Chelmsford Club v. CIT

243 ITR 89Supreme Court of India2000#1113 most cited

What is Chelmsford Club v. CIT authority for?

Income arising from mutual activities carried out by clubs or associations solely among their members is not assessable for income tax, as it does not constitute income from a trade or business due to the principle of mutuality.

100

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2009 to 2026.

Also referred to as

Chelmsford Club v. CIT · 243 ITR 89 · doctrine of mutuality · mutuality principle · clubs and associations income · non-taxable income · Section 11 · Section 263 · Section 143(3)

Sections most often in play

Section 143(3)Section 143(2)Section 142(1)Section 144BSection 263Section 57(iii)Section 11Section 12
Read the full judgment

Issues it is cited on

doctrine of mutualitysection 59(2)mutuality principlesection 2(n)section 10(20)section 38section 59lack of enquirysection 80p(2)(a)national faceless assessment centremalabar industrialsection 57

Judgments citing Chelmsford Club v. CIT

M/S Top Star Group Housing Society, Jaipur vs. Income Tax Officer, Ward-4-2, Jaipur

ITA 678/JPR/2019[2009-10]Status: DisposedITAT Jaipur28 Jun 2021AY 2009-10
For Appellant: Ms. Pallavi Joshi (Adv.)For Respondent: Smt. Runi Pal (Addl.CIT)
Section 139Section 142(1)Section 143(2)Section 143(3)Section 147Section 148Section 44ASection 68

…d excluded from the principle of mutuality." 3. CIT vs Prabhukunj Co-operative Housing Society Ltd. (2015) 377 ITR 13 (Guj) 4. CIT vs. Adarsh Co-operative Housing Society Ltd (1995) 213 ITR 677 (Guj) 5. Chelmsford Club vs. CIT (2000) 159 CTR (SC) 235 : (2000) 243 ITR 89 (SC) 6. CIT vs. Bankipur Club Ltd. (1997) 140 CTR (SC) 102 : (1997) 226 ITR 97 (SC) 7. CIT vs. Royal Western India Turf Club Ltd. (1953) 24 ITR 551 (SC) 8. Delhi Stock Exchange Association Ltd. vs. CIT (1961) 41 ITR 495 (SC) 9. CIT vs Talangang Co-operative Housing Society Ltd. (2010) 44 DTR (Del) 58 in which it was held that: the bye-laws clearly…

M/S Darshan Singh, Jaipur vs. Income Tax Officer, Ward-4-1, Jaipur

ITA 677/JPR/2019[2009-10]Status: DisposedITAT Jaipur28 Jun 2021AY 2009-10
For Appellant: Ms. Pallavi Joshi (Adv.)For Respondent: Smt. Runi Pal (Addl.CIT)
Section 139Section 142(1)Section 143(2)Section 143(3)Section 147Section 148Section 44ASection 68

…d excluded from the principle of mutuality." 3. CIT vs Prabhukunj Co-operative Housing Society Ltd. (2015) 377 ITR 13 (Guj) 4. CIT vs. Adarsh Co-operative Housing Society Ltd (1995) 213 ITR 677 (Guj) 5. Chelmsford Club vs. CIT (2000) 159 CTR (SC) 235 : (2000) 243 ITR 89 (SC) 6. CIT vs. Bankipur Club Ltd. (1997) 140 CTR (SC) 102 : (1997) 226 ITR 97 (SC) 7. CIT vs. Royal Western India Turf Club Ltd. (1953) 24 ITR 551 (SC) 8. Delhi Stock Exchange Association Ltd. vs. CIT (1961) 41 ITR 495 (SC) 9. CIT vs Talangang Co-operative Housing Society Ltd. (2010) 44 DTR (Del) 58 in which it was held that: the bye-laws clearly…

Armed Forces Co-Operative Housing Society Limited, Secunderabad vs. Asst. Commissioner of Income Tax, Circle-15(1), Hyderabad

Appeals are dismissed”

