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“doctrine of mutuality”

Judicial DoctrinesMutualityMutuality75 judgments

The decision most relied on for doctrine of mutuality is Bangalore Club v. CIT (350 ITR 509), cited in 247 judgments on BharatTax.

Leading authorities on doctrine of mutuality

Bangalore Club v. CIT
350 ITR 509 · 2013 · Supreme Court
247
citing judgments

The Supreme Court affirmed the doctrine of mutuality, holding that contributions received from and returned to members for a common purpose do not constitute taxable profits. However, income from transactions with non-members or interest earned from investments in external entities (like cooperative banks) may break the mutuality chain and be taxable under Section 56, falling outside the scope of Section 80P deductions.

CIT v. Bankipur Club Ltd.
226 ITR 97 · 1997 · Supreme Court
125
citing judgments

The doctrine of mutuality applies only when there is complete identity between the contributors to a common fund and the participants in its surplus. Income received from non-members or distinct classes of members who do not share this identity is not covered by mutuality and is taxable.

Chelmsford Club v. CIT
243 ITR 89 · 2000 · Supreme Court
100
citing judgments

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.

CIT v. Ace Multi Axes Systems Ltd.
88 Taxmann.com 69 · 2017 · Supreme Court
61
citing judgments

Each assessment year constitutes a separate unit of assessment under the Income-tax Act, and findings or decisions for one assessment year do not operate as res judicata for subsequent assessment years.

CIT v. Royal Western India Turf Club Ltd.
24 ITR 551 · 1953 · Supreme Court
32
citing judgments

A mutual concern may be held to carry on a business or trade with its members, even if the surplus from such trade is not considered income or profit. The court adopted a stricter approach in applying the principle of mutuality, emphasizing the identity of contributors and recipients.

Sind Co-operative Housing Society v. ITO
317 ITR 47 · 2009 · High Court
32
citing judgments

The doctrine of mutuality applies to co-operative societies, preventing income derived from members from being taxed as income from other sources. The court affirmed that the principle of mutuality, as accepted by the jurisdictional High Court, should be followed.

CIT v. Common Effluent Treatment Plant (Thane Belapur) Association
328 ITR 362 · 2010 · High Court
25
citing judgments

Interest earned by an association from surplus funds deposited with non-members is taxable and does not fall under the principle of mutuality.

CIT v. Delhi Gymkhana Club Limited
339 ITR 525 · 2011 · Reported
21
citing judgments

The doctrine of mutuality is applicable to interest earned on fixed deposits, provided the interest is used for the maintenance and welfare of members. However, some later judgments have dissented from this view, holding that such interest is taxable.

Judgments citing doctrine of mutuality

The Jyoti Co-Operative Non Agricultural Thrift & Credit Society Ltd., Sirmour vs. ITO, Ward, Nahan

In the result, the assessee is not eligible for deduction on interest on deposits placed with scheduled commercial banks under section 80(P)(2)(a)(i) of the Act and the appeal of the assessee is di...

ITA 160/CHANDI/2023[2017-18]Status: DisposedITAT Chandigarh12 Feb 2025AY 2017-18
For Appellant: Shri Vishal Mohan, Sr. Advocate with Shri Parveen Sharma, AdvocateFor Respondent: Dr. Ranjeet Kaur, Sr. DR
Section 142(1)Section 80Section 80P(2)Section 80P(2)(a)

various Societies. The Honorable Supreme Court held that "in our opinion, unlike the surplus amount' itself, which is exempt from tax under the doctrine of mutuality, the amount of interest earned by the assessee (Bangalore Club) from the member banks will not fall within the ambit of the mutuality principle

Industries Association of Chandigarh, Chandigarh vs. Income Tax Officer, Ward, Chandigarh

