M/s Nerbudda Club, Jabalpur V. ACIT, Jabalpur

ITA 142/JAB/2013

• Counselvise Citation: 14222914 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 04-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 13-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK SHUKLA
• Assessee Lawyers: ANIL AGARWAL
• Section: 143(3)

Judgement Text

I.T.A. NO. 142/JAB/2013 ASSESSMENT YEAR 2005-06 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR [CORAM: I C SUDHIR JM AND PRAMOD KUMAR AM] I.T.A. NO.142/JAB/2013 ASSESSMENT YEAR: 2005-06 NERBUDDA CLUB, .APPELLANT CANTONMENT, JABALPUR. [PAN: AAATN 3187 F] VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 2(1), JABALPUR. .RESPONDENT APPEARANCES BY: ANIL AGARWAL, FOR THE APPELLANT ABHISHEK SHUKLA, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: 4 TH FEBRUARY, 2015 DATE OF PRONOUNCING THE ORDER: 27 TH MARCH, 2015 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT H AS CHALLENGED CORRECTNESS OF ORDER DATED 13 TH DECEMBER, 2012 PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TA X ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), FOR THE ASSESSMENT YEAR 2005-06. 2. GRIEVANCE RAISED BY THE ASSESSEE ARE AS FOLLOWS :- I.T.A. NO. 142/JAB/2013 ASSESSMENT YEAR 2005-06 PAGE 2 OF 8 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) ERRED IN :- (A) DENYING OF EXEMPTION TO THE INTEREST INCOME OF RS.2,65,331/- ON THE BASIS OF MUTUALITY. (B) IGNORING THE LOSS OF THE CLUB I.E. EVEN AFTER I NCLUDING INTEREST INCOME, THE CLUB ON ACCOUNT OF EXCESS EXPENDITURES IS SHOWING DEFICIT OF RS.88,342.00 2. THE ORDER OF THE CIT(A) IS ERRONEOUS IN LAW AS WELL AS ON FACTS. 3. THE SHORT ISSUE THAT WE ARE REQUIRED TO ADJUDICA TE IN THIS APPEAL IS WHETHER OR NOT LD. CIT(A) WAS JUSTIFIED IN DECLININ G EXEMPTION, ON THE PRINCIPLES OF MUTUALITY, TO INTEREST INCOME OF FDRS AGGREGATIN G TO RS.2,91,910/-. 4. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LEA RNED COUNSEL FOR THE ASSESSEE FAIRLY POINTED OUT THAT THE AUTHORITIES BE LOW HAVE ONLY FOLLOWED AN EX- PARTE ORDER PASSED BY THIS TRIBUNAL ON 13.04.2006, IN ASSESSEES OWN CASE, WHICH HELD AS FOLLOWS :- 2. THE ONLY GROUND RAISED IN THE APPEAL IS AGAINST THE DENIAL OF EXEMPTION OF INTEREST INCOME AMOUNTING TO RS.2,65,3 31/-. THE ASSESSEE IS A TRUST AND RUNS A CLUB. IT HAD EARNED INTEREST INCOME FROM BANK ON BALANCES IN SAVINGS BANK ACCOUNT AND O N FDRS. THIS INCOME WAS CLAIMED TO BE EXEMPT ON GROUNDS OF MUTUA LITY. HOWEVER, ASSESSING OFFICER DENIED THE SAME BY RELYING ON THE JUDGEMENT OF THE GUJARAT HIGH COURT IN THE CASE OF SPORTS CLUB OF GU JARAT LTD. VS. CIT (171 ITR 504). THE (APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON THE SAME GROUND. THE LEARNED DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 3. WE HAVE CONSIDERED THE ORDERS OF THE REVENUE AUT HORITIES. GENERALLY SPEAKING, SURPLUS INCOME OF A MUTUAL CONC ERN IS NOT TAXABLE UNDER THE INCOME TAX ACT, 1961 (THE ACT) AS NO MAN CAN MAKE A PROFIT OUT OF HIMSELF. THE MOST ESSENTIAL CONCEP T OF MUTUALITY IS THAT THERE IS COMPLETE IDENTITY BETWEEN THE CONTRIB UTORS AND THE PARTICIPANTS. SO FAR AS INTEREST INCOME EARNED ON FDRS WAS I.T.A. NO. 142/JAB/2013 ASSESSMENT YEAR 2005-06 PAGE 3 OF 8 CONCERNED, THE COURT HELD THAT IT DID NOT SATISFY T HIS CRITERION AND HENCE INTEREST INCOME CANNOT BE CLAIMED TO BE EXEMP T ON GROUNDS OF MUTUALITY. NO CONTRARY DECISION HAS COME TO OUR NO TICE AND HENCE RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE GUJARAT HIGH COURT, WE UPHOLD THE ORDER OF THE CIT (APPALS). 