ITA 648/HYD/2018[2014-15]Status: DisposedITAT Hyderabad01 Feb 2021AY 2014-15

Bench: Shri A.Mohan Alankamony & Shri S.S.Godara

For Appellant: Shri B.Prabhakar, ARFor Respondent: Shri Rohit Mujumdar, DR
Section 143(3)

…the profit from it, even if they are transactions with members, would be taxable and the principle of mutuality would have no application. 35. The decision of this court was long prior to Bankipur Club Ltd. (1997 ) 226 ITR 97 (SC) and Chelmsford Club (2000) 243 ITR 89 (SC), and no reference was made therein to Royal Western India Turf Club. (1953) 24 ITR 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 a…

The Armed Forces Officers Co-Operative Housing Society Limiyrf, Secunderabad vs. Asst. Commissioner of Income Tax, Circle-15(1), Hyderabad

Appeals are dismissed”

ITA 1017/HYD/2017[2013-14]Status: DisposedITAT Hyderabad01 Feb 2021AY 2013-14

Bench: Shri A.Mohan Alankamony & Shri S.S.Godara

For Appellant: Shri B.Prabhakar, ARFor Respondent: Shri Rohit Mujumdar, DR
Section 143(3)

…the profit from it, even if they are transactions with members, would be taxable and the principle of mutuality would have no application. 35. The decision of this court was long prior to Bankipur Club Ltd. (1997 ) 226 ITR 97 (SC) and Chelmsford Club (2000) 243 ITR 89 (SC), and no reference was made therein to Royal Western India Turf Club. (1953) 24 ITR 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 a…

Armed Forces Co-Operative Housing Society Ltd., Secunderabad vs. Income Tax Officer, Ward-10(3)., Hyderabad

Appeals are dismissed”

ITA 1016/HYD/2017[2012-13]Status: DisposedITAT Hyderabad01 Feb 2021AY 2012-13

Bench: Shri A.Mohan Alankamony & Shri S.S.Godara

For Appellant: Shri B.Prabhakar, ARFor Respondent: Shri Rohit Mujumdar, DR
Section 143(3)

…the profit from it, even if they are transactions with members, would be taxable and the principle of mutuality would have no application. 35. The decision of this court was long prior to Bankipur Club Ltd. (1997 ) 226 ITR 97 (SC) and Chelmsford Club (2000) 243 ITR 89 (SC), and no reference was made therein to Royal Western India Turf Club. (1953) 24 ITR 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 a…

The Armed Forces Officers Co-Operative Housing Society Limited, Secunderabad vs. Income Tax Officer, Ward-10(3), Hyderabad

Appeals are dismissed”

ITA 1015/HYD/2017[2011-12]Status: DisposedITAT Hyderabad01 Feb 2021AY 2011-12

Bench: Shri A.Mohan Alankamony & Shri S.S.Godara

For Appellant: Shri B.Prabhakar, ARFor Respondent: Shri Rohit Mujumdar, DR
Section 143(3)

…the profit from it, even if they are transactions with members, would be taxable and the principle of mutuality would have no application. 35. The decision of this court was long prior to Bankipur Club Ltd. (1997 ) 226 ITR 97 (SC) and Chelmsford Club (2000) 243 ITR 89 (SC), and no reference was made therein to Royal Western India Turf Club. (1953) 24 ITR 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 a…

The Armed Forces Officers Co-Operative Housing Society Limited, Secunderabad vs. Income Tax Officer, Ward-10(3), Hyderabad

Appeals are dismissed”

ITA 1014/HYD/2017[2010-11]Status: DisposedITAT Hyderabad01 Feb 2021AY 2010-11

Bench: Shri A.Mohan Alankamony & Shri S.S.Godara

For Appellant: Shri B.Prabhakar, ARFor Respondent: Shri Rohit Mujumdar, DR
Section 143(3)

