Principal of mutulity

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