5. LEARNED COUNSEL HOWEVER, ALSO POINTS OUT THAT TH E ISSUE IS NOW COVERED, IN FAVOUR OF THE ASSESSEE, BY HONBLE DELHI HIGH CO URTS JUDGEMENT IN THE CASE OF CIT VS. DELHI GYMKHANA CLUB LD (339 ITR 335) WHICH HOLDS THAT THE INTEREST INCOME FROM FDRS ETC. ION THE HANDS OF A CLUB, IS E XEMPT ON THE GROUND OF MUTUALITY. HE SUBMITS THAT THE BENEFIT OF THIS DEC ISION WAS NOT AVAILABLE TO THE BENCH EARLIER WHILE DECIDING THE MATTER AGAINST THE ASSESSEE. IN VIEW OF THIS DECISION, HE URGES US TO ACCEPT THE PLEA OF THE ASS ESSEE. 6. LEARNED DEPARTMENTAL REPRESENTATIVE PACES HIS RE LIANCE ON THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE AIN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 8. WE FIND THAT HONBLE GUJARAT HIGH COURTS DECISI ON IN THE CASE OF SPORTS CLUB OF GUJARAT LTD. VS. CIT (171 ITR 504), WHICH W AS RELIED UPON BY THE CO- ORDINATE BENCH IN DECIDING THE ISSUE AGAINST THE AS SESSEE, HAS SINCE BEEN CONCURRED WITH BY THE HONBLE JURISDICTIONAL HIGH C OURT IN THE CASE OF DEVI AHILYA NEW CLOTH MARKET CO. LTD VS. CIT (222 ITR 58 3) WHEREIN THEIR LORDSHIP HAVE, INTER ALIA, OBSERVED S FOLLOWS :- I.T.A. NO. 142/JAB/2013 ASSESSMENT YEAR 2005-06 PAGE 4 OF 8 15. AS RIGHTLY URGED BY LEARNED COUNSEL FOR REVENUE, THE ISSUE INVOLVED IN THIS CASE CAME UP FOR CONSIDERATION FOR THE FIRST TIM E BEFORE GUJARAT HIGH COURT IN THE CASE OF SPORTS CLUB OF GUJARAT LTD. VS . CIT (SUPRA). IN THIS CASE, THE CLUB WAS INCORPORATED AS A COMPANY. ITS MAIN OBJ ECT WAS TO PROMOTE THE GAME OF CRICKET AND OTHER GAMES AND SPORTS. THE OBJEC T CLAUSE IN THE MEMORANDUM AND ARTICLES OF ASSOCIATION EMPOWERED THO SE IN THE MANAGEMENT OF THE CLUB; TO INVEST AND DEAL WITH MONE Y OF THE CLUB NOT IMMEDIATELY REQUIRED IN SUCH MANNER AS MAY FROM TIME TO TIME BE DETERMINED BY THEM. THE CLUB (ASSESSEE) HAD SOME INCOM E BY WAY OF INTEREST ON FIXED DEPOSIT. THE CLUB, THEREFORE, CLAIM ED EXEMPTION FROM PAYMENT OF INCOME-TAX ON THIS INCOME, BUT THE ITO REJ ECTED THE CLAIM. THE TRIBUNAL HOWEVER IN AN APPEAL FILED BY CLUB HELD IN T HEIR FAVOUR BY HOLDING THAT INCOME ASSESSABLE UNDER THE HEAD 'PROFITS AND GAI NS OF BUSINESS OR PROFESSION' WOULD NOT BE EXIGIBLE TO TAX ON THE PRI NCIPLE OF MUTUALITY, SINCE ACCORDING TO TRIBUNAL THERE WAS COMPLETE IDENTITY B ETWEEN THE CONTRIBUTORS AND THE PARTICIPANTS BUT INCOME DERIVED BY WAY OF IN TEREST ON THE FIXED DEPOSIT WITH BANKS MINUS 10 PER CENT WAS ALLOWED UND ER S. 57(III) AS INCOME EXIGIBLE TO TAX. IN FURTHER APPEAL, THE HIGH COURT HELD THAT ASSESSEES INCOME FROM INTEREST WAS NOT FROM MUTUAL ACTIVITY AND AS S UCH IT WAS EXIGIBLE TO TAX. 16. THE LEARNED JUDGE AHMADI, J. (AS HIS LORDSHIP THEN WAS A JUDGE OF HIGH COURT OF GUJARAT AND LATER BECAME CHIEF JUSTICE OF I NDIA) SPEAKING FOR THE BENCH, DISCUSSED THIS ISSUE VERY ELABORATELY AND HELD AS UNDER : WE NOW REVERT TO THE QUESTION WHETHER THE INCOME DERI VED BY WAY BANKS IS EXIGIBLE TO TAX NOTWITHSTANDING THE FINDING THAT THE