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Section 4 of the Income-tax Act, 1961 - Mutual concern - Assessable as - Assessment year 2003-04 - Assessee-company was running a recreation club for its members - It was given exemption from income-tax on income from its members on principle of 'doctrine of mutuality' - Assessee claimed that income from FDRs in bank, dividend income, etc., would also be exempted from income-tax on principle of mutuality - Whether assessee's claim was allowable - Held, yes FACTS The assessee-company was running a recreational club for its members. It was allowed exemption of income earned from its members on the basis of 'doctrine of mutuality'. The case of the assessee was that the income from FDRs in bank, dividend income, income from the Government securities and profit on sale of investments, etc., would also attract the 'doctrine of mutuality' and, therefore, no tax was payable thereupon. The Assessing Officer as well as the Commissioner (Appeals) rejected the submission of the assessee. On second appeal, the Tribunal held that the 'doctrine of mutuality' would apply even on the aforesaid income. On revenue's appeal to the High Court : HELD The finding of the Tribunal was correct on facts and in law, which did not call for any interference. The issue, in fact, stood covered by at least three s of the Court, which were as under : (i)DIT v. All India Oriental Bank of Commerce Welfare Society [2003] 130 Taxman 575 (Delhi). (ii)CIT v. Talangang Co-operative Group Housing Society Ltd. [2010] 195 Taxman 110 (Delhi). (iii)CIT v. Standing Conference of Public Enterprises (SCOPE) [2010] 186 Taxman 142 (Delhi). In All India Oriental Bank of Commerce Welfare Society's case (supra ), it was held that there are three conditions for applicability of the principle of mutuality, which are as follows : (a)Where a number of persons combine together contribute to a common fund for the financing of some venture or object; (b)They have no dealings or relation with any outside body; and (c)Surplus generated is not spent for any other purpose except for the welfare of the principles. On that basis, the Court clearly held that even if there was an income earned by the society in the form of…

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