V.K.Mehrotra, J. - (1.) The following questions of law have been referred for the opinion of this court by the Income-tax Appellate Tribunal, Allahabad Bench, Allahabad: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the income of the assessee was liable to be assessed as income from other sources ? (2) If the answer to question No. 1 is in the negative, was this income, income from property as claimed by the Department or business income as claimed by the assessee ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in rejecting the assessee's claim that its income was exempt from tax on the principle of mutuality ?"
(2.) The necessary facts are these. The assessee which is a company registered under the Indian Companies Act, 1913, is running a club at Kanpur for the benefit of its members. Out of the fifteen, rooms in the club, some were used by some of its members on payment of Rs. 250 per month per room. The claim of the assessee was that the amount received by it was income from business and was exempt from tax on the principle of mutuality ; alternatively, that it was income from other sources under Section 56 of the Income-tax Act, 1961, and that even, as such, it was exempt from tax on the principle of mutuality. The Commissioner, on the other hand, claimed that it was income from house property and, as such, liable to tax. The present reference relates to the assessment year 1972-73.
(3.) The Tribunal took the view that the income of the assessee was one from other sources and further, that it was not exempt from tax on the principle of mutuality as claimed by the assessee. The reference was made by it of the aforesaid questions for the opinion of this court both at the instance of the Commissioner of Income-tax as well as the assessee.;