Case Law Details
Savitri Phule Mahila Bahu Uuddeshiya Sahakari Samiti Ltd. Vs ACIT (ITAT Jaipur)
Hon’ble Supreme Court in Chelmsford Club Vs CIT 243 ITR 89(SC) had held that what is taxed is, the income, “profits or gains” earned or “arising”, “accruing” to a “person”. Where a number of persons combine together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to those persons cannot be regarded in any sense as profit. There must be complete identity between the contributors and the participators. If these requirements are fulfilled, it is immaterial what particular form the association takes. Trading between persons associating together in this way does not give rise to profits which are chargeable to tax. Where the trade or activity is mutual, the fact that, as regards certain activities, certain members only of the association take advantage of the facilities which it offers does not affect the mutuality of the enterprise. In view of these facts and circumstances we are of the considered view that the assessee is entitled to the deduction of Rs. 12,41,850/- and therefore the appeal of the assessee is allowed by reversing the order of the Commissioner (Appeals).
FULL TEXT OF THE ORDER OF ITAT JAIPUR
The assessee has filed an appeal against the order of the ld.CIT(A), Alwar dated 03-01-2019 for the assessment year 2009-10 raising therein solitary ground as under:-
‘’The ld. CIT(A) erred in law as well as on the facts of the case in confirming the addition made of Rs.12,41,850/- by holding that the principle of mutuality does not fit in the case of the assessee.”
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