HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D. B. Income Tax Appeal No. 133/2016 Principal Commissioner of Income Tax-1, New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Petitioner Versus M/s. Jaipur Club Ltd, Jacob Road, Civil Lines, Jaipur ----Respondent Connected With D. B. Income Tax Appeal No. 153/2016 Principal Commissioner of Income Tax-1, New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Petitioner Versus M/s. Jaipur Club Ltd, Jacob Road, Civil Lines, Jaipur ----Respondent For Petitioner(s) : Mr. Anuroop Singhi with Mr. Aditiya Vijay For Respondent(s) : Mr. Anant Kasliwal HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 20/11/2017 1. In both these appeals since identical questions of law and facts are involved, they are decided by this common judgment. 2. By way of these appeals, appellants have challenged judgment and order of Tribunal whereby Tribunal has dismissed appeal of department. 3. This court while admitting appeals inadvertently framed following question of law wrongly:- (2 of 4) [ITA-133 /2016] Whether interest which has been earned on earlier assessment year will be taxable under Income Tax Act or not? 3.1 question which has been wrongly framed is now reframed as under and appeals be treated as admitted on these questions and are decided accordingly: 1. D.B. Income Tax Appeal No. 133/ 2016 Whether Tribunal was justified in holding that income earned by assessee-club from non- members of Rs. 30,54,177/- is exempted, ignoring principle of mutuality as per which only income earned from members is exempted and that from non- members is liable to be taxed? 2. D.B. Income Tax Appeal No. 153/ 2016 Whether Tribunal was justified in holding that income earned by assessee-club even from non-members is exempted, ignoring principle of mutuality as per which only income earned from members exempted and that from non-members is liable to be taxed? Whether Tribunal was justified in exempting receipts of Rs. 72,06,960/-, Rs. 19,34,146/-, Rs. 3,34,005/- and Rs. 6,286/- towards room, guest, lawn and annexe charges, respectively, admittedly when same was earned from non- members? 4. However, issue is now squarely covered by decision of this Court in case of Principal Commissioner of Income-Tax V/s M/s Jaipur Club Ltd., (D. B. Income Tax Appeal No. 25/2017) decided on 31.01.2017 wherein it has been held as under:- 3. Brief facts of case are that assessee club is registered as non trading company. It operates as club where members are allowed to enter and they are served food, liquor, refreshments etc. Facilities for various outdoor and indoor games (3 of 4) [ITA-133 /2016] and swimming, Gym etc. are provided to members. club considers itself mutual organization, and hence considers it s income as outside purview of taxability. On perusal of Income and Expenditure Account statement, it is seen that income/receipt consists of charges received by assessee on supply of various kinds of services to members as well as to non members. club on several occasions interacts with outsiders i.e. non members and income is generated on account of transactions with non members. A/R of assessee was asked to explain as to why income generated due to transactions with non members may not be considered as taxable. 4. In view of decision of this Court, issue is squarely covered against department in favour of assessee. 5. We are in complete agreement with view taken by Tribunal, more particularly, observations which are made in para 7 which reads as under:- 7.We have heard rival contentions and perused material available on record. Coordinate Bench of Tribunal in assessee s own case in ITA Nos. 592 & 418/JP/2013 for A.Y. 2007-08 and 2008-09 vide order dated 01.01.2016 has held as under:- 5. We have heard rival contentions of both parties and perused material available on record. assessee has not issued any bill in name of outsider. If any service has been provided to guest by club, bills has been issued in name of members only. Id Assessing Officer had not specifically pointed out receipts received from non members. He simply made disallowance on estimate basis. assessee has produced complete books of account during assessment proceedings. Therefore, principle laid down by Hon ble Supreme Court in case of Bankipur Club Limited (supra) is squarely applicable on principle of mutuality wherein it has been held that in any mutual organization, there is element of altruism, since benefit availed by member may not always be commensurate with his contribution. It was for this reason that even where there is no return on contribution, as in case of association formed for purpose of general public utility, mutuality may not be lost. Full Bench of Hon ble Patna High Court in case of CIT Vs. Ranchi Club Ltd. (supra) has also held that merely (4 of 4) [ITA-133 /2016] because assessee company had entered into transactions with non members and earned profits out of transactions held with them its right to claim exemption on principle of mutuality in respect of transactions held by it with its members was not lost. assessee was mutual concern, income derived by it from its house property let to its members and their guests and from sale of liquor etc. to its members and their guests was not taxable in its hands. above principle is squarely applicable in case of assessee, therefore, we uphold order of Id CIT (A) for both assessment years. By respectfully following decision on similar facts, we uphold order of Id. CIT(A). 5. In view of above, issue is required to be answered in favour of assessee and against department. 6. Both appeals stand dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. B.M.G./Gourav68-69 Principal Commissioner of Income-tax-1, Jaipur (Raj.) v. Jaipur Club Ltd