THE WODEHOUSE GYMKHANA LTD, MUMBAI V. DCIT (OSD) 1(1), MUMBAI

ITA 1290/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2032 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 02-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 26-02-2014
• Court: TRIBUNAL
• Department Lawyers: PRAKASH R MANE
• Assessee Lawyers: JEEVRAJ P JAIN
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

, , G, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI , , , BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.1290/MUM/2014 ASSESSMENT YEAR: 2007-08 WODEHOUSE GYMKHANA LTD. 182, MAHARSHI KARVE ROAD, COLABA, MUMBAI-400021 / VS. DY CIT RANGE(OSD) - 1(1) AAYAKAR BHAVAN, MUMBAI-40020 ( APPELLANT ) (RESPONDENT ) P.A. NO. AAA C F2119C APPELLANT BY SHRI JEEVRAJ P. JAIN ( A R) REVENUE BY SHRI PRAKASH R. MANE ( SR. DR) / DATE OF HEARING: 02/11/2016 / DATE OF ORDER: 02/11/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS), MUMBAI- 7, {(IN SHORT CIT(A)}, DATED 16.12.2013 PASSED AGAINST AS SESSMENT ORDER U/S 143(3) DATED 30.12.2009 FOR ASSESSMENT YE AR 2007- 08 ON THE FOLLOWING GROUNDS: 1. LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF RS. 38632/- UNDER SECTION 14A R.W.S. 8D. APPELLANT WODEHOUSE GYMKHANA L. 2 PRAYS TO DELETE DISALLOWANCE OF RS. 38,632/- U/S. 1 4A. 2. LEARNED CIT(A) ERRED IN CONFIRMING INTEREST ON B ANK DEPOSITS RS. 169456/- AND INTEREST ON BANK FIXED DEPOSIT RS. 76603/- AS TAXABLE WITHOUT GIVING SPEAK ING ORDER. APPELLANT PRAYS TO ALLOW SAME AS BANK DEPOSITS ARE KEPT AGAINST CONTINGENT LIABILITY OF R S. 37501254/- ON ACCOUNT OF LEASE RENT PAYABLE HENCE INTEREST EARNED IS IN INTEREST OF MEMBERS, HENCE FA LLS IN PRINCIPAL OF MUTUALITY HENCE EXEMPT. 3. LEARNED CIT(A) ERRED IN CONFIRMING INTEREST FROM MEMBERS AMOUNTING TO RS.41323/- WITHOUT CONSIDERING ANY FACTS AT ALL AND WITHOUT ANY SPEAKING ORDER. APPELLANT PRAYS TO DELETE SAME AS IT FALLS UNDER PRINCIPAL OF MUTUALITY HENCE EXEMPT. 4. LEARNED CIT(A) ERRED IN HOLDING THAT COMPENSATIO N RECEIVABLE OF RS. 848323/- IS TAXABLE ON THE GROUND OF FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING WITHOUT GIVING SPEAKING ORDER TO ALLOW LEASE RENT OF RS. 1072564/- PAYABLE AGAINST SAID INCOME, APPELLANT PRAYS TO ALLOW LEASE RENT PAYABLE RS. 1072564/- AGAINST COMPENSATION RECEIVABLE OF RS.8483 23/-. 5. LEARNED CIT(A) ERRED IN CONFIRMING TAXABILITY OF COMPENSATION OF RS. 848323/- WITHOUT CONSIDERING TH E FACT THAT LEASE RENT OF 1072564/- IS ALLOWED IN REG ULAR ASSESSMENT IN A.Y. 2004-05. 2005-06, 2006-07 & 2009-10 AND TAKING INCOME AS NIL. APPELLANT PRAYS T O ALLOW LEASE RENT PAYABLE AGAINST THIS INCOME. 6. LEARNED CIT(A) ERRED IN NOT GIVING SPEAKING ORDE R WITH REGARD TO ADDITIONAL GROUNDS OF APPEAL TO CLAI M OF GROUND RENT PAYABLE OF RS.1072564/- AGAINST COMPENSATION RECEIVABLE OF RS. 848322/- INCLUDED UNDER INCOME FROM OTHER SOURCES. APPELLANT PRAYS TO ALLOW GROUND RENT PAYABLE AND ALSO CONSIDER A.O. ORDERS FOR A.Y. 2004-05, 2005-06, 2006-07 & 2009-10 WHERE GROUND RENT IS ALLOWED AGAINST COMPENSATION RECEIVABLE. 7. LD CIT(A) ERRED IN TAKING NIL INCOME AGAINST LOS S OF RS. 3890845/- WITHOUT GIVING ANY REASONING IN WODEHOUSE GYMKHANA L. 3 ASSESSMENT ORDER. APPELLANT PRAYS TO GIVE SPECIFIC ORDER, HOW RETURNED LOSS OF RS.3890845/- WAS MADE N IL. DURING THE COURSE OF HEARING, THE ASSESSEE SUBMITTE D FOLLOWING ADDITIONAL GROUNDS ALSO: APPELLANT PRAYS THAT SUM OF RS.848323/- BEING COMPENSATION RECEIVABLE FOR PLOT SHOWN AS INCOME ON MERCANTILE BASIS BE DELETED AS INCOME ON THE BASIS OF REAL INCOME THEORY AS MATTER IS IN DISPUTE IN COURT AND INCOME NOT RECEIVED FROM 1996 ONWARD. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI JEEVRAJ P. JAIN, AUTHORISED REPRESENTATIVES (A R) ON BEHALF OF THE ASSESSEE AND BY SHRI PRAKASH R. MANE, DEPART MENTAL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. 3 . DURING THE COURSE OF HEARING IT HAS BEEN SUBMITTE D IN DETAIL BY THE LD. COUNSEL OF THE ASSESSEE THAT IN THIS CAS E ASSESSMENT WAS PASSED BY THE ASSESSING OFFICER DISR EGARDING THE PROVISIONS OF LAW AND WITHOUT TAKING INTO ACCOU NT ALL THE FACTS OF THE CASE AND RETURN OF INCOME FILED BY THE ASSESSEE. IT WAS SUBMITTED THAT THE AO DID NOT CONSIDER THE RETU RN OF INCOME FILED BY THE ASSESSEE WHEREIN INCOME WAS DEC LARED AT LOSS OF RS.38,90,845/-. THE AO BROUGHT TO TAX INCOM E FROM NON-MEMBERS FOR RS.6,07,5,97/- AND INCOME FROM OTHE R SOURCES AGGREGATING TO RS.11,92,313/- WITHOUT GIVIN G ANY BENEFIT OF THE LOSS CLAIMED IN THE RETURN FILED BY THE ASSESSEE AND THAT TOO WITHOUT MAKING ANY DISCUSSION IN THE A SSESSMENT ORDER. IT IS FURTHER SUBMITTED THAT LD. CIT(A) ALSO DID NOT GIVE PROPER RELIEF AND ORDER HAS BEEN PASSED BY THE LD. CIT(A) IN A WODEHOUSE GYMKHANA L. 4 HIGHLY NON SPEAKING MANNER AND WITHOUT CONSIDERING THE ARGUMENTS OF THE ASSESSEE. 3.1 . PER CONTRA, LD. DR SUBMITTED THAT AFTER THE PASSI NG OF ORDER BY BOTH THE AUTHORITIES, THERE HAVE BEEN LEGA L DEVELOPMENT IN THE SENSE THAT HONBLE SUPREME COURT PASSED ONE JUDGMENT IN THE CASE OF BANGLORE CLUB V. CIT 29 TAXMANN.COM 29 WHEREIN IT WAS HELD THAT INTEREST EA RNED BY THE ASSESSEE ON FIXED DEPOSIT FROM ITS MEMBER BANKS WOULD NOT BE EXEMPT FROM TAX ON THE BASIS OF DOCTRINE OF MUTUALITY AND THEREFORE, IN THIS CASE NO RELIEF WOULD BE GIVE N TO THE ASSESSEE. 3.2. PER CONTRA, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IF PROPERLY ANALYZED, THE AFORESAID JUDGMENT OF HONBL E SUPREME COURT CASE IS IN FAVOUR OF THE ASSESSEE AND VARIOUS TYPES OF INCOME EARNED BY THE ASSESSEE WOULD FALL INTO THE C ATEGORY OF EXEMPT INCOME, EVEN AFTER APPLYING THE AFORESAID JU DGMENT OF HONBLE SUPREME COURT. BUT, HE FAIRLY SUBMITTED THA T THIS CASE MAY BE SENT BACK TO THE FILE OF THE AO FOR PROPER E XAMINATION OF THE FACTS. 3.3. WE HAVE GONE THROUGH THE ORDERS PASSED BY BOTH THE LOWER AUTHORITIES. IT IS NOTED THAT BOTH THE AUTHOR ITIES HAVE PASSED THE ORDER IN A NON-SPEAKING MANNER. THE INCO ME WAS ASSESSED BY THE AO DISREGARDING INCOME TAX RETURN F ILED BY THE ASSESSEE AND WITHOUT MAKING ANY DISCUSSION IN THE ASSESSMENT ORDER AS TO WHY RETURN FILED BY THE ASSE SSEE (WHEREIN LOSS WAS CLAIMED BY THE ASSESSEE) WAS T OTALLY IGNORED BY THE AO WHILE COMPUTING TAXABLE INCOME OF THE ASSESSEE IN THE ASSESSMENT ORDER. FURTHER, LD. CIT( A) DID NOT WODEHOUSE GYMKHANA L. 5 PASS THE SPEAKING AND WELL REASONED ORDER. IT WAS I NFORMED THAT HONBLE SUPREME COURT HAS RECENTLY CLARIFIED L AW ON TAXABILITY OF INTEREST AND ITS EXEMPTION ON THE BAS IS OF DOCTRINE OF MUTUALITY. BOTH THE PARTIES SIMULTANEOUSLY CLAIM ED THAT THE AFORESAID JUDGMENT WAS IN THEIR FAVOUR. THUS, TAKIN G INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES OF THE CASE , WE FIND IT APPROPRIATE TO SEND THIS CASE BACK TO THE FILE OF T HE AO FOR PROPER EXAMINATION OF THE FACTS AND PASSING A WELL REASONED ORDER AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTA NCES OF THE CASE AND CLAIM MADE BY THE ASSESSEE IN THE RETURN O F INCOME. THE ASSESSEE SHALL SUBMIT ITS PLEADINGS ON APPLICAB ILITY OF JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF BA NGLORE CLUB (SUPRA) AND SHALL BE FREE TO RAISE ALL THE LEG AL AND FACTUAL ISSUES AS MAY ARISE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO SHALL GIVE ADEQUATE OPPORTUNITY OF HEARING AND SHALL CONSIDER ALL THE SUBMISSIONS AND DOCUMENTARY EVIDENCES AS MAY BE PLACED BY THE ASSES SEE BEFORE PASSING FRESH ASSESSMENT ORDER. WITH THESE D IRECTIONS ALL THE AFORESAID GROUNDS (INCLUDING ADDITIONAL GRO UND) ARE SENT BACK TO THE FILE OF THE AO FOR DE NOVO ADJUDICATION. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE MA Y BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE CONCL USION OF HEARING. SD/- (AMIT SHUKLA ) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER MUMBAI; # DATED : 10 /11/2016 CTX? P.S/. .. WODEHOUSE GYMKHANA L. 6 #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. % &' / THE APPELLANT 2. ()&' / THE RESPONDENT. 3. * * ( % ) / THE CIT, MUMBAI. 4. * * / CIT(A)- , MUMBAI 5. -. / (01 , * % 012 , / DR, ITAT, MUMBAI 6. / 34 5 / GUARD FILE. / BY ORDER, ) -% ( //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI