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“mutuality principle”

Judicial DoctrinesMutualityMutuality54 judgments

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

Leading authorities on mutuality principle

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.

Barendra Prasad Ray v. ITO
129 ITR 295 · 1981 · Supreme Court
80
citing judgments

When determining if an activity serves charitable purposes for tax exemption, the primary consideration is whether its predominant object is to make a profit or to carry out charitable activities.

Surendranagar District Co-op. Milk Producers Union Ltd. v. Deputy Ld. CIT(A)
111 Taxmann.com 69 · 2019 · ITAT
40
citing judgments

The Assessing Officer (AO) must provide a deduction to the assessee respondent. This deduction relates to cooperative society income, as the CIT(A) has relied on case laws supporting such deductions.

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.

Judgments citing mutuality principle

The Institute of Indian Foundrymen, Kolkata vs. ITO, Ward-1(3), Exempt, Kolkata.

In the result, the appeal of the assessee is allowed

ITA 906/KOL/2023[2014-15]Status: DisposedITAT Kolkata18 Mar 2024AY 2014-15

Bench: Shri Sanjay Garg & Shri Rajesh Kumar]

Section 11Section 12ASection 2(15)

course of such business specific services must be rendered for its members. The concept behind s.28(iii) is to cut at the mutuality principle being relied on in support of a claim for exemption, when the assessee was actually deriving income or making profits as a result of rendering specific

Dy. Commissioner of Income Tax (Exemption)-1(1), Mumbai vs. Association of Mutual Funds in India, Mumbai

In the result, the appeal of the revenue stands allowed for statistical purpose

ITA 3201/MUM/2022[2018-19]Status: DisposedITAT Mumbai29 Nov 2023AY 2018-19

Bench: Shri Aby T. Varkey, Jm & Shri Prashant Maharishi, Am आयकर अपील सं/ I.T.A. No.3201/Mum/2022 (निर्धारण वर्ा / Assessment Year: 2018-19) Dcit(Exemption)-1(1) बिधम/ Association Of Mutual Room No.607, 6Th Floor, Funds In India Vs. Mtnl Building, Cumballa 71, 7Th Floor One Hill, Mumbai-400026. Indiabulls Centre Tower- 2, Wing B, 841 Senapati Bapat Marg Elphinstone Road, Mumbai-400013. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaaca5550A (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Nitesh Joshi/Shri Samir Kapadia Revenue By: Shri Ajay Chandra (Cit-Dr) सुनवाई की तारीख / Date Of Hearing: 16/10/2023 घोषणा की तारीख /Date Of Pronouncement: 29/11/2023 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Revenue Against The Order Of The Ld. Cit(A)/Nfac, Delhi Dated 28.10.2022 For The Ay. 2018-19. 2. The Main Grievance Of The Revenue Is Against The Action Of The Ld. Cit(A) Allowing The Appeal Of The Assessee By Following The Tribunal Order In Assessee’S Own Case For Ay. 2012 13 & Ay. 2013-14 Wherein Exemption U/S 11 Of The Income Tax Act, 1961 (Hereinafter “The Act”) Was Allowed To The Assessee. According To The Revenue, The Tribunal While Granting Exemption U/S 11 Of The Act Has Not Considered The Proviso To Section 2(15) Of The Act As Well As The Recent Decision Of The Hon’Ble Supreme Court In The Case Of Acit(Exemptions) Vs. Ahmedabad Urban Development Authority

For Appellant: Shri Nitesh Joshi/Shri SamirFor Respondent: Shri Ajay Chandra (CIT-DR)
Section 11Section 13(8)Section 2(15)

pointed out that the following receipts the assessee received are from non-members and therefore the said receipts cannot be exempt income as “Mutuality Principle” is not attracted for the receipts like (1) ARN Fees (Rs.1894.40 Lakhs) (2) ARN Data fees & Due diligence fee (Rs. 1.00 Lakh) (3) AMFI Summit

Vapi Green Enviro Limited, Vapi vs. Principal Commissioner of Income Tax, Valsad

In the result, various grounds of appeal raised by the assessee are allowed

ITA 387/SRT/2023[2018-19]Status: DisposedITAT Surat21 Sept 2023AY 2018-19

Bench: Shri Pawan Singh & Dr. Arjun Lal Saini(Hearing In Virtual Court) Vapi Green Enviro Limited, Pr.C.I.T., Valsad. 135, 1St Floor, Via House, G.I.D.C. 301, 3Rd Floor, Palak Vs. Char Rasta, Vapi, Gujarat, Arcade, Shanti Nagar, India-396195. Tithal Road, Pan: Aaacv 8289 P Valsad-396001. Appellant Respondednt

Section 143(3)Section 2(24)Section 254(1)Section 263

Exemption) has erred in overlooking the fact that, the Appellant has claimed gross income of Rs.52,71,01,098/- as exempt on applicability of mutuality principles and the Appellant has not claimed any expenditure as they are related to exempt income. 5. The Ld. Commissioner of Income Tax (Exemption ... that when no claim of deduction of expenditure out of income has been made in view of exemption of income due to applicability of mutuality principle, no disallowance of any expenditure is sustainable. The assessment for the impugned assessment year-2018-19 has been a subject matter of appeal

M/S Ravikiran Co-Operative Credit Society Limited, Belgundi vs. ITO, Ward - 1(3), Belgavi

ITA 32/PAN/2020[2016-17]Status: DisposedITAT Panaji25 Jan 2023AY 2016-17

Bench: Shri Satbeer Singh Godara

For Appellant: Shri Shivanand Halbhavi, C.AFor Respondent: Shri N. Shrikanth
Section 143(3)Section 271(1)(c)Section 80Section 80PSection 80P(2)Section 80P(2)(a)Section 80P(2)(d)

activities of the appellant society are beyond the scope of bye laws, 6. That the learned A.O. has wrongly interpreted the concept of Mutuality principle and has applied the decision of Hon’ble Supreme Court in case of the 3 ITA.No.32/PAN./2020 Citizen Co-operative Society to our case

Bank of America N.A, Mumbai vs. DCIT (It) RG 1, Mumbai

In the result, the appeal filed

ITA 3343/MUM/2019[2013-14]Status: DisposedITAT Mumbai26 Aug 2022AY 2013-14

Bench: Shri Om Prakash Kant () & Shri Rahul Chaudhary () Assessment Year: 2013-14 Bank Of America National Commissioner Of Income Tax Association, (International Taxation), Range-1, Ground Floor, A Wing, One Vs. 3Rd Floor, Room No. 9, Mittal Court Bkc, G Block, Bandra Kurla ‘B’ Wing, Nariman Point, Complex, Bandra (East), Mumbai-400021. Mumbai-400051. Pan No. Aaacb 1537 G Appellant Respondent Assessee By : Mr. P.J. Pardiwala/Vasanti Patel Revenue By : Mr. Sunil K. Jha, Cit-Dr Date Of Hearing : 11/07/2022 Date Of Pronouncement : 26/08/2022

For Appellant: Mr. P.J. Pardiwala/Vasanti PatelFor Respondent: Mr. Sunil K. Jha, CIT-DR
Section 143(3)Section 144CSection 263Section 9(1)(v)

income in the head office/overseas branches as income in the hands of hands of permanent establishment, the assessee establishment, the assessee is invoking mutuality principle s invoking mutuality principle under the Income-tax Act Act, instead of following provisions of DTAA. ng provisions of DTAA. According to him, in respect ... said amendment being CIT said amendment being clarificatory in nature, it is applicable in nature, it is applicable retrospectively and therefore mutuality principle will not apply in retrospectively and therefore mutuality principle will not apply in retrospectively and therefore mutuality principle will not apply in the case of the assessee

Cricket Club of India P.Ltd, Mumbai vs. CIT 1, Mumbai

In the result, the appeal of the assessee is allowed

ITA 3282/MUM/2015[2010-11]Status: DisposedITAT Mumbai15 Jul 2022AY 2010-11

Bench: Us:-

Section 143(3)Section 263Section 263(1)

upon the method adopted by the Ld. CIT(A) in AY 2009-10 wherein the Ld. CIT(A) enhanced the assessment by denying the mutuality principles and computed the total income on commercial manner. In response to the said notice, the assessee filed its reply vide letters dated ... this Tribunal in allowing 'Catering Revenue' as income exempt from tax under the principle of Mutuality. Hence, the said issue of applicability of mutuality principle is further covered/ settled in favour of assessee. Hence the observation made by the ld. PCIT in this regard is totally untenable in the eyes

