M/S. BANGALORE CLUB vs. COMMISSIONER OF INCOME TAX

SLP(C) No.-014470-014470 - 2006Supreme Court14 January 201337 pages
For Respondent: B. V. BALARAM DAS
AI SummaryDismissed

What did the Supreme Court hold?

The Supreme Court held that the interest earned from fixed deposits with member banks was not covered by the doctrine of mutuality. The Court found that the transactions had a commercial element, akin to a banker-customer relationship, and were therefore taxable.

What were the facts?

The Bangalore Club, an Association of Persons, claimed exemption from income tax on interest earned from fixed deposits with corporate member banks, based on the doctrine of mutuality. The Assessing Officer rejected this claim, but the CIT(A) and the Tribunal ruled in favor of the assessee.

What were the issues?

Whether interest earned on fixed deposits with member banks is exempt from tax under the doctrine of mutuality. Whether the relationship between the club and member banks in this context is mutual or commercial.

Which sections of the Income-tax Act were involved?

Section 2(24)

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Cause title — parties, addresses and appearances
Page 1 JUDGMENT REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 124 OF 2007 M/S. BANGALORE CLUB — APPELLANT VERSUS COMMISSIONER OF INCOME TAX & ANR. — RESPONDENTS WITH CIVIL APPEAL NO. 125 OF 2007, CIVIL APPEAL NO. 272 OF 2013 (Arising out of S.L.P.(Civil) No. 16863 of 2010), CIVIL APPEAL NO.273 OF 2013 (Arising out of S.L.P.(Civil) No. 16880 of 2010), CIVIL APPEAL NO.274 OF 2013 (Arising out of S.L.P.(Civil) No. 16881 of 2010), CIVIL APPEAL NO.275 OF 2013 (Arising out of S.L.P.(Civil) No. 16882 of 2010) CIVIL APPEAL NOS.276-277 OF 2013 (Arising out of S.L.P.(Civil) Nos. 16883-16884 of 2010) AND CIVIL APPEAL NO.278 OF 2013 (Arising out of S.L.P.(Civil) No. 16879 of 2010) 1 Page 2

JUDGMENT J U D G M E N T D.K. JAIN, J.

1.

Leave granted in Special Leave Petitions.

2.

This batch of appeals arises from a common judgment and order pronounced by the High Court of Karnataka, in Income Tax Appeals No. 115 of 1999 along with 70 of 2000, 3095 of 2005, 1547 of 2005, 1548 of 2005, 3091 of 2005, 3089 of 2005 along with 3093 of 2005, and 3088 of 2005. Since these appeals entail the same issue, they are being disposed of by this common j

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