In the result, appeal of the assessee is allowed

ITA 760/CHANDI/2024[2010-11]Status: DisposedITAT Chandigarh22 Jan 2025AY 2010-11

Bench: SHRI. VIKRAM SINGH YADAV (Accountant Member), SHRI. PARESH M. JOSHI (Judicial Member)

For Appellant: Shri Vineet Krishan, AdvocateFor Respondent: Shri Vivek Vardhan, JCIT, Sr. DR
Section 11Section 143(3)Section 250Section 253

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 deposited ... double benefit of mutuality. 6 (Para 32) It was held, unlike the aforesaid surplus amount itself, which was exempt from tax under the doctrine of mutuality, the amount of interest earned by the assessee from banks would not fall within the ambit of the mutuality principle and will therefore

The ITO, (Exemptions), Ward-2, Ahmedabad vs. The Gujarat Institute of Housing & Estate Developers, Ahmedabad

In the result, the appeal of the Department is allowed

ITA 1022/AHD/2017[2011-12]Status: DisposedITAT Ahmedabad08 Jan 2025AY 2011-12

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri Waghe Prasad Rao, Sr. DRFor Respondent: Shri S. N. Soparkar, Sr. Advocate
Section 11Section 12ASection 25Section 271(1)(c)

circumstances is the LD. CIT(A) justified in deleting the amount of penalty of Rs. 1,14,59,416/- by allowing the doctrine of mutuality. II. On the facts and circumstances of the case, the ld. Commissioner of Income- Tax (Appeal) ought to have upheld the order of the Assessing

The Imperial Condominium, Mumbai vs. Assistant Commissioner of Income Tax, Circle 19(3), Mumbai

In the result, the appeal of the assessee for AYs 2014-15 to 2017-18 are allowed

ITA 4983/MUM/2024[2017-18]Status: DisposedITAT Mumbai12 Nov 2024AY 2017-18

Bench: Shri Sandeep Gosain, Jm & Ms Padmavathy S, Am

For Appellant: Shri. Vijay Mehta, ARFor Respondent: Shri Krishna Kumar, Sr.DR
Section 57

receipts by cooperative societies, from its members, generating profits and surplus, having an element of commerciality, are exempt or not, based on the doctrine of mutuality. Thus, in the case of Venkatesh Premises Cooperative Society Ltd, there was no dispute on the contribution of funds by the members

The Imperial Condominium, Mumbai vs. Assistant Commissioner of Income Tax, Circle 19(3), Mumbai

In the result, the appeal of the assessee for AYs 2014-15 to 2017-18 are allowed

ITA 4982/MUM/2024[2016-17]Status: DisposedITAT Mumbai12 Nov 2024AY 2016-17

Bench: Shri Sandeep Gosain, Jm & Ms Padmavathy S, Am

For Appellant: Shri. Vijay Mehta, ARFor Respondent: Shri Krishna Kumar, Sr.DR
Section 57

receipts by cooperative societies, from its members, generating profits and surplus, having an element of commerciality, are exempt or not, based on the doctrine of mutuality. Thus, in the case of Venkatesh Premises Cooperative Society Ltd, there was no dispute on the contribution of funds by the members

The Imperial Condominium, Mumbai vs. Assistant Commissioner of Income Tax Circle -19(3), Mumbai

In the result, the appeal of the assessee for AYs 2014-15 to 2017-18 are allowed

ITA 4980/MUM/2024[2015-16]Status: DisposedITAT Mumbai12 Nov 2024AY 2015-16

Bench: Shri Sandeep Gosain, Jm & Ms Padmavathy S, Am

For Appellant: Shri. Vijay Mehta, ARFor Respondent: Shri Krishna Kumar, Sr.DR
Section 57

receipts by cooperative societies, from its members, generating profits and surplus, having an element of commerciality, are exempt or not, based on the doctrine of mutuality. Thus, in the case of Venkatesh Premises Cooperative Society Ltd, there was no dispute on the contribution of funds by the members

The Imperial Condominium, Mumbai vs. Assistant Commissioner of Income Tax, Circle 19(3), Mumbai