Income Tax Officer(Exemption) Ward-1(1), Mumbai vs. Association of Physicians of India, Mumbai

In the result, Ground No.1 of the assessee‟s appeal is allowed

ITA 974/MUM/2022[2017-18]Status: DisposedITAT Mumbai30 Jun 2022AY 2017-18
Section 11Section 143Section 2(15)Section 28

thus clear that the authorities below have proceeded on the misconception that the assessee trust has claimed tax exemption on the basis of mutuality principle alone. Learned CIT(A) has rather summarily dismissed the contention of the assessee with respect of exemption under section 11 by the virtue of being

Income Tax Officer (Exemption), Ward-1(1), Mumbai vs. Association of Physicians of Indiaf, Mumbai

In the result, Ground No.1 of the assessee‟s appeal is allowed

ITA 973/MUM/2022[2016-17]Status: DisposedITAT Mumbai30 Jun 2022AY 2016-17
Section 11Section 143Section 2(15)Section 28

thus clear that the authorities below have proceeded on the misconception that the assessee trust has claimed tax exemption on the basis of mutuality principle alone. Learned CIT(A) has rather summarily dismissed the contention of the assessee with respect of exemption under section 11 by the virtue of being

Income Tax Officer(Exemption)Ward-1(1), Mumbai vs. Association of Physicians of India, Mumbai

In the result, Ground No.1 of the assessee‟s appeal is allowed

ITA 972/MUM/2022[2015-16]Status: DisposedITAT Mumbai30 Jun 2022AY 2015-16
Section 11Section 143Section 2(15)Section 28

thus clear that the authorities below have proceeded on the misconception that the assessee trust has claimed tax exemption on the basis of mutuality principle alone. Learned CIT(A) has rather summarily dismissed the contention of the assessee with respect of exemption under section 11 by the virtue of being

Income Tax Officer (Exemption) Ward-1(1), Mumbai vs. Association of Physicians of India, Mumbai

In the result, Ground No.1 of the assessee‟s appeal is allowed

ITA 971/MUM/2022[2014-15]Status: DisposedITAT Mumbai30 Jun 2022AY 2014-15
Section 11Section 143Section 2(15)Section 28

thus clear that the authorities below have proceeded on the misconception that the assessee trust has claimed tax exemption on the basis of mutuality principle alone. Learned CIT(A) has rather summarily dismissed the contention of the assessee with respect of exemption under section 11 by the virtue of being

Choice Co-Op. Credit Society Ltd., Mumbai vs. ITO 31(1)(3), Mumbai

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

ITA 3659/MUM/2019[2016-17]Status: DisposedITAT Mumbai25 Mar 2022AY 2016-17

Bench: Shri Prashant Maharishi & Shri Pavan Kumar Gadalechoice Co-Op Credit Vs. Ito Ward 31(1)(3) Society Ltd Pratyakshakar Bhavan Shop No. 9, K-3, Bmc C-13, Bandra Kurla Colony, Goregaon, Complex, Bandra East Mumbai – 400065. Mumbai – 400051. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aabac4576H Appellant .. Respondent Appellant By : None Respondent By : Ms.Neena Jeph. Sr. Dr Date Of Hearing 15.03.2022 Date Of Pronouncement 22.03.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm:

For Appellant: NoneFor Respondent: Ms.Neena Jeph. Sr. DR
Section 143(1)Section 143(2)Section 143(3)Section 271(1)(c)Section 80P

respect of income. Whereas the A.O on perusal of the facts dealt on the Bylaws, issues with respect to concept of mutuality principle, members and nominal members rights. Finally the A.O has relied on the Hon’ble Supreme Court decision on the category of members and observed at page ... being a cooperative society provided services to its nominal members who does not have equal rights compared to ordinary members and the concept of mutuality principle is nullified. The CIT(A) was not satisfied with explanations of the assessee on the concept of mutuality and relied

