Law:

Section:

section 4 of the income-tax act, 1961-mutual concerns-assessee was registered co-operative society, objects of which, inter alia, were to sell and supply articles of household consumption and other necessities of life to members of society as well as non-members-contributions to society's funds were, thus, from members as well as non-members-however, dividends on shares were to be distributed to members only-whether it could be said that assessee-society was mutual society whose income was exempt on ground of mutuality-held, on facts, no section 4 of the income-tax act, 1961-capital or revenue receipt-assessee-society with objects as given under caption 'mutual concerns' was receiving subsidy/grant regularly from companies for benefit of their employees-tribunal found that these payments were not without consideration and that companies paying subsidy/grant considered these as part of their labour welfare activities-whether tribunal justified in holding that impugned subsidy/grant were received in course of assessee's business and were revenue receipts-held, on facts, yes Facts The assessee was a registered co-operative society, the objects of which, inter alia, were (i) to sell and supply to the members of the society and the employees of the Tata Iron & Steel Co. Ltd. (TISCO) and its associated and subsidiary companies articles of household consumption or use and other necessities of life at economic prices, and (ii) to accept gifts on contributions either by way of donation periodically or other subscription or otherwise for the support and furtherance of the objects of the society. For the relevant years, the assessee claimed that these profits should be exempt on the basis of mutuality. The assessee also claimed exemption from taxation in respect of subsidy and grants received by it from TISCO and other companies. The ITO as well as the AAC rejected the claim of the assessee and treated both the items as business receipts in the hands of the assessee and liable to be taxed as such. The Tribunal also rejected the claim holding that since the society traded with its members and others and the surplus out of the common fund was distributable among the…

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