the status of AOP as the Association was not registered under section 11 & 12 of the Act. 2.3 That the Assessee aggrieved by the addition preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dt. 06/07/2018 dismissed the appeal of the assessee. 2.4 Aggrieved with the order of the Ld. CIT(A) the assessee filed an appeal before this Tribunal. This Tribunal vide order dt. 28/02/2019 in Appeal No. ITA No. 1185/Chd/2018 set aside the order of Ld. CIT(A) in para 4.1 has held as under: 4.1 Reliance was placed upon decision of the Hon'ble Supreme Court in the case of Chelmsford Club vs. CIT 243 ITR 89. It has also been argued that the assessee had not indulged in any trade or business and was merely organizing activities confined to its members. Accordingly, in the light of the submissions of the parties before the Bench and in the interests of justice, the impugned order is set aside back to the file of the A.O with a direction to first bring out the correct and true facts as noticed by the tax authorities and thereafter to proceed to decide the issue also consi....
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....ncome Tax as it is clubbed by the mutual benefit of the members of the association and on account of mutuality which is exemption from Income tax". 2.8 The assessee during the course of the assessment proceedings relied upon following judgements: 1. Chelmsford Club vs CIT 243 ITR 89 2. CIT vs Bankipur Club Ltd (1197)226ITR 97(SC) 3. Delhi Gymkhana Club Ltd vs DCIT, ITAT Delhi "H" Bench 39 DTR (Del) Trib) 48 2.9 The assessee has further submitted that since inception of association, the association has claimed surplus, if any, as exempt on the basis of principle of mutuality. The association is in existence for the common purpose which is mutually beneficial to its members and it governed by the principle of mutuality. 2.10 The order of Assessment of Ld. AO bears No: ITBA/Com/F/17/2019-20/ 1023537308(1) dt. 31/12/2019 in which it is observed as under: (i) I have gone through the reply of the assessee, the assessee has earned interest income to the tune of Rs. 97,235/- The assessee has earned surplus from annual subscription from the members of association and entrance fee from the members and bank interest. The assessee society is not reg....
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.... of mutuality', consequently, violating the one to one identity between the contributors and participators. Also, in the instant case, the surplus funds were not used for any specific service, infrastructure, and maintenance or for any other direct benefit for the member of the club. These were taken out of mutuality when the member banks placed the same at the disposal of third parties, thus, Initiating an independent contract between the bank and the clients of the bank, a third party, not privy to the mutuality. This contract lacked the degree of proximity between the club and its member, which may in a distant and indirect way benefit the club. Further before the funds returned to the club, they were expended on non-members i.e. the clients of the bank. This loaning out of funds of the club, by banks to outsiders for commercial reasons, snapped the link of mutuality. Thus, none of the conditions of mutuality were satisfied. (Para 26, 27 & 28) Moreover the assessee was already availing the benefit of the doctrine of mutuality in respect of the surplus amount received as contributions or price for some of the facilities avalled by its members, before it was deposi....
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....aised following grounds of appeal against impugned order which are as follows: 1. That the order dated 30.03.2024, under section 250 of the Income Tax Act, 1961 passed by the Ld. Addl/JCIT (Appeals)-9, Mumbai in Appeal No. ITBA/APL/250/2023-24/1063667481 (1) is contrary to law and facts of the case. 2. That in the facts and circumstances of the case, the Ld. AddI/JCIT (Appeals)-9, Mumbai gravelly erred in not giving the reasonable opportunity of being heard to the appellant and decided the appeal exparte. 3. (a) That in the facts and circumstances of the case, the Ld. AddI/JCIT (Appeals)-9, Mumbai gravelly erred in upholding the addition of Rs. 97,235/- made by the Id. Assessing Officer on account of interest on bank deposits. (b). Without prejudice to the above, income assessed by the Id. Assessing Officer of Rs. 97,235/- was much less than the threshold limit of Rs. 1,60,000/- for the income to be taxable in the case of an association of person. 4. That in the facts and circumstances of the case, the Ld. AddI/JCIT (Appeals)-9, Mumbai gravelly erred in deciding the issue without considering the facts and history of the case and the orde....
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....d upon the orders of lower authorities. 4. Observations, Findings & Conclusions 4.1 We now examine the legality, validity and proprietary of the impugned order basis records of the case. 4.2 We are of the considered opinion basis principle of mutuality of interest interse between association and its members that subscription amount which assessee receives is in the form of subscription fee from its members and so also from the new members who join fresh. There is thus a common kitty of funds available which is utilised by association for welfare of its members who have collective object and aim i.e. to promote and protect industries of Chandigarh which is a small union territory. To elevate the problems faced by Industries in Chandigarh. The object and purpose is indeed laudable and it is for mutual benefit of members of association. In so far as this corpus of fund mainly consisting of subscription from members no doubt it is for mutual benefit as there is a mutuality of interest. The corpus amount is not spent to earn income and profit. But we notice that in the year under consideration excess fund must have come into its kitty or must have been carried forwards from ear....