TRAVEL AGENTS ASSOCIATION OF INDIA, MUMBAI V. ITO 1(3)(3), MUMBAI

ITA 1163/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3465 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 21-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER / I .T A NO. 1163/MUM/2014 ( / ASSESSMENT YEAR : 2010 - 11 M/S. TRAVEL AGENTS ASSOCIATION OF INDIA, 2 - D,LAWRENCE & MAYO HOUSE, 276, DR. D.N. ROAD, FORT, MUMBAI - 400 01 / VS. THE ITO, RANGE - 1(3)(3), MUMBAI ./ ./ PAN/GIR NO. AAACT 2733J ( / APP LICANT ) .. ( / RESPONDENT ) / APP ELLANT BY: SHRI SUNIL NAHTA / RESPONDENT BY: SHRI MANJUNATHA SWAMY / DATE OF HEARING : 11 . 0 2 . 201 6 / DATE OF PRONOUNCEMENT : 18.03.2016 / O R D E R PER C.N. PRASAD, JM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - 2, MUMBAI DATED 17.10 .201 3 PERTAINING TO ASSESSMENT YEAR 2010 - 11. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE ALLOWED A SUM OF RS.26,94,384/ - , BEING PROPORTIONATE ALLOCABLE EXPENSES CLAIMED BY THE APPELLANT OUT OF TOTAL COMMON EXPENDITURE INCURRED FOR EARNING TAXABLE RECEIPTS AS WELL AS NON - ITA NO. 1163/M/2014 2 TAXABLE RECEIPTS AGAINST THE INTEREST INCOME EARNED ON FIXED DEPOSITS MADE OUT OF MONIES RECEIVED FROM MEMBERS, AND NOT DOING SO IS WRONG & CONTRARY TO THE FACTS OF THE CASE, THE PROVISIONS OF THE INCOME TAX ACT, 1961 AND THE RULES MADE THEREUNDER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT CONSIDERING THE ALTERNATIVE CALCULATION OF PROPORTIONATE ALLOCABLE EXPENDITURE SUBMITTED BY THE ASSESSEE OF RS. 28,13,597/ - AS BEIN G ALLOCABLE TOWARDS EARNING THE INTEREST INCOME EARNED ON FIXED DEPOSITS MADE OUT OF MONIES RECEIVED FROM MEMBERS OUT OF TOTAL COMMON EXPENDITURE INCURRED FOR EARNING TAXABLE RECEIPTS AS WELL AS NON - TAXABLE RECEIPTS, AND NOT DOING SO IS WRONG & CONTRARY TO THE FACTS OF THE CASE, THE PROVISIONS OF THE INCOME TAX ACT, 1961 AND THE RULES MADE THEREUNDER. 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE CO - ORDINATE BENCH IN ASSESEES OWN CASE FOR ASS ESSMENT YEARS 2006 - 07 TO 2009 - 10 BY COMMON ORDER DATED 12.1.2016 WHEREIN THE CO - ORDINATE BENCH RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER IN RESPECT OF THE CLAIM MADE TOWARDS PROPORTIONATE EXPENDITURE. THE LD. COUNSEL SUBMITS THAT SIMILAR VIE W MAY BE TAKEN IN THIS ASSESSMENT YEAR ALSO. 4. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 5. IN ITS APPEAL, THE ASSESSEE CONTEN D S THAT LOWER AUTHORITIES SHOULD HAVE ALLOWED PROPORTIONATE ALLOCABLE EXPENSES CLAIMED BY THE ASSESSEE OUT OF TOTAL COMMON EXPENDITURE INCURRED FOR EARNING TAXABLE RECEIPTS AS WELL AS NON - TAXABLE RECEIPTS AGAINST THE INTEREST INCOME EARNED ON FIXED DEPOSITS MADE OUT OF MONIES RECEIVED FROM MEMBERS. ON PERUSAL OF THE CO - ORDINATE BENCH DECISION FOR THE ITA NO. 1163/M/2014 3 ASSESSMENT YEAR S 2006 - 07 TO 2009 - 10, WE FIND THAT THE MATTER WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH THE FOLLOWING DIRECTION. REPRESENTATIVES OF BOTH SIDES AGREED THAT THE FACTS IN ISSUES INVOLVED ARE IDENTICAL IN ALL THESE YEARS UNDER CONSIDERATION. ON THIS CONCESSION, WE HAVE CAREFULLY PERUSED THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT THE ENTIRE DISPUTE REVOLVES AROUND THE CLAIM OF PROPORTIONATE EXPENSES TOWARDS TAXABILITY OF INCOME EARNED AS INTEREST ON FIXED DEPOSIT RECEIPT. THE ASSESSEE IS INCORPORATED U/S. 25 OF THE COMPANIES ACT, 1956 WITH AN OBJECT TO PROMOTE THE INTEREST OF TRAVEL AGENTS BY MUTUAL HELP AND CO - OPERATION HAVING NO MOTIVE PROFIT WHATSOEVER NATURE AND STRICTLY PROHIBITS THE DISTRIBUTION OF INCOME AND PROPERTY TO THE MEMBERS, IN OTHER WORDS, THE ASSESSEE IS A MUTUAL ASSOCIATION AND AS SUCH RECEIPTS IN THE NATURE OF MEMBERSHIP SUBSCRIPTION, ANNUAL CONVENTION AND INTEREST ON FIXED DEPOSITS MADE OUT OF MEMBERS SUBSCRIPTION ARE CLAIMED TO BE EXEMPT FROM INCOME TAX ON THE PRINCIPLE OF MUTUALITY. WE FIND THAT THE ASSESSEE HAS BEEN ASSESSED IN THE EARLIER YEARS ON THE BASIS OF THE AGREED FORMULA CONFIRMED BY THE TRIBUNAL WHEREIN SOME INCOME WAS SUBJECT TO TAX IN EARLIER YEARS. SINCE COMMON EXPENDITURE ARE INCURRED F OR THE TAXABLE RECEIPTS AS WELL AS EXEMPTED RECEIPTS, THE SAME HAVE BEEN ALLOCATED IN PROPORTIONATE BASIS, WHICH THE TAXABLE RECEIPTS BEARS TO THE TOTAL RECEIPTS. IN VIEW OF THE SETTLED POSITION, THE ASSESSEE CLAIMED PROPORTIONATE EXPENDITURE. HOWEVER, IN SO FAR AS INTEREST ON FIXED DEPOSIT IS CONCERNED IN THE EARLIER YEARS, THE SAME WAS CLAIMED TO BE EXEMPTED BUT FOR THE YEARS UNDER CONSIDERATION PURSUANT TO SOME DECISIONS, THE INTEREST INCOME WAS ACCEPTED AS TAXABLE INCOME. HOWEVER, THE ASSESSEES CON TENTION IS THAT IN VIEW OF EARLIER YEARS CONSISTING DECISIONS FOR ALLOCATION OF EXPENDITURE, THE SAME SHOULD BE ACCEPTED AND FOLLOWED FOR THE YEAR UNDER CONSIDERATION ALSO. IN OUR CONSIDERED OPINION, THE CLAIM OF THE ASSESSEE HAS TO BE VERIFIED AS PER THE DECISIONS OF THE ITA NO. 1163/M/2014 4 TRIBUNAL GIVEN IN EARLIER YEARS KEEPING IN MIND THE RELEVANT PROVISIONS OF THE LAW. WE RESTORE THIS ISSUE TO THE FILES OF THE AO. ALL THE GRIEVANCE RELATING TO THIS ISSUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSE . IN VIEW OF THE ORDER OF THE CO - ORDINATE BENCH, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WHO SHALL FOLLOW THE CO - ORDINATE BENCH DECISION AND DECIDE THE ISSUE ACCORDINGLY . 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATI STICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH , 201 6 . SD/ - SD/ - ( RAJESH KUMAR ) ( C.N. PRASAD ) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI ; DATED : 18 TH MARCH , 201 6 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI