SANTACRUZ GYMKHANA, MUMBAI V. ACIT CIR 19(1), MUMBAI

ITA 1008/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7848 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 23-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 08-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SK MAHAPATRA PER R K
• Assessee Lawyers: SANJIV M SHAH
• Keywords: Opportunity of being heard

Judgement Text

1 ITA NO.1008/M UM/2010 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI E EE E BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI D MANMOHAN, VP & SHRI D MANMOHAN, VP & SHRI D MANMOHAN, VP & SHRI D MANMOHAN, VP & SHRI R K PANDA, AM SHRI R K PANDA, AM SHRI R K PANDA, AM SHRI R K PANDA, AM ITA NO. ITA NO. ITA NO. ITA NO. 1008/MUM/2010 1008/MUM/2010 1008/MUM/2010 1008/MUM/2010 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR 2005 2005 2005 2005- -- -06 0606 06) )) ) SANTACRUZ GYMKHANA 11 TH ROAD, SANTACRUZ (E) MUMBAI 55 VS THE ASST COMMR OF INCOME TAX CIR 19(1), MUMBAI ( (( (APPELLANT APPELLANT APPELLANT APPELLANT) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO.AAAAS4059E AAAAS4059E AAAAS4059E AAAAS4059E A SSESSEE BY SHRI SANJIV M SHAH REVENUE BY SHRI SK MAHAPATRA PER R K PANDA, AM PER R K PANDA, AM PER R K PANDA, AM PER R K PANDA, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 26.11.2009 OF THE CIT(A)-30, MUMBAI RELATING TO ASS ESSMENT YEAR 2005-06. 2 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSE E IS AN AOP RUNNING ON THE PRINCIPLE OF MUTUALITY. DURING THE YEAR UNDER CONSI DERATION, THE ASSESSEE HAS RECEIVED INTEREST OF RS.11.53,180/- ON FDS WITH THE BANK. ACCORDING TO THE ASSESSING OFFICER, THE INCOME EARNED FROM BANK INTE REST IS OUTSIDE THE PURVIEW OF MUTUALITY CONCEPT AND IS TAXABLE. HE, ACCORDINGL Y CONFRONTED THE SAME TO THE ASSESSEE. AFTER RECEIVING REPLY FROM THE ASSESSEE, THE ASSESSING OFFICER HELD THAT THE SAID INCOME FROM BANK INTEREST WAS NOT FR OM A MUTUAL ACTIVITY AND AS SUCH IT WAS EXIGIBLE TO TAX. HE, ACCORDINGLY HELD THE ENTIRE INTEREST INCOME OF RS. 11,53,180/- AS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. WHILE COMING TO THE CONCLUSION, THE ASSE SSING OFFICER RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CHELMSFORD CLUB V CIT REPORTED IN 243 ITR 89(SC) 2 ITA NO.1008/M UM/2010 2.1 THE ASSESSING OFFICER FURTHER HELD THAT THE LOS SES INCURRED BY THE ASSESSEE ARE GOVERNED BY CONCEPT OF MUTUALITY; BUT INTEREST INCOME IS NOT GOVERNED BY CONCEPT OF MUTUALITY AND CONSEQUENTLY IS TAXABLE UN DER THE HEAD INCOME FROM OTHER SOURCES. THE VARIOUS EXPENSES INCURRED BY TH E ASSESSEE HAVE NOT BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF EARNING OF INTEREST INCOME AND THEREFORE, THE SAME ARE NOT ALLOWABLE U/S 57(II I) OF THE I T ACT. HE, ACCORDINGLY, TAXED THE ENTIRE INTEREST INCOME OF RS . 11,53,180/- AS INCOME FROM OTHER SOURCES. 3 IN APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER, FOR WHICH THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRI BUNAL WITH THE FOLLOWING GROUNDS: I) THE LD CIT(A ERRED IN APPROVING THE ADDITION OF INTEREST EARNED ON FIXED DEPOSITS OF RS. 11,53,020 ON THE PREMISE THAT THE PRINCIPLE MUTUALITY IS NOT SATISFIED IN THE APPELLANTS CASE. II) THE LD CIT(A) ERRED IN REJECTING THE VARIOUS RE LEVANT AND GERMANE DECISIONS CITED AND RELIED UPON BY THE APPELLANT. III)THE APPELLANT CRAVES LEVEE TO ADD TO AND/OR EME ND AND/OR DELETE AND/OR MODIFY AND/OR ALTER THE AFORESAID GROUNDS OF APPEAL AS AND WHEN THE OCCASION DEMANDS. 4 THE ASSESSEE HAS ALSO TAKEN THE FOLLOWING ADDITIO NAL GROUNDS: I). THE LD ASSESSING OFFICER ERRED IN NOT ALLOWING THE SET OFF SEVERAL AND MULTIPLE EXPENSES INCURRED BY THE APPELLANT AGAINST THE INTEREST INCOME OF RS.11,53,018/- II)THE LD ASSESSING OFFICER ERRED IN ADDLING THE AP PELLANT WITH INTEREST U/S234B RS. 111,902/- AND 234C RS 4,617/- 5 REFERRING TO THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC REPORTED IN 229 ITR 383 AND IN THE CASE OF JUT E CORPORATION OF INDIA REPORTED IN 187 ITR 688 AND VARIOUS OTHER DECISIONS , THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITIONAL GROUNDS RAI SED BY THE ASSESSEE SHOULD 3 ITA NO.1008/M UM/2010 BE ACCEPTED SINCE NO FRESH FACTS NEED TO BE EXAMINE D AND IT IS PURELY A LEGAL ISSUE. 5.1 THE LD DR, ON THE OTHER HAND, SUBMITTED THAT SI NCE THESE ADDITIONAL GROUNDS ARE RAISED FOR THE FIRST TIME BEFORE THE TR IBUNAL AND WAS NOT ADJUDICATED EITHER BY THE ASSESSING OFFICER OR BY THE CIT(A); T HEREFORE, THESE NEED TO GO BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 6 AFTER HEARING BOTH THE SIDES, WE FIND, ADMITTEDLY THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE WERE NOT RAISED BEFORE THE C IT(A) AND THE ASSESSING OFFICER ALSO HAD NO OCCASION TO DECIDE THE ISSUE IN THE LINES NOW AGITATED BY THE ASSESSEE THROUGH THESE ADDITIONAL GROUNDS. THEREFOR E, WE, IN THE INTEREST OF JUSTICE, DEEM IT PROPER TO RESTORE THE ISSUE BACK T O THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO DECIDE THE ISSUE AFRE SH AND IN ACCORDANCE WITH LAW. NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL GIVE D UE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. TH E GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PU RPOSE. 7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 30 TH , DAY OF MAR 2011. SD/- SD/- ( (( ( D MAMMOHAN D MAMMOHAN D MAMMOHAN D MAMMOHAN ) )) ) VICE PRESIDENT ( (( ( R K PANDA R K PANDA R K PANDA R K PANDA ) )) ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 30 TH , MAR 2011 RAJ* 4 ITA NO.1008/M UM/2010 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI