Hiiiiiiii dear friends
Can some one explain what is principal of mutulity.
Thanx in advance.
1 Replies
Dhruv
(Chartered Accountant)
(308 Points)
Replied 21 April 2010
I think you mean mutuality
Basically, the principle of mutuality illustrates that no one can deal with himself and have claimed to make a profit. Only income that is earned from external sources is taxable. Thus a person cannot enter into a business transcation and requires atleast two persons for the business ( as per IT act) to take place.
There's actually a good article on it on CaclubIndia
/articles/concept-of-mutuality-a-discussion-2675.asp
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