In the result, the appeal of the assessee for AYs 2014-15 to 2017-18 are allowed

ITA 4979/MUM/2024[2014-15]Status: DisposedITAT Mumbai12 Nov 2024AY 2014-15

Bench: Shri Sandeep Gosain, Jm & Ms Padmavathy S, Am

For Appellant: Shri. Vijay Mehta, ARFor Respondent: Shri Krishna Kumar, Sr.DR
Section 57

receipts by cooperative societies, from its members, generating profits and surplus, having an element of commerciality, are exempt or not, based on the doctrine of mutuality. Thus, in the case of Venkatesh Premises Cooperative Society Ltd, there was no dispute on the contribution of funds by the members

The Tea Trade Association of Cochin, Kochi vs. The DCIT Exemption, Kochi

Appeal is allowed in above terms

ITA 453/COCH/2023[2013-14]Status: DisposedITAT Cochin07 Nov 2024AY 2013-14

Bench: Shri Satbeer Singh Godara & Shri Amarjit Singh

For Appellant: Shri Thomas Thomas, CAFor Respondent: Shri Dr. S. Pandian, CIT-DR
Section 10Section 11Section 11(1)(a)Section 12ASection 143(1)Section 2Section 2(15)

Trade organisation duly registered u/sec.12A of the Act. In the ITR the assessee claimed exemption u/sec.10 for Rs.13,83,000/- on ‘Doctrine of Mutuality’ received in respect of membership subscription(s) and admission fees. The CPC denied the claim solely for not mentioning the relevant section and further affirmed

M/S Gymkhana Club, Panchkula vs. ITO, W-3, Panchkula

In the result, the appeal of the assessee is allowed

ITA 1305/CHANDI/2018[2009-10]Status: DisposedITAT Chandigarh28 Oct 2024AY 2009-10

Bench: Shri A.D.Jain, Vice Prersident & Shri Vikram Singh Yadavआयकर अपील सं./Ita No 1305/Chd/2018 िनधा"रण वष" / Assessment Year : 2009-10 M/S Gymkhana Club, Vs The Ito, Sector 6, Ward-3, Panchkula. Panchkula. "थायी लेखा सं./Pan No: Aaaag0115B अपीलाथ"/Appellant ""यथ"/Respondent िनधा"रती क" ओर से/Assessee By: Shri S.K.Mukhi, Advocate राज"व क" ओर से/ Revenue By : Shri Vivek Vardhan, Jcit, Sr.Dr सुनवाई क" तारीख/Date Of Hearing : 07.10.2024 उदघोषणा क" तारीख/Date Of Pronouncement : 28/10/2024 Physical Hearing आदेश/Order Per Vikram Singh Yadav,A.M.

For Appellant: Shri S.K.Mukhi, AdvocateFor Respondent: Shri Vivek Vardhan, JCIT, Sr.DR
Section 234B

nature of its management and involvement of HUDA in the affairs of the assessee club A.Y. 2009-2010 5 infers that the doctrine of mutuality was missing and the income of the assessee was held taxable. Regarding interest from banks, the AO observed that ‘the profit made on account

ACIT, Range-1, Lucknow vs. M/S Mohamed Bagh Club Ltd., Lucknow

In the result, the appeal of the Revenue is dismissed

ITA 435/LKW/2020[2014-15]Status: DisposedITAT Lucknow30 Sept 2024AY 2014-15

Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudharya.Y.-2014-15 Asstt. Commissioner Of M/S Mohamed Bagh Club, Limited, Income Tax, Range-I, Vs. 202, M.G. Marg, Lucknow-226001 Lucknow Pan:Aaccm2600B (Appellant) (Respondent) Assessee By: Sh. Rohit Bhalla, C.A. Revenue By: Sh. Sunil Kumar Rajwanshi, Addl. Cit (Dr) Date Of Hearing: 20.08.2024 Date Of Pronouncement: 30.09.2024 O R D E R Per Sh. Nikhil Choudhary: This Is An Appeal By The Revenue Against The Order Of The Ld. Cit(A)-2, Lucknow Under Section 250 Of The Income Tax Act Dated 16.09.2020. The Grounds Of Appeal Preferred Read As Under:-