Jhaverilal Dedhia, Mumbai vs. DCIT, Central Cir 8(2), Mumbai

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

ITA 3657/MUM/2019[2015-16]Status: DisposedITAT Mumbai25 Mar 2022AY 2015-16

Bench: Shri Prashant Maharishi & Shri Pavan Kumar Gadalechoice Co-Op Credit Vs. Ito Ward 31(1)(3) Society Ltd Pratyakshakar Bhavan Shop No. 9, K-3, Bmc C-13, Bandra Kurla Colony, Goregaon, Complex, Bandra East Mumbai – 400065. Mumbai – 400051. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aabac4576H Appellant .. Respondent Appellant By : None Respondent By : Ms.Neena Jeph. Sr. Dr Date Of Hearing 15.03.2022 Date Of Pronouncement 22.03.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm:

For Appellant: NoneFor Respondent: Ms.Neena Jeph. Sr. DR
Section 143(1)Section 143(2)Section 143(3)Section 271(1)(c)Section 80P

respect of income. Whereas the A.O on perusal of the facts dealt on the Bylaws, issues with respect to concept of mutuality principle, members and nominal members rights. Finally the A.O has relied on the Hon’ble Supreme Court decision on the category of members and observed at page ... being a cooperative society provided services to its nominal members who does not have equal rights compared to ordinary members and the concept of mutuality principle is nullified. The CIT(A) was not satisfied with explanations of the assessee on the concept of mutuality and relied

Breach Candy Swimming Bath Trust, Mumbai vs. DCIT Cent. Cir 5(3), Mumbai

In the result, the assessee appeal

ITA 2469/MUM/2021[2014-15]Status: DisposedITAT Mumbai24 Feb 2022AY 2014-15

Bench: Shri S Rifaur Rahman & Shri Pavan Kumar Gadale & Breach Candy Vs. Dcit, Cc5(3) Swimming Bath Trust Room No. 1906, 19Th 66, Bhulabhai Desai Floor, Air India Bldg, Road, Breach Candy, Nariman Point, Mumbai – 400026. Mumbai – 400021. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaatb0133F Appellant .. Respondent Appellant By : Shri.Rajeev Waglay Adv. Ar Respondent By : Shri.Dilip Kumar Shah & Shri.Mahesh Akhade. Dr Date Of Hearing 18.01.2022 Date Of Pronouncement 27.01.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: These Are The Appeals Filed By The Assessee Against The Separate Orders Of The Commissioner Of Income Tax (Appeals)- 53, Mumbai Passed U/Sec144 R.W.S147 & 250 Of The Act (A.Y.2014-15) & U/Sec 143(3)R.W.S147 & 250 Of The Income Tax Act, 1961 (A.Y.2015-16). Since The Issues Involved In These Appeals Are Identical & Inter Connected, Hence Are Clubbed, Heard & Consolidated Order Is Passed.

For Appellant: Shri.Rajeev Waglay Adv. ARFor Respondent: Shri.Dilip Kumar Shah &
Section 11Section 12ASection 143(3)Section 148Section 2(15)

assessee has received tax free interest income on securities-bonds aggregating to Rs. 4,61,67,132/- and claimed exempt on the concept of mutuality principle. Whereas the A.O is of the opinion that the assessee is not entitled for any exemption or benefit and fall outside the purview

M/S Mico Karmikara Balagada Vasathi Sahakara Sangha, Bangalore vs. The Income Tax Officer Ward-7(2)(5), Bangalore

In the result, the appeal by the assessee is partly allowed

ITA 2724/BANG/2017[2014-15]Status: DisposedITAT Bangalore21 Feb 2022AY 2014-15

Bench: Shri Chandra Poojari & Smt. Beena Pillaiassessment Year : 2014-15

For Appellant: Shri V. Srinivasan, AdvocateFor Respondent: Shri Priyadarshi Mishra, Addl. CIT(DR)(ITAT)

design of the second condition. Therefore, it stands violated. 28. The facts at hand also fail to satisfy the third condition of the mutuality principle i.e. the impossibility that contributors should derive profits from contributions made by themselves to a fund which could only be expended or returned to themselves ... interest earned by the assessee from the afore-noted Page 7 of 8 four banks will not fall within the ambit of the mutuality principle and will therefore, be exigible to Income-Tax in the hands of the assessee-club. 34. In light of the afore-going discussion, these appeals