…the profit from it, even if they are transactions with members, would be taxable and the principle of mutuality would have no application. 35. The decision of this court was long prior to Bankipur Club Ltd. (1997 ) 226 ITR 97 (SC) and Chelmsford Club (2000) 243 ITR 89 (SC), and no reference was made therein to Royal Western India Turf Club. (1953) 24 ITR 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 a…

The Armed Forces Officers Co-Operative Housing Society Limited, Secunderabad vs. Income Tax Officer, Ward-10(3), Hyderabad

Appeals are dismissed”

ITA 1013/HYD/2017[2009-10]Status: DisposedITAT Hyderabad01 Feb 2021AY 2009-10

Bench: Shri A.Mohan Alankamony & Shri S.S.Godara

For Appellant: Shri B.Prabhakar, ARFor Respondent: Shri Rohit Mujumdar, DR
Section 143(3)

…the profit from it, even if they are transactions with members, would be taxable and the principle of mutuality would have no application. 35. The decision of this court was long prior to Bankipur Club Ltd. (1997 ) 226 ITR 97 (SC) and Chelmsford Club (2000) 243 ITR 89 (SC), and no reference was made therein to Royal Western India Turf Club. (1953) 24 ITR 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 a…

M/S. Vasavi Credit Co-Operative Society Limited, Bangalore vs. Income Tax Officer (TDS), Ward- 3(4), Bangalore

ITA 413/BANG/2020[2016-17]Status: DisposedITAT Bangalore18 Jan 2021AY 2016-17

Bench: Shri B. R. Baskaran & Smt. Beena Pillai

For Appellant: Shri C. Sandeep, A.RFor Respondent: Shri Priyadarshi Mishra, D.R
Section 194A(3)Section 194A(3)(v)Section 201Section 201(1)

…Ld. CIT(A) held that the principles of mutuality will not apply to associate members. With regard to the principles of mutuality, the Ld CIT(A) placed his reliance on the decision rendered in the case of CIT vs. Bankipur Club (226 ITR 97) and Chelmsford Club (243 ITR 89). Accordingly, he held that the associate members are distinctly different and they cannot be equated with regular members. Accordingly, the Ld CIT(A) held that the A.O. was justified in raising the impugned demands. Aggrieved, the assessee has filed these appeals before us, i.e., one against the demand raised u/s 201(1) and another on the interes…

M/S. Vasavi Credit Co-Operative Society Limited, Bangalore vs. Income Tax Officer (TDS), Ward- 3(4), Bangalore

ITA 412/BANG/2020[2016-17]Status: DisposedITAT Bangalore18 Jan 2021AY 2016-17

Bench: Shri B. R. Baskaran & Smt. Beena Pillai

For Appellant: Shri C. Sandeep, A.RFor Respondent: Shri Priyadarshi Mishra, D.R
Section 194A(3)Section 194A(3)(v)Section 201Section 201(1)

…Ld. CIT(A) held that the principles of mutuality will not apply to associate members. With regard to the principles of mutuality, the Ld CIT(A) placed his reliance on the decision rendered in the case of CIT vs. Bankipur Club (226 ITR 97) and Chelmsford Club (243 ITR 89). Accordingly, he held that the associate members are distinctly different and they cannot be equated with regular members. Accordingly, the Ld CIT(A) held that the A.O. was justified in raising the impugned demands. Aggrieved, the assessee has filed these appeals before us, i.e., one against the demand raised u/s 201(1) and another on the interes…

M/S Mag India Industrial Automation Systems Pvt Ltd, Bangalore vs. The Principal Commissioner of Income Tax Bangalore-4, Bangalore

In the result, the appeal filed by the assessee is dismissed

ITA 2218/BANG/2018[2014-15]Status: DisposedITAT Bangalore20 Oct 2020AY 2014-15

Bench: Shri B. R. Baskaran & Smt. Beena Pillaiassessmentyear: 2014-15

For Appellant: Smt. K. Soumya, A.RFor Respondent: Shri Muzaffar Hussain, D.R
Section 143(3)Section 263