For Appellant: Sh. Rohit Bhalla, C.AFor Respondent: Sh. Sunil Kumar Rajwanshi, Addl. CIT
Section 250Section 271(1)(c)

wherein it had been held that since members/contributors had contributed for the mutual benefit of all members of the Club, the doctrine of mutuality was evidently applicable on the Club and hence income from members should be treated as exempt. It was further submitted that the Hon’ble Supreme Court ... case of Chelmsford Club vs. CIT 243 ITR 89 (SC) laid down the three conditions which established the doctrine of mutuality i. the identity of the contributors to the fund and the recipients from the fund 6 A.Y-2014-15 M/s Mohamed Bagh Club Ltd. ii. the treatment of the company, though

The W.B State Co-Op Agri and Rural Development Bank Limited, Kolkata vs. ACIT, Cir-32/ Kolkata., Kolkata

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

ITA 1321/KOL/2023[2017-18]Status: DisposedITAT Kolkata02 Sept 2024AY 2017-18

Bench: Shri Sanjay Garg & Shri Rakesh Mishraassessment Year: 2017-18 The W.B. State Co-Op. Agri & Assistant Commissioner Of Rural Development Bank Ltd. Income-Tax, Circle-32, Vs 25D, Shakespeare Sarani, Kolkata. Kolkata-700017. (Pan: Aaajt0468K) (Appellant) (Respondent)

For Appellant: Shri Palas Chattopadhya, ARFor Respondent: Shri Sailen Samadder, Addl. CIT, Sr. DR
Section 115BSection 143(3)Section 250Section 68Section 69A

Members of the Co-operative Society being unexplained cash credit u/s 68 of the Act of Rs.11,9O,457/- which is against the Doctrine of Mutuality. For in view of the circumstances the addition of Rs. 11,80,457/- be deleted. 4. That the Ld. CIT(A), NFAC erred

The Venus Parkland Co.Operatgive Housing Service Society Ltd., Ahmedabad vs. The Income Tax Officer, Ward-3(3)(5), Ahmedabad

In the result, the appeal filed by the Assessee is partly allowed

ITA 1039/AHD/2023[2018-19]Status: DisposedITAT Ahmedabad07 Aug 2024AY 2018-19

Bench: Shri T.R. Senthil Kumar (Judicial Member), Shri Narendra Prasad Sinha (Accountant Member)

Section 143(3)Section 56Section 57Section 80PSection 80P(2)(c)

follows: I.T.A No. 1039/Ahd/2023 A.Y. 2018-19 Page No 8 The Venus Parkland Co.Op. Housing Service Society Ltd. . vs. ITO “…14. The doctrine of mutuality, based on common law principles, is premised on the theory that a person cannot make a profit from himself. An amount received from oneself, therefore

Abhay Shaligram Patil, Mumbai vs. Income Tax Officer - 23(1)(1), Mumbai

In the result, the appeal filed by the assessee stands allowed

ITA 995/MUM/2024[2012-13]Status: DisposedITAT Mumbai26 Jul 2024AY 2012-13

Bench: Shri Amit Shukla & Shri Ratnesh Nandan Sahayassessment Year: 2012-13 Abhay Shaligram Patil Income Tax Officer- B-8/60, 23(1)(1), 1St Floor, M I G Colony, Vs. Kalanagar, Room No. 106, Bandra (East), Matru Mandir, Mumbai- 400051. Grant Mandir, Pan: Abppp1649G Mumbai- 400007. (Appellant) (Respondent) Present For : Assessee By : Shri Yogesh Thar A/W. Shri Deep Chauchan, A.R. Revenue By : Shri R. R. Makwana- Sr. D.R.

