CHELMSFORD CLUB vs. COMMISSIONER OF INCOME TAX, DELHI

C.A. No.-005364-005365 - 1995Supreme Court02 March 20007 pages
For Petitioner: DEVENDRA SINGHFor Respondent: RR-EX-PARTE
AI SummaryAllowed

What did the Supreme Court hold?

The Supreme Court held that the principle of mutuality applies to the income from the property of the club, including its annual letting value. Therefore, such income is not taxable under the Income Tax Act.

What were the facts?

The assessee, Chelmsford Club, a company registered under the Companies Act, provided recreational facilities exclusively to its members on a no-profit-no-loss basis. The dispute concerned the taxability of the annual letting value of the club building.

What were the issues?

Whether the annual letting value of a club building is assessable to income tax, and if the principle of mutuality applies to property income of a club.

Which sections of the Income-tax Act were involved?

Section 22

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Cause title — parties, addresses and appearances
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7 PETITIONER: M/S. CHELMSFORD CLUB Vs. RESPONDENT: COMMISSIONER OF INCOME-TAX, DELHI DATE OF JUDGMENT: 02/03/2000 BENCH: D.P.Wadhwa, N.S.Hegde

JUDGMENT: SANTOSH HEGDE, J.

The following two questions were referred to the High Court of Delhi by the Income Tax Appellate Tribunal (for short the tribunal) in respect of assessment years 1977-78 and 1978- 79 : 1. Whether on the facts and in the circumstances of the case, the Honble Tribunal was legally correct in holding that the annual letting value of the Club building is not assessable to income-tax under the head Income from property ? 2. Whether on the facts and in the circumstances of the case, the Honble Tribunal was legally correct in holding that the principle of mutuality applies to the property income and accordingly it is not taxable income of the assessee ? The High Court relying on Section 22 of the Income Tax Act, 1961 (hereinafter referred to as the Act) and following the judgment of Allahabad High Court in the case of C.I.T., U.P. v. Wheeler Club Limited {(1963) 49 ITR 52} and s

The order continues below.

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