P RINCIPLE OF MUTUALITY APPLIES TO THE ASSESSEE CLUB. WE HAVE ALREADY POINTE D OUT EARLIER THAT ONE OF THE ESSENTIALS OF MUTUALITY IS THAT THE CONTRIBUTORS TO THE COMMON FUND ARE ENTITLED TO PARTICIPATE IN THE SURPLUS, THEREBY CREAT ING AN IDENTITY BETWEEN THE PARTICIPATORS AND THE CONTRIBUTORS. ONCE SUCH AN IDENTITY IS ESTABLISHED, THE SURPLUS INCOME WOULD NOT BE EXIGIBLE TO TAX ON T HE PRINCIPLE THAT NO MAN CAN MAKE A PROFIT OUT OF HIMSELF. HOWEVER, AS POINTE D OUT EARLIER, THE OBJECTS CLAUSE IN THE MEMORANDUM AND ARTICLES OF ASSOCIATION EMPOWERS THOSE IN THE MANAGEMENT OF THE ASSESSEE CLUB TO INVEST AND DEA L WITH MONEYS OF THE CLUB NOT IMMEDIATELY REQUIRED IN SUCH MANNER AS MAY FROM TIME TO TIME BE DETERMINED BY THEM. UNDER THIS CLAUSE, THE INVESTMENT NEED NOT BE CONFINED TO INVESTMENT BY WAY OF FIXED DEPOSITS WITH BANKS. I T CAN TAKE ANY OTHER FORM OR SHAPE, SUCH AS INVESTMENT IN SHARES, REAL ESTA TE ETC. WHEN INCOME IS DERIVED FROM SUCH INVESTMENT, WHETHER BY WAY OF INTER EST, DIVIDEND OR RENT, IT IS DERIVED FROM A THIRD PARTY AND IS NOT BY WAY O F CONTRIBUTION FROM THE MEMBERS OF THE CLUB. WE HAVE ALSO NOTICED THAT CL. (V II) OF THE MEMORANDUM AND ARTICLES OF ASSOCIATION PROVIDES THAT IN THE EVEN T OF WINDING-UP OR DISSOLUTION OF THE CLUB, IF THERE REMAINS ANY SURPLUS AFTER SATISFYING ALL THE DEBTS AND LIABILITIES, THE SAME SHALL BE PAID OR DIS TRIBUTED AMONGST THE I.T.A. NO. 142/JAB/2013 ASSESSMENT YEAR 2005-06 PAGE 5 OF 8 MEMBERS IN EQUAL SHARES. IF THE INCOME DERIVED FROM I NVESTMENTS OVER A PERIOD OF TIME IS ADDED TO THE SURPLUS, THERE CAN BE NO DOUBT THAT WHEN THE SURPLUS IS DISTRIBUTED, A COMPONENT OF RETURN ON IN VESTMENT WOULD GO TO THE MEMBERS IN EQUAL SHARES. THIS COMPONENT OF RETURN WHIC H THE MEMBERS WILL RECEIVE WILL NOT BE BY WAY OF A PLOUGH BACK OF THEIR OWN CONTRIBUTIONS BY WAY OF FEES, ETC., TO THE CLUB. AN ASSOCIATION WHICH R ECEIVES SUCH INCOME CAN BE SAID TO BE INDULGING IN BOTH MUTUAL ACTIVITY AS W ELL AS NON-MUTUAL ACTIVITY. THAT IS WHY IN CIT VS. MADRAS RACE CLUB 19 76 CTR (MAD) 377 : (1976) 105 ITR 433 (MAD), IT WAS OBSERVED THAT THE APP LICATION OF THE PRINCIPLE OF MUTUALITY IS NOT DESTROYED BY THE PRESE NCE OF TRANSACTIONS WHICH ARE NON-MUTUAL IN CHARACTER. THE PRINCIPLE OF MUTUALI TY CAN IN SUCH CASES BE CONFINED TO TRANSACTIONS WITH MEMBERS. THE TWO ACTIV ITIES CAN IN APPROPRIATE CASES BE SEPARATED AND THE PROFITS DERI VED FROM NON-MEMBERS CAN BE BROUGHT TO TAX. IN CARLISLE & SILLOTH GOLF CLU B VS. SMITH (1912) 6 TAX CASES 48 (KB), THE GOLF CLUB IN QUESTION WHICH WAS ADM ITTEDLY A BONA FIDE MEMBERS CLUB WAS BOUND, UNDER A CLAUSE IN ITS LEAS E, TO ADMIT NON-MEMBERS TO PLAY ON ITS COURSE ON PAYMENT OF GREEN FEES TO B E FIXED BY THE LESSORS BUT NOT TO BE BELOW A MINIMUM FIXED IN THE LEASE. IT WAS HELD THAT THE CLUB, FOR THE PURPOSE OF INCOME-TAX WAS CARRYING ON A CONCERN OR BUSINESS WHICH WAS CAPABLE OF BEING ISOLATED AND DEFINED AND IN RESPEC T OF WHICH IT RECEIVED REMUNERATION WHICH WAS ASSESSABLE. THIS VIEW WAS AFFIR MED BY THE COURT OF APPEAL, VIDE CARLISLE & SILLOTH GOLF CLUB VS. SMITH ( 1913) 6 TAX CASES 198 (CA). IN AUTOMOBILE ASSOCIATION OF BENGAL VS. CIT ( 1968) 69 ITR 878 (CAL), THE ASSOCIATION, A MUTUAL CONCERN, RUN ON NO PROFