Santosh Hegde, J. - (1.) The following two questions were referred to the High Court of Delhi by the Income Tax Appellate Tribunal (for short 'the Tribunal') in respect of assessment years 1977-98 and 1978-79:"1. Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal was legally correct in holding that the annual letting value of the Club building is not assessable to income-tax under the head 'Income from property' 2. Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal was legally correct in holding that the principle of mutuality applies to the property income and accordingly it is not taxable income of the assessee -
(2.) The High Court relying on Section 22 of the Income-tax Act, 1961 (hereinafter to as 'the Act') and following the judgment of Allahabad High Court in the case of C.I.T., U. P. v. Wheeler Club Limited, (1963) 49 ITR 52 and some observations of the Delhi High Court in the case of C.I.T., Delhi-II v. Delhi Gymkhana Club Ltd., 155 ITR 373 answered the questions in the negative and in favour of the Department. Against the said judgment of the High Court dated 11-11-1992, the appellant has preferred these appeals.
(3.) On behalf of the appellant, it is contended before us that the appellant though registered as a Company under the Companies Act, its business is governed by the principle of mutuality, therefore, the income, if any, earned by the appellant is outside the scope of the Income-tax Act. This is based on a principle that it is the only income which comes within the definition of Section 2 (24) of the Act, that could be taxed and this definition generally excludes the income from business involving doctrine of mutuality, except the business that is included specifically in sub-clause (vii) of that Section. The appellant contends that its business admittedly does not come under the clause, hence, any income earned by the appellant is not exigible to income-tax. The appellant relies on a decision of this Court in C.I.T. v. Bankipur Club Limited, 226 ITR 97. It is further contended by the appellant that what is taxed under Section 22 of the Act is in reality an income, though in a deemed form and, therefore, this income is also outside the scope of income-tax in view of the principle of mutuality. For this proposition, the appellants relies on another judgment of this Court in the case of Bhagwan Dass Jain v. Union of India, 128 ITR 315.;