S.K.Choudhuri, J.

1. These five tax cases arise out of a reference made under Sec.256(1) of the I.T. Act, 1961 ( " the Act" for brief), at the instance of the Commissioner of Income-tax, Bihar, Patna.

2. The following two questions of law have been referred to this court:

" (i) Whether, on the facts and in the circumstances of the case, the profits arising from the sales made to the regular members of the club is entitled to exemption on the doctrine of mutuality ? (ii) Whether, on the facts and in the circumstances of the case, the directions given by the Tribunal are valid in law ? "

3. The assessee-respondent is known as the Bankipur Club Ltd. (" the club " for short), having its registered office at Bankipur, Patna, incorporated under the Companies Act, 1956, the liability of its shareholders being limited by guarantee. The main object of the club, as the memorandum of association shows, is to afford to its members all the usual privileges, advantages, conveniences and accommodation of a club. Clause 5 of the memorandum of association makes a provision that upon a winding-up or dissolution of the company, if there remains any property left after the satisfaction of all