…High Court, in the case of Grasim Industries Ltd. V CIT (321 ITR 92) by taking into account the law laid down by the Hon'ble Supreme Court in the case of M/s. Mag India Industrial Automation Systems Pvt. Ltd., Bengaluru Page 3 of 5 Malabar Industrial Co Ltd (243 ITR 80). The relevant observations made by Hon’ble Bombay High Court are extracted below: “Section 263 of the Income-tax Act, 1961 empowers the Commissioner to call for and examine the record of any proceedings under the Act and, if he considers that any order passed therein, by the Assessing Officer is erroneous in so far as it is prejudicial to the int…

The DIT ( Exemption), Kochi vs. M/S.Indian Medical Association Cochin Branch, Cochin

In the result, both the appeals of the Revenue are dismissed

ITA 507/COCH/2019[2010-11]Status: DisposedITAT Cochin27 Nov 2019AY 2010-11

Bench: S/Shri Chandra Poojari, Am & George George K., Jm

Section 11Section 12ASection 143(3)Section 2(15)

…bviously it needs to be treated as Corpus fund. On the Principal of Mutuality, since the amount had come from the members only, it cannot be treated as income of the assessee in view of the decision of the Supreme court in the case of Chelmsford Club vs. CIT 243 ITR 80. In view of the above, addition of Rs.9,94,82,230/- was deleted. 10. Against this, the Revenue is in appeal before us. The Ld. AR relied on the order of the CIT(A). 11. We have heard the rival submissions and perused the material on record. Admittedly, in this case, the assessee had collected an amount of Rs.9,94,82,230/- towards construction…

The ADIT ( Exemption), Kochi vs. M/S.Indian Medical Association Cochin Branch, Cochin

In the result, both the appeals of the Revenue are dismissed

ITA 327/COCH/2019[2010-11]Status: DisposedITAT Cochin27 Nov 2019AY 2010-11

Bench: S/Shri Chandra Poojari, Am & George George K., Jm

Section 11Section 12ASection 143(3)Section 2(15)

…bviously it needs to be treated as Corpus fund. On the Principal of Mutuality, since the amount had come from the members only, it cannot be treated as income of the assessee in view of the decision of the Supreme court in the case of Chelmsford Club vs. CIT 243 ITR 80. In view of the above, addition of Rs.9,94,82,230/- was deleted. 10. Against this, the Revenue is in appeal before us. The Ld. AR relied on the order of the CIT(A). 11. We have heard the rival submissions and perused the material on record. Admittedly, in this case, the assessee had collected an amount of Rs.9,94,82,230/- towards construction…

Smt. Malini Subramanian, Mysore vs. Pr. CIT, Mysore

In the result, the appeal filed by the assessee is dismissed

ITA 935/BANG/2016[2011-12]Status: DisposedITAT Bangalore27 Sept 2019AY 2011-12

Bench: Shri N.V Vasudevan, Vice Presidnet & Shri B.R Baskaranassessment Year : 2011-12

For Appellant: Shri Shreehari Kutsa, C.AFor Respondent: Ms. Neera Malhotra, CIT (DR)
Section 143(3)Section 263Section 43B

…ted under section 263 of the Act was considered by Hon'ble Bombay High Court, in the case of Grasim Industries Ltd. V CIT (321 ITR 92) by taking into account the law laid down by the Hon'ble Supreme Court in the case of Page 4 of 7 Malabar Industrial Co Ltd (243 ITR 80). The relevant observations made by Hon’ble Bombay High Court are extracted below: “Section 263 of the Income-tax Act, 1961 empowers the Commissioner to call for and examine the record of any proceedings under the Act and, if he considers that any order passed therein, by the Assessing Officer is erroneous in so far as it is prejudicial to the int…

DDIT (E), New Delhi vs. National Association of Software and Service Companies, New Delhi

In the result, appeal of the revenue is dismissed

ITA 6521/DEL/2013[2009-10]Status: DisposedITAT Delhi20 Sept 2019AY 2009-10

Bench: Shri Prashant Maharishi & Shri K. Narasimha Chary

For Appellant: Shri Aajy Vohra, Sr. AdvocateFor Respondent: Ms Naina Soin Kapil, Sr.DR
Section 11Section 12ASection 2(15)Section 28

…ights are relevant while claiming exemption under the principle of mutuality. They have placed reliance on the decisions reported in (i) CIT vs Merchant Navy Club, 96 ITR 261 (AP); (ii) CIT vs Bankipur Club Ltd., 226 ITR 97 (SC); (iii) Chelmsford Club vs CIT, 243 ITR 89 (SC); (iv) Sports Club of Gujarat Ltd. vs CIT, 171 ITR 504 (Guj); (v) CIT vs Delhi Race Club, 196 ITR 777 (Del); (vi) Ranchi Club Ltd. vs CIT, 196 ITR 137 (Patna); and (vii) CIT vs National Sports Club of India, 230 ITR 777 (Del). 5. Learned CIT(A) considered submissions of the assessee in the light of the law settled in the decisions relied upon…

Mr.Aritro Ashish Roy, Mumbai vs. Pr.CIT(A)-24, Mumbai

In the result, appeal filed by the assesee is allowed

ITA 1791/MUM/2019[2014-15]Status: DisposedITAT Mumbai28 Aug 2019AY 2014-15

Bench: Shri G. Manjunatha & Shri Ram Lal Negiaritro Ashsish Roy Vs. Acit-24(1) Room No.604, 6Th Floor Plot No.121, Edifice 5Th Road, Khar(W) Piramal Chamber, Lalbaug, Mumbai-400 052 Parel Mumbai-400 012 Pan/Gir No.Agapr8158C Appellant) .. Respondent)

Section 143(3)Section 14ASection 263

…e facts of present case in light of provision of section 14A r.w. Rule 8D, which caused prejudice to the interest of the revenue and accordingly, by following the decision of Hon’ble Supreme Court in the case of CIT vs Malabar Industrial company Ltd. vs CIT 243 ITR 89 set aside assessment order passed by the AO and direct the AO to re-do the assessment afresh in the light of 6 Aritro Ashish Roy the discussion, after following due procedure and affording the assessee reasonable opportunity of being heard. Aggrieved by the Ld. PCIT order, the assessee is in appeal before us. 6. The Ld. AR for the assessee submi…

M/S. Iscon Megacity Members Association, Bhavnagar vs. The Income Tax Officer, (Exemp. ), Bhavnagar

In the result, the appeal of the assessee is partly allowed for statistical purposes

ITA 1290/AHD/2014[2010-11]Status: DisposedITAT Ahmedabad22 Aug 2019AY 2010-11

Bench: Shri Rajpal Yadav & Shri Amarjit Singhआयकर अपील सं./I.T.A. No.1290/Ahd/2014 ("नधा"रण वष" / Assessment Year : 2010-11)

For Appellant: Shri Tushar P.Hemani, ARFor Respondent: Shri Lalit P. Jain, Sr.DR
Section 11Section 12ASection 143(2)Section 143(3)Section 2(15)

…Vs. CIT 246 ITR 188 (Guj.) (ii) ACIT vs. Surat City Gymkhana 300 ITR 214 (SC) (iii) CIT vs. Adarsh Co-operative Housing Soc.Ltd. 213 ITR 677 (Guj.) (iv) CIT vs. Manekbaug Co-operative Housing Soc.Ltd. 208 Taxman 5644 (Guj.) (v) Chelmsford Club vs. CIT [2000] 243 ITR 89/109 Taxman 215 (SC). 5.1. I have considered the assessment order and the submissions made by the appellant. It is evident from the income & expenditure statement that the appellant has credited Rs.54,87,950/- as a maintenance fee in the income side. The maintenance fee, by no stretch of imagination can be termed as a capital receipt, as maintenan…

ACIT, Circle, Panchkula vs. M/S Panchkula Golf Club, Panchkula

Appeal are allowed

ITA 994/CHANDI/2018[2015-16]Status: DisposedITAT Chandigarh27 Jun 2019AY 2015-16

Bench: The Appeal Is Heard & Disposed Off.

For Appellant: Shri. Manoj Kumar, CAFor Respondent: Shri. Manjit Singh, CIT DR
Section 143(3)

…he management & control over the assessee club was with the State Government. The club was not assessed as mutual concern in A.Y. 2007-08 as it failed to fulfill the three tests of mutuality as laid down by the Hon'ble Supreme Court in Chelmsford Club Vs. CIT 243 ITR 89 and in CIT Vs. Bankipur Club Ltd. 226 ITR 97. The claim of the assessee as a mutual concern was also not accepted as the assessee in the income tax return has no where stated that Panchkula Golf Club is a mutual concern. The Form used to file income tax return was not applicable in this case. Further, AO noted that the sum of Rs.94,62,549/- as one…

Windsor Home Owners Welfare Association, Hyderabad vs. Income Tax Officer, Ward-1, Vikarabad

In the result, appeal of the assessee is allowed

ITA 2013/HYD/2018[2015-16]Status: DisposedITAT Hyderabad21 Jun 2019AY 2015-16

Bench: Smt. P. Madhavi Deviassessment Year: 2015-16 Windsor Home Owners Vs. Income-Tax Officer, Welfare Association, Ward – 1, Vikarabad. Hyderabad. Pan – Aaaaw 4867G Appellant Respondent Assessee By: Shri M.V. Anil Kumar Revenue By: Smt. Esther N. Hongal Date Of Hearing: 06/06/2019 Date Of Pronouncement: 21/06/2019 O R D E R

For Appellant: Shri M.V. Anil KumarFor Respondent: Smt. Esther N. Hongal
Section 143(3)Section 40Section 70

…received, ought to have granted the exemption on interest receipts, as this income arises from the contributions from Members. 2. Your Appellant submits that the C!T(A) has not applied the ratio of the Hon'ble Supreme Court in the case Chelmsford Club Vs CIT 243 ITR 89 (SC) and CIT Vs Bankipur Club 92 Taxman 278 (SC) by virtue of which the receipts from non-members if any is also exempt from tax on the principals of mutuality. 3. Without prejudice to the above, your Appellant submits that as an alternative that at best the net surplus only may be taxed and not the entire interest receipts from the banks. 4. Your…

M/S. Sobha Magnolia Condominium Owners Association, Bengaluru vs. Income Tax Officer, Ward 4(3)(1), Bengaluru

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 1934/BANG/2018[2013-14]Status: DisposedITAT Bangalore16 May 2019AY 2013-14

Bench: Shri Arun Kumar Garodia & Shri Laliet Kumarassessment Year :2013-14 M/S. Sobha Magnolia Condominium Owners Association, The Income Tax Officer, No. 16, Bannerghatta Road, Vs. Ward – 4 (3) (1), 1St Main, Gurrappanapalya, Bangalore. Bangalore – 560 076. Pan: Aagas0682P Appellant Respondent Appellant By : Shri C. Prashanth, Ca Respondent By : Shri R.N. Siddappaji, Addl. Cit (Dr) Date Of Hearing : 02.05.2019 Date Of Pronouncement : 16.05.2019

For Appellant: Shri C. Prashanth, CAFor Respondent: Shri R.N. Siddappaji, Addl. CIT (DR)
Section 143Section 250

…Delhi High Court rendered in the case of DIT (E) Vs. All India Oriental Bank of Commerce Welfare Society (supra). In this case, the Hon’ble Delhi High Court has followed the judgment of Hon’ble Apex Court rendered in the case of Chelmsford Club v. CIT (2000) 243 ITR 89 (SC). As per the facts noted in that case by Hon’ble Apex Court, it is noted that Page 6 of 6 assessee club provided recreational and refreshment facilities exclusively to its members and their guests and its facilities are not available to non- members and the Club is run on no profit no loss basis and the members pay for all their expenses and a…