These three appeals are filed by assessee. relevant assessment years are 1997-98, 1998-99 and 2001-02. appeals are directed against common order passed by CIT(A)-XXI at Mumbai, dt. 17th Feb., 2004. assessments in these cases have been completed under s. 143(3) of IT Act, 1961. assessee is company incorporated under s. 25 of Companies Act, 1956. As per memorandum of association and object clauses therein, assessee company is incorporated to promote interest of travel agents in India. company does not have any profit motive and distribution of income or property to members is strictly prohibited by memorandum of association and articles of association of company. It is case of assessee company in above circumstances that it conforms with requirement of mutual association and as such income is exempt from purview of taxation on ground of mutuality. assessing authority in course of assessment proceedings for impugned assessment years held that even if assessee company is company registered under s. 25, company is liable for assessment under s. 115JA. AO held that law stated under s. 115JA does not exempt companies like assessee company from application of s. 115JA and according to statute, assessee has to be brought under s. 115JA. Accordingly, assessee has been brought to tax for book profit for all three assessment years under appeal. assessments have been taken in appeal before CIT(A). CIT(A) found that computation of total income as per normal provisions of IT Act is positive figure for years and that itself shows that whole income of assessee is not exempt. He observed that P&L a/c of assessee is prepared in accordance with Parts II and III of Sch. VI to Companies Act, 1956, and therefore, book profit for purpose of s. 115JA has to be taken cognizance of for purpose of taxation. He has also referred to Supreme Court decision in case of Apollo Tyres Ltd. vs. CIT (2002) 174 CTR (SC) 521: (2002) 255 ITR 273 (SC). He has also relied on decision of Bombay High Court in case of CIT vs. Veekaylal Investment Co. (P) Ltd. (2001) 166 CTR (Bom) 96: (2001) 249 ITR 597 (Bom), wherein it is held that income from capital gains is to be included in "book profit" for purpose of s. 115J of Act. assessee is aggrieved, and therefore, these appeals before us. Shri Shailesh Shah, chartered accountant, appearing for assessee, argued case in detail. He explained that assessee is computing income and expenditure on year to year basis and arrives at excess of income over expenditure or vice versa and transfers net amount to income and expenditure account in balance sheet. It is mutual association and therefore, s. 115JA does not apply. Alternatively, learned chartered accountant argued that annual convention receipts, membership and interest thereon have been held as exempted receipt from taxation being in nature of mutual receipt, by Tribunal, Mumbai Benches, in earlier assessment years. As such, receipts being in nature of mutual receipts do not represent income or profit, and therefore, not assessable as income. learned chartered accountant explained that reference to requirements of Companies Act shows that it is concerned with result of working of company. In fact, MAT Scheme has been introduced for taxing zero tax companies where companies are making profits and declaring dividends but not paying income-tax by claiming various deductions. assessee company does not have any object of declaring profit or earning income. Therefore, object for which s. 115JA is enacted does not fit into scheme of mutual association like assessee company. Shri Anadee Nath Misshra, learned CIT, appearing for Revenue, on other hand, argued that law should be read as it appears in statute book. He referred to s. 115JA in detail. He explained that section begins with non obstante clause. That is liability under s. 115JA existed irrespective of law stated in remaining provisions of IT Act. statute has declared that s. 115JA applies to "every assessee being company". Therefore, even if assessee is company incorporated under s. 25 of Companies Act, 1956, it is still company required to prepare its annual accounts in accordance with Sch. VI to Companies Act, 1956, and therefore, bound by s. 115JA. We heard both sides in detail. scheme of MAT has been brought into t h e statute book to deal with special situation. number of companies otherwise earning profit and income as well as declaring dividends, were not paying income-tax by claiming number of deductions available under statute. This has created serious case of economic and equitable anomaly. In order to overcome this situation, deeming provision was brought into IT Act whereby company is bound to pay tax either on its normal income-tax profits or on 30 per cent of book profit whichever is higher. For that purpose, book profit means profit computed under Sch. VI to Companies Act, 1956. It is obvious from above that s. 115JA is to deal with such companies earning normal business profits. It is applicable to such companies which are preparing P&L a/c in accordance with Part II and Part III of Sch. VI to Companies Act, 1956. In fact, assessee is not earning any profit at all. It is earning income. expression "income" is little different from expression "profits", as far as present situation is concerned. That is why in Companies Act it has been provided that s. 25 companies need to prepare "income and expenditure account" in place of "P&L a/c". Companies are registered under s. 25 of Companies Act, 1956 either for carrying on charitable purposes or for carrying on activities of mutual interest. company incorporated under s. 25 is prohibited from declaring dividends or distributing profits to its members. constituents of company registered under s. 25 are known as members and not as "shareholders". This difference is also to be noted. In such circumstances, where company not supposed to make profit and declare dividends or distribute profits is anyhow exempt from levy of tax provided they are satisfying other conditions prescribed. In case of charitable institutions, it must answer to law stated in ss. 11 and 12. When those conditions are satisfied, income itself is exempt from taxation. In such circumstances, where is scope of s. 115J to play? This proposition equally applies to mutual concern. IT law has accepted principle of mutuality to exempt from levy of taxation. This is because mutual concern is working within itself on principle of mutuality, and therefore, all activities are considered to be carried out with and by members constituting association. person cannot generate income or profit by dealing with himself. It is on this principle that mutual association is exempt from tax. That does not mean that mutual association can carry on any business and escape from levy of tax. Where mutual association like assessee does not carry on any such business and almost entire income is derived from mutual activities, it is exempt from tax. It is only where such company comes out of tax exemption by indulging in activities of earning profits and distributing same that question of assessing it like any other company arises. In such situation, s. 115JA may come into play. But so long as assessee company is enjoying immunity from tax on ground of mutuality, question of taxation does not arise except for certain income that assessee may earn incidental to carrying on its objectives. It is possible that mutual association may earn income from services or facilities extended to non-members. If such activity is major activity carried on by mutual association, question of taxability would arise in substantial way and even rule of mutuality may be questioned in such cases. In such circumstances, applicability of s. 115JA cannot be ruled out. But in present case, assessee is professional association. There i s no case of non-members involving in affairs of assessee company. assessee company is meant only for travelling agents working in India. T h e assessee company admits only such travel agents as its members. Therefore, invariably, activities carried on by assessee company are meant for member travel agents alone and obviously mutual in character. Therefore, in present case, no contingencies exist as apprehended in paras above. assessee is mutual concern in its strict sense. All members are travel agents in India. They have no activity other than mutual activities. Tribunal has held for earlier assessment years that convention receipts, membership and subscription fees and interest thereon are exempted receipts being in nature of mutual receipts. Once those receipts are taken out of computation of excess of income over expenditure, what is leftover is minimal in nature of incidental receipts. Such incidental receipts will not decide character of activities carried on by assessee company. Therefore, to conclude, we have to hold that assessee is mutual concern, carrying on activities of earning receipts and making payments for all mutual activities. It is not for profit or income. assessee does not declare dividends. assessee does not distribute its income. Therefore, in such circumstances, it does not come under MAT regime. Therefore, s. 115JA is not applicable in case of assessee company. Therefore, we set aside computation of income made for these three assessment years under s. 115JA. AO is directed to process file under regular provisions of IT Act, 1961. In result, these three appeals filed by assessee are allowed. *** INCOME TAX OFFICER v. GANESH TRADING CO.