The Anakapalle Rural Electrical Co-operative Society Limited, , Anakapalle V. The Assistant Commissioner of Income Tax, Circle-1, , Kakinada

CO 57/VIZ/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6416 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-09-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 24-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K SONAWAL
• Keywords: Set aside
• Section: 143(3); 80P; 69B; 201; 13; 22; 10; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM (T HROUGH WEB - BASED VIDEO CONFERENCING PLATFORM) BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER I . T . A . NO S . 140 & 141 /VIZ/2019 (ASST. YEAR S : 20 1 3 - 1 4 & 201 4 - 1 5 ) ACIT, CIRCLE - 1, KAKINADA. VS. M/S. THE A NAKAPALLE RURAL ELECTRICAL CO - OPERATIVE SOCIETY LTD., B - 1539, MAIN ROAD, KASIMKOTA, VISAKHAPATNAM DISTRICT PAN NO. AAAAT 3410 A (APP ELLANT ) (RESPONDENT) C.O.NOS. 57 & 58/VIZ/2019 (ARISING OUT OF I.T.A. NOS. 140 & 141/VIZ/2019) (ASST. YEAR S : 2013 - 14 & 2014 - 15 ) M/S. THE A NAKAPALLE RURAL ELECTRICAL CO - OPERATIVE SOCIETY LTD., B - 1539, MAIN ROAD, KASIMKOTA, VISAKHAPATNAM DISTRICT VS. ACIT, CIRCLE - 1, KAKINADA. PAN NO. AAAAT 3410 A (APPLICANT ) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI , ADVOCATE . DEPARTMENT BY : SHRI D.K. SONAWAL, CIT - DR DATE OF HEARING : 19 / 0 8 /2020 . DATE OF PRONOUNCEMENT : 22 / 0 9 /20 20 . O R D E R PER V. DURGA RAO , JUDICIAL MEMBER THESE APPEAL S BY THE REVENUE AND THE CROSS OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S OF 2 ITA NO S . 140 & 141/VIZ/2019 C.O.NOS. 57 & 58/VIZ/2019 ( THE ANAKAPALLE RURAL ELECTRICAL CO - OPERATIVE SOCIETY LTD. ) COMMISSIONER OF INCOME TAX (APPEALS) - 2 , VISAKHAPATNAM , BOTH DATED 14 / 1 2 /201 8 FOR THE ASSESSMENT YEAR S 20 1 3 - 1 4 & 2014 - 15 . SINCE FACTS AND ISSUES ARE COMMON, CLUBBED AND HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER . ITA NO. 140/VIZ/20 19 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE ORDER OF THE LD. CIT(A) - 2, VISAKHAPATNAM IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2) LD. CIT(A) - 2, VISAKHAPATNAM ERRED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEDUCTIO N CLAIMED BY THE ASSESSEE U/S. 8 0 P OF THE I.T. ACT 1961 BY STATING THAT THE INCOME OF THE SOCIETY IS OTHERWISE EXEMPT FROM TAX ON THE PRINCIPLE OF MUTUALITY. 3) LD. CIT(A) FAILED TO NOTE THAT THE ASSESSEE - SOCIETY ITSELF FILED THE RETURN OF INCOME ADMITTING GROSS TOTAL INCOME COMPUTED UND ER THE PROVISIONS OF THE I.T.ACT AND THEREAFTER CLAIMED DEDUCTION U/S. 80P OF THE I.T. ACT. 4) LD. CIT(A) ALSO FAILED TO APPRECIATE THAT IT IS ONLY WHEN THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE ITS CLAIM OF DEDUCTION U/S. 80P DURING THE ASSESSMENT PROCEE DINGS THE SOCIETY CHANGED ITS STAND AND CLAIMED THAT ITS INCOME IS EXEMPT ON THE PRINCIPLE OF MUTUALITY. 5) LD. CIT(A) OUGHT TO HAVE FURTHER APPRECIATED THAT THE ASSESSEE - SOCIETY IS LIKE ANY OTHER CONSUMERS SOCIETY AND IT IS ELIGIBLE FOR DEDUCTION UNDER C LAUSE(C) OF SECTION 80P(2) ONLY TO THE EXTENT OF RS. ONE LAKH AS CONSIDERED IN THE ASSESSMENT ORDER. 6) THE APPELLANT CRAVES LEAVE TO ADD OR DELETE OR SUBSTITUTE OR AMEND ANY GROUND OF APPEAL BEFORE AND / OR AT THE TIME OF HEARING OF THE APPEAL. FOR THES E AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, IT IS PRAYED THAT THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S. 80P OF THE I.T. ACT BE RESTORED. 3 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY WHICH PURCHASES POWER FROM APEPDCL AND 3 ITA NO S . 140 & 141/VIZ/2019 C.O.NOS. 57 & 58/VIZ/2019 ( THE ANAKAPALLE RURAL ELECTRICAL CO - OPERATIVE SOCIETY LTD. ) DISTRIBUTES THE SAME TO THE CONSUMERS , FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 42,03,080/ - AFTER CLAIMING DEDUCTION U/SEC. 80P AT RS. 1,33,64,521/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE ASSESSEE U/SEC. 80P(2)(C) AND ASSESSMENT WAS COMPLETED U/SEC. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') DATED 31/03/ 2016 . THE REASON GIVEN BY THE ASSESSING OFFICER FOR DISALLOWANCE U/SEC. 80P(2)(C) IS THAT THE ASSESSEE - SOCIETY IS NOT A MUTUAL ASSOCIATION, BUT A CONSUMER COOPERATIVE SOCIETY WHICH RUN ITS ACTIVITIES FOR THE BENEFIT OF ITS MEMBERS / CONSUMERS . HE FURTHER OBSERVED THAT ASSESSEE - SOCIETY IS REGISTERED BY THE DEPUTY REGISTRAR OF COOPERATIVE SOCIETIES , VISAKHAPATNAM ON 18/10/2014 THAT IS FAR BEYOND THE END OF THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2013 - 14. THE ASSESSEE - SOCIETY NOT ABLE TO PROVE ITS CLAIM OF DEDUCTION U/SEC. 80P, IT HAS COME OUT WITH AN IDEA OF BEING MUTUAL ASSOCIATION. THE ASSESSING OFFICER HAS OBSERVED THAT THE PRINCIPLE OF MUTUAL CONCEPT APPLIES WHERE THE SURPLUS IS DISTR I B UT ED AMONGST THE MEMBERS AS DIVIDEND. BUT IN THE CASE OF THE ASSESSEE - SOCIETY IT HAS NOT DISTRIBUTED ANY DIVIDEND BUT SURPLUS IS ACCUMULATED OR SOME PART OF IT IS BEING UTILIZED FOR THE SOCIETY. AS PER THE BYE - LAWS OF THE SOCIETY IT HAD TO DISTRIBUTE 25% OF THE PROFIT OF THE YEAR AS 4 ITA NO S . 140 & 141/VIZ/2019 C.O.NOS. 57 & 58/VIZ/2019 ( THE ANAKAPALLE RURAL ELECTRICAL CO - OPERATIVE SOCIETY LTD. ) DIVIDEND TO THE MEMBERS OF THE SOCIETY , WHICH HAS NOT DONE SO. THEREFORE, THE CONCEPT OF MUTUALITY IS NOT APPLICABLE TO THE ASSESSEE. 4 . BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND SUBMITTED BEFORE HIM THAT UNDER THE SIMILAR FACTS SAME ISSUE CAME UP BEFORE THE HON'BLE ITAT, VISAKHAPATNAM BENCH IN ASSESSEES OWN CASE IN ITA NO. 297/VIZ/201 6 FOR THE A.Y. 2012 - 13 DATED 21/02/2018 WHEREBY THE HON'BLE ITAT HAS DIRECTED THE ASSESSING OFFICER TO ALLOW 80P(2)(C) CLAIM TO THE ASSESSEE . THE LD. CIT(A) BY FOLLOWING THE DECISION OF THE ITAT IN ASSESSEES OWN CASE (SUPRA) THE CLAIM OF THE ASSESSEE U/SEC. 80P(2)(C) IS ALLOWED. 5. ON BEING AGGRIEVED, REVENUE CARRIED THE MATTER IN APPEAL BEFORE THIS TRIBUNAL. 6 . AT THE OUTSET , LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQ U ARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF TH IS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.297/VIZ/2016 FOR THE A.Y. 2012 - 13 , DATED 21/02/2018 AND THE LD. CIT(A) BY FOLLOWING THE SAME , ALLOWED THE CLAIM MADE BY THE ASSESSEE , THEREFORE REQUESTED TO DISMISS THE APPEAL OF THE REVENUE. 5 ITA NO S . 140 & 141/VIZ/2019 C.O.NOS. 57 & 58/VIZ/2019 ( THE ANAKAPALLE RURAL ELECTRICAL CO - OPERATIVE SOCIETY LTD. ) 7 . ON THE OTHER HAND, LD.DR STRONGLY PLACED RELIANCE ON THE GR O UNDS OF APPEAL AND SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 8 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 9 . THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WHETHER ASSESSEE IS ENTITLED TO CLAIM UNDER SECTION 80P(2)(C) OR NOT. A SIMILAR ISSUE CAME UP BEFORE THE ITAT IN ASSESSEES OWN CASE IN ITA NO. 297/VIZ/2016 FOR THE A.Y. 2012 - 13 BY ORDER DATED 21/02/2018 WHEREIN THE ITAT HAS HELD THAT THE ASSESSEE IS ENTITLED FOR BENEFIT OF SECTION 80P(2)(C) OF THE ACT. T HE LD. CIT(A) BY FOLLOWING THE SAME APPEAL FILED BY THE ASSESSEE IS ALLOWED . FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE ORDER IN ITA NO. 297/VIZ/2016 (SUPRA) IS EXTRACTED AS UNDER : - 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THERE IS NO DISPUTE THAT THE ASSESSEE IS A MUTUAL ASSOCIATION ESTABLISHED FOR THE PURPOSE OF SUPPLY OF ELECTRICITY TO THE RURAL FARMERS AT A REASONABLE PRICE TO IMPROVE THE INFRASTR UCTURE. ALL THE MEMBERS AND CONTRIBUTORS ARE IDENTIFIABLE AND THE CONTRIBUTORS AS WELL AS THE CONSUMERS ARE THE SAME. THERE IS NO OTHER OUTSIDER IS INVOLVED IN THE ASSOCIATION. HONBLE SUPREME COURT IN THE CASE OF MERCHANT NAVY CLUB AND ROYAL WESTERN IND IA TURF CLUB LTD. (SUPRA) HELD THAT THE INCOME OF THE CLUB WAS NOT PROFIT FROM BUSINESS ASSESSABLE U/S 10 OF THE IT ACT ON MUTUALITY BASIS. IN THE INSTANT CASE, THERE IS NO DISPUTE THAT CONTRIBUTORS AND THE CONSUMERS ARE ONE AND THE SAME. IN THE CASE OF SH REE JARI MERCHANTS ASSOCIATION, HONBLE GUJARAT HIGH COURT HELD THAT THERE IS NO BASIS FOR PRINCIPLE OF MUTUALITY BECAUSE OF RULE 38 AT ITS CONSTITUTION, WHEREIN IT SHOWS THAT AT THE TIME OF DISSOLUTION OF THE ASSOCIATION ITS SURPLUS WOULD BE DISTRIBUTED 6 ITA NO S . 140 & 141/VIZ/2019 C.O.NOS. 57 & 58/VIZ/2019 ( THE ANAKAPALLE RURAL ELECTRICAL CO - OPERATIVE SOCIETY LTD. ) AMONGST NON MEMBERS. THE CASE LAW RELIED UPON BY THE AO IS DISTINGUISHABLE SINCE THERE IS NO SUCH RULE OR BYE LAW IN THE CASE OF THE ASSESSEE. IN THE ABSENCE OF BYE LAWS REGARDING THE DISPOSAL OF SURPLUS ASSETS, SECTION 69B OF AP COOPERATIVE SOCIETIES ACT 1964 WOULD BE APPLICABLE AND IN SUCH CASE, THE SURPLUS WOULD BE VESTED WITH THE REGISTRAR WHO SHALL HOLD IT IN TRUST AND SHALL TRANSFER IT TO THE RESERVE FUNDS OF THE SOCIETY REGISTERED WITH THE SIMILAR OBJECTS. IN THE SIMILAR CIRCUMSTANCES, HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF CIT VS. WEST GODAVARI DISTRICT RICE MILLERS ASSOCIATION HELD THAT INCOME OF THE SOCIETY IS EXEMPT EVEN IF THE SURPLUS GOES TO SOME OTHER SOCIETY WITH SIMILAR OBJECTS ON DISSOLUTION. FOR THE SAKE OF CLARITY AND CONVENIEN CE WE REPRODUCE RELEVANT PART OF THE HONBLE JURISDICTIONAL ORDER WHICH READS AS UNDER: 7. A MUTUAL ASSOCIATION IS AN ASSOCIATION OF PERSONS WHO AGREE TO CONTRIBUTE FUNDS FOR SOME COMMON PURPOSE MUTUALLY BENEFICIAL AND RECEIVE BACK THE SURPLUS LEFT OUT IN THE SAME CAPACITY IN WHICH THEY HAVE MADE THE CONTRIBUTIONS. THEREFORE, THE CAPACITY AS CO NTRIBUTORS AND PARTICIPANTS REMAINS THE SAME. THEY CONTRIBUTE NOT WITH AN IDEA TO TRADE BUT WITH AN IDEA OF RENDERING OF MUTUAL HELP. THEY RECEIVE BACK THE SURPLUS, WHICH IS LEFT AFTER MEETING THE EXPENDITURE OF THE ASSOCIATION WHICH IS INCURRED FOR THE CO MMON PURPOSE IN THE SAME CAPACITY IN WHICH THEY HAVE CONTRIBUTED. THUS, THEY RECEIVE BACK WHAT WAS REALLY THEIR OWN. THE RECEIPT IN THEIR HANDS IS NOT REALLY A PROFIT AS NO MAN CAN MAKE A PROFIT OUT OF HIMSELF, JUST AS HE CANNOT ENTER INTO A TRADE OR BUSIN ESS WITH HIMSELF. THUS, THE MAIN TEST OF MUTUALITY IS COMPLETE WITH THE IDENTITY OF CONTRIBUTORS WITH THE RECIPIENTS. IT IS WELL SETTLED THAT THE IDENTITY NEED NOT BE NECESSARILY OF INDIVIDUALS BECAUSE IT IS THE IDENTITY OF STATUS OR CAPACITY WHICH MATTERS MORE. THE INDIVIDUAL MEMBERS OF AN ASSOCIATION MAY BE DIFFERENT; BUT SO LONG AS THE CONTRIBUTORS AND RECIPIENTS ARE BOTH HOLDING THE MEMBERSHIP STATUS IN THE ASSOCIATION, THEIR IDENTITY WOULD BE AVAILABLE TO THEM IF SUCH A MUTUAL CONCERN RECEIVES ANY INCO ME THE SURPLUS OF WHICH GOES BACK TO THE CONTRIBUTORS OF THE SAID INCOME. NOW THESE ARE THE WELL SETTLED PRINCIPLES ON THE QUESTION OF MUTUALITY. BUT, MR. M.S.N. MURTHY, THE LEARNED COUNSEL FOR THE DEPARTMENT, RELIED UPON RULE 21 OF THE MEMORANDUM OF ASSOC IATION WHICH SAYS THAT THE SURPLUS SHOULD BE TRANSFERRED TO SOME OTHER ASSOCIATION HAVING SIMILAR OBJECTS. HE ADMITS THAT SINCE THERE IS A BAN ON THE SURPLUS GOING TO THE MEMBERS, THERE IS NO IDENTITY BETWEEN THE CONTRIBUTORS AND THE RECIPIENTS. IN SUPPORT OF THIS CONTENTION, THE LEARNED COUNSEL RELIED UPON A DECISION OF THE GUJARAT HIGH COURT 7 ITA NO S . 140 & 141/VIZ/2019 C.O.NOS. 57 & 58/VIZ/2019 ( THE ANAKAPALLE RURAL ELECTRICAL CO - OPERATIVE SOCIETY LTD. ) IN CIT V. SHREE JARI MERCHANTS ASSOCIATION [1977] 106 ITR 542 . IN THIS CASE RUL E 38 OF THE CONSTITUTION OF THE ASSESSEE - ASSOCIATION PROVIDED THAT THE - SURPLUS ASSETS SHOULD BE USED AS PER THE DECISION OF THE ASSOCIATION AT THE TIME OF ITS DISSOLUTION. ON A CONSTRUCTION OF THIS RULE, THE GUJARAT HIGH COURT HELD THAT THERE WAS NO IDENTI TY BETWEEN THE CONTRIBUTORS AND THE RECIPIENTS AND THE ASSESSEE, THEREFORE, COULD NOT CLAIM EXEMPTION FROM THE TAX ON THAT GROUND. BUT SHRI ANJANEYULU, THE LEARNED COUNSEL FOR THE PETITIONER, STRONGLY RELIED UPON THE DECISION OF THE MADRAS HIGH COURT IN CI T V. MADRAS RACE CLUB [1976] 105 ITR 433 AND TWO DECISIONS OF THIS COURT IN CIT V. MERCHANT NAVY CLUB [1974] 96 ITR 261 AND ADDL. CIT V. SECUNDERABAD CLUB [RC NO. 10 OF 1974 DATED 3 - 12 - 1975]. WE SHALL REFER TO THE DECISION OF THE MADRAS HIGH COURT IN MADRAS RACE CLUB'S CASE (SUPRA). IN THIS CASE, THE CONTENTION OF THE REVENUE WAS THAT THE APPLICATION OF PRINCIPLE OF MUTUALITY WAS EXCLUDED BECAUSE THE MEMORANDUM OF ASSOCIATION PROVIDED THAT THERE COULD BE NO DISTRIBUTION OF PROFITS AND THAT AT THE TIME OF WINDING UP THE SURPLUS WAS NOT DIVISIBLE AMONG THE MEMBERS, BUT HAD TO BE MADE OVER TO ENTITIES HAVING SIMILAR OBJECTS. THE MADRAS HIGH COURT REPELLED THIS CONTENTION AND OBSERVED AS FOLLOWS: 'THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF A COMPANY REPRESENT THE CONTRACT BETWEEN THE COMPANY AND THE MEMBERS. IT IS ONLY BY VIRTUE OF THEIR OWN ERSHIP OF THE SURPLUS ASSETS, IF ANY, THAT THE MEMBERS HAD AGREED TO THE CLAUSE THAT THEY WOULD NOT TAKE BACK THE SURPLUS, BUT ALLOW IT TO BE TRANSFERRED TO ANY SIMILAR ENTITY. AS THEY THEMSELVES ARE TO DEAL WITH THE SURPLUS, IF ANY, AT THE TIME OF WINDING UP, IT CANNOT BE SAID THAT THEY ARE NOT PARTICIPATORS IN THE SURPLUS. THIS CLAUSE IS ONLY A FETTER IN THE MANNER OF DISPOSAL. THE PARTICIPATION ENVISAGED IN THE PRINCIPLE OF MUTUALITY IS NOT THAT THE MEMBERS SHOULD WILLY - NILLY TAKE THE SURPLUS TO THEMSELV ES. IT IS ENOUGH IF THEY HAD A RIGHT OF DISPOSAL OVER THE SURPLUS TO SHOW THAT THEY WERE THE PARTICIPATORS.' (P. 434). 8. THIS CASE, IN OUR OPINION, IS DIRECTLY APPLICABLE TO THE FACTS OF THE PRESENT CASE. RULE 21 OF THE MEMORANDUM OF ASSOCIATION SAYS THAT THE SURPLUS SHOULD NOT GO TO THE MEMBERS AND IT SHOULD BE MADE OVER TO THE ASSOCIATIONS WITH SIMILAR OBJECTS BY A DECISION OF THE 3/5THS MAJORITY OF THE ASSOCIATION IN ALMOST IDENTICAL TERMS. AS THE OWNERS OF THE PROPERTY, THEY HAVE THE RIGHT TO DISPOSE O F THE SAME IN THE MANNER THEY CHOOSE AND IF THEY DECIDED THAT IT SHOULD BE GIVEN TO ASSOCIATIONS WITH ALLIED OBJECTS, IT IS DIFFICULT TO 8 ITA NO S . 140 & 141/VIZ/2019 C.O.NOS. 57 & 58/VIZ/2019 ( THE ANAKAPALLE RURAL ELECTRICAL CO - OPERATIVE SOCIETY LTD. ) SAY THAT THE DOCTRINE OF MUTUALITY IS NOT ATTRACTED. THE MADRAS HIGH COURT QUOTED WITH APPROVAL THE RATIO OF THE DECISI ON IN IRC V. ECCENTRIC CLUB LTD. [1925] 12 TC 657 (HL). IN THAT CASE, THERE WAS A CLUB WHICH WAS INCORPORATED AS A COMPANY. THE OBJECT OF THE COMPANY WAS TO PROMOTE SOCIAL RELATIONS AMONGST GENTLEMEN CONNECTED WITH LITERATURE, ART, MUSIC, DRAMA, ETC., AND CONDUCT A CLUB OF NON - POLITICAL CHARACTER. THE MEMBERS AND THEIR FRIENDS WERE TO BE GIVEN THE PRIVILEGES, ADVANTAGES, CONVENIENCE AND ACCOMMODATION OF THE CLUB. SIMILAR TO OUR CLAUSE 21, THERE WAS CLAUSE 6 OF THE MEMORANDUM WHICH PROVIDED THAT NO MEMBER OF THE CLUB IN HIS CHARACTER AS SUCH MEMBER WAS ENTITLED TO RECEIVE, DIRECTLY OR INDIRECTLY, ANY DIVIDEND, BONUS OR OTHER PROFIT OUT OF SUCH INCOME OR PROPERTY OF THE CLUB. ON THE WINDING UP OF THE CLUB, THE SURPLUS, IF ANY, WAS NOT TO BE DISTRIBUTED AMONG T HE MEMBERS BUT WAS TO BE GIVEN OR TRANSFERRED, AS THE COMMITTEE OF MANAGEMENT MIGHT DETERMINE. WITH ALL THESE FEATURES, IT WAS HELD THAT THE DOCTRINE OF MUTUALITY WOULD APPLY AND THE AMOUNT WAS NOT LIABLE TO BE TAXED. 7.1. THE DECISION OF HONBLE JURISDICT IONAL HIGH COURT IS SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSE E S CASE. FURTHER THE ASSESSEE HAS AMENDED THE BYE LAWS AND PLACED BEFORE THE CIT(A), AFTER GOT REGISTERED WITH THE REGISTRAR OF SOCIETY TO ENABLE THE ASSESSEE TO DISTRIBUTE THE SURPLUS A SSETS AMONG ITS MEMBERS BEFORE COMPLETION OF THE APPELLATE PROCEEDINGS. THEREFORE, WE HOLD THAT THE ASSESSEE IS A MUTUAL ASSOCIATION AND THE INCOME OF THE SOCIETY IS NOT CHARGEABLE TO TAX U/S 4 OF THE IT ACT, ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LD. CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 8. SINCE WE HAVE HELD THAT THE SOCIETYS INCOME IS EXEMPT ON THE CONCEPT OF MUTUALITY, WE CONSIDER IT IS NOT NECESSARY TO ADJUDICATE THE REMAINING GROUNDS OF APPEAL. THE LD.DR HAS NOT PLACED ANY MATERIAL TO SHOW THAT THE FACTS OF THIS ASSESSMENT YEAR ARE DIFFEREN T AND HE HAS NOT BROUGHT TO OUR NOTICE TO SHOW THAT THE ABOVE SAID ORDER HAS BEEN MODIFIED OR REVERSED BY THE HON'BLE HIGH COURT. FURTHER, LD.DR COULD POINT OUT ANY CONTRAR Y DECISION S. THEREFORE, RESPECTFULLY FOLLOWING THE 9 ITA NO S . 140 & 141/VIZ/2019 C.O.NOS. 57 & 58/VIZ/2019 ( THE ANAKAPALLE RURAL ELECTRICAL CO - OPERATIVE SOCIETY LTD. ) DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 297/VIZ/2016 FOR THE A.Y. 2012 - 13 , DATED 21/02/2018, WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT( A). THUS, TH I S APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO.141/VIZ/2019 10 . TH E FACTS MENTIONED IN THIS APPEAL ARE SIMILAR TO THE FACTS MENTIONED IN ITA NO.140/VIZ/2019. THEREFORE, OUR DECISION IN ITA NO.140/VIZ/2019 SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL ALSO. C.O.NOS. 57 & 58/VIZ/2019 11 . THE CROSS O BJECTIONS FILED BY THE ASSESSEE ARE SUPPORTIVE TO THE ORDERS OF THE LD. CIT(A). AS THERE IS NO GRIEVANCE AGAINST THE ORDERS OF THE LD. CIT(A), THESE CROSS OBJECTIONS FILED BY THE ASSESSEE HAVE B E COME INFRUCTUOUS AND ARE DISMISSED A C CORDINGLY. 12 . IN THE RESULT, APPEAL S FILED BY THE REV E NUE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 2 N D DAY OF SEP. , 2020 . S D / - S D / - (D.S. SUNDER SINGH) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 2 N D SEPTEMBER , 20 20 . VR/ - 10 ITA NO S . 140 & 141/VIZ/2019 C.O.NOS. 57 & 58/VIZ/2019 ( THE ANAKAPALLE RURAL ELECTRICAL CO - OPERATIVE SOCIETY LTD. ) COPY TO: 1. THE ASSESSEE M/S. THE ANAKAPALLE RURAL ELECTRICAL CO - OPERATIVE SOCIETY LTD., B - 1539, MAIN ROAD, KASIMKOTA, VISAKHAPATNAM DISTRICT . 2. THE REVENUE THE ACIT, CIRCLE - 1, KAKINADA. 3. THE PR. CIT - 2 , VISAKHAPATNAM. 4. THE CIT(A) - 2, VISAKHAPATNAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.