For Appellant: Shri Yogesh Thar a/w. Shri Deep Chauchan, A.RFor Respondent: Shri R. R. Makwana- SR. D.R
Section 143(2)Section 143(3)Section 147Section 148Section 234ASection 250Section 45Section 54Section 56

surplus funds invested in fixed deposits with the corporate member bank is exempt from levy of income tax, based on the doctrine of mutuality. The Hon'ble Supreme Court observed 10 Abhay Shaligram Patil that the assessee is an AOP. The concerned banks are all corporate members of the club ... further stated that the assessee is 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 availed by its members, before it is deposited with the bank. This surplus amount was not treated as income

Andhra Pradesh Advocates Welfare Fund, Hyderabad vs. Income Tax Officer, Ward-8(2), Hyderabad

In the result, all the three appeals of the assessee are dismissed

ITA 664/HYD/2023[2018-19]Status: DisposedITAT Hyderabad24 Jul 2024AY 2018-19

Bench: SHRI K.NARASIMHA CHARY (Judicial Member), SHRI MADHUSUDAN SAWDIA (Accountant Member)

For Appellant: Shri P.R. Suresh, C.AFor Respondent: Shri Kumar Pranav, CIT(DR) &
Section 23Section 3

Supreme Court of India in Yum! Restaurants (Marketing) Private Limited vs. CIT (2020) 424 ITR 630 provided a detailed analysis of the doctrine of mutuality, particularly emphasizing the necessity for complete identity between contributors and participants or beneficiaries and held that this principle is central to determining the taxability ... surplus under IT Act. 49. Hon’ble Court held that the doctrine of mutuality is grounded in the fundamental idea that an entity cannot trade with itself. This principle dictates that if the identities of the seller and the buyer, the vendor and the consumer, or the contributor

Andhra Pradesh Advocates Welfare Fund, Hyderabad vs. Income Tax Officer, Ward 8(2), Hyderabad

In the result, all the three appeals of the assessee are dismissed

ITA 663/HYD/2023[2017-18]Status: DisposedITAT Hyderabad24 Jul 2024AY 2017-18

Bench: SHRI K.NARASIMHA CHARY (Judicial Member), SHRI MADHUSUDAN SAWDIA (Accountant Member)

For Appellant: Shri P.R. Suresh, C.AFor Respondent: Shri Kumar Pranav, CIT(DR) &
Section 23Section 3

Supreme Court of India in Yum! Restaurants (Marketing) Private Limited vs. CIT (2020) 424 ITR 630 provided a detailed analysis of the doctrine of mutuality, particularly emphasizing the necessity for complete identity between contributors and participants or beneficiaries and held that this principle is central to determining the taxability ... surplus under IT Act. 49. Hon’ble Court held that the doctrine of mutuality is grounded in the fundamental idea that an entity cannot trade with itself. This principle dictates that if the identities of the seller and the buyer, the vendor and the consumer, or the contributor

Andhra Pradesh Advocates Welfare Fund, Hyderabad vs. Income Tax Officer, Ward 8(2), Hyderabad

In the result, all the three appeals of the assessee are dismissed

ITA 662/HYD/2023[2016-17]Status: DisposedITAT Hyderabad24 Jul 2024AY 2016-17

Bench: SHRI K.NARASIMHA CHARY (Judicial Member), SHRI MADHUSUDAN SAWDIA (Accountant Member)

For Appellant: Shri P.R. Suresh, C.AFor Respondent: Shri Kumar Pranav, CIT(DR) &
Section 23Section 3

Supreme Court of India in Yum! Restaurants (Marketing) Private Limited vs. CIT (2020) 424 ITR 630 provided a detailed analysis of the doctrine of mutuality, particularly emphasizing the necessity for complete identity between contributors and participants or beneficiaries and held that this principle is central to determining the taxability ... surplus under IT Act. 49. Hon’ble Court held that the doctrine of mutuality is grounded in the fundamental idea that an entity cannot trade with itself. This principle dictates that if the identities of the seller and the buyer, the vendor and the consumer, or the contributor

Rajpath Club Ltd., Ahmedabad vs. The DCIT, Circle-3(1)(2), Ahmedabad

ITA 2420/AHD/2018[2015-16]Status: DisposedITAT Ahmedabad28 Jun 2024AY 2015-16

Bench: Mrs. Annapurna Gupta & Shri Siddhartha Nautiyal

For Appellant: Shri Biren Shah, ARFor Respondent: Ms. Saumya Pandey Jain, Sr DR
Section 250(6)

mandatory to examine from the root of the issue as to which category of members would fall within the ambit of the doctrine of mutuality. The ITAT noted that all the facts relating to the different type of members and the different treatment given to them needed to be recorded ... consistently allowed by the Tribunal noting that the AC Hall and lawns was given to relatives and guests of the members and the doctrine of mutuality extended even when the facilities were provided to the guests of the members on account of member himself. It was noted that in such

Rajpath Club Ltd., Ahmedabad vs. The Deputy Commissioner of Income Tax, Circle-3(1)(2), Ahmedabad

ITA 274/AHD/2017[2013-14]Status: DisposedITAT Ahmedabad28 Jun 2024AY 2013-14

Bench: Mrs. Annapurna Gupta & Shri Siddhartha Nautiyal

For Appellant: Shri Biren Shah, ARFor Respondent: Ms. Saumya Pandey Jain, Sr DR
Section 250(6)

mandatory to examine from the root of the issue as to which category of members would fall within the ambit of the doctrine of mutuality. The ITAT noted that all the facts relating to the different type of members and the different treatment given to them needed to be recorded ... consistently allowed by the Tribunal noting that the AC Hall and lawns was given to relatives and guests of the members and the doctrine of mutuality extended even when the facilities were provided to the guests of the members on account of member himself. It was noted that in such

Rajpath Club Ltd., Ahmedabad vs. The Asstt. Commissioner of Income Tax, Circel-5, Ahmedabad

ITA 3084/AHD/2016[2012-13]Status: DisposedITAT Ahmedabad28 Jun 2024AY 2012-13

Bench: Mrs. Annapurna Gupta & Shri Siddhartha Nautiyal

For Appellant: Shri Biren Shah, ARFor Respondent: Ms. Saumya Pandey Jain, Sr DR
Section 250(6)

mandatory to examine from the root of the issue as to which category of members would fall within the ambit of the doctrine of mutuality. The ITAT noted that all the facts relating to the different type of members and the different treatment given to them needed to be recorded ... consistently allowed by the Tribunal noting that the AC Hall and lawns was given to relatives and guests of the members and the doctrine of mutuality extended even when the facilities were provided to the guests of the members on account of member himself. It was noted that in such

Rajpath Club Ltd., Ahmedabad vs. The Asstt. Commissioner of Income Tax, Circel-5, Ahmedabad

ITA 3083/AHD/2016[2008-09]Status: DisposedITAT Ahmedabad28 Jun 2024AY 2008-09

Bench: Mrs. Annapurna Gupta & Shri Siddhartha Nautiyal

For Appellant: Shri Biren Shah, ARFor Respondent: Ms. Saumya Pandey Jain, Sr DR
Section 250(6)

mandatory to examine from the root of the issue as to which category of members would fall within the ambit of the doctrine of mutuality. The ITAT noted that all the facts relating to the different type of members and the different treatment given to them needed to be recorded ... consistently allowed by the Tribunal noting that the AC Hall and lawns was given to relatives and guests of the members and the doctrine of mutuality extended even when the facilities were provided to the guests of the members on account of member himself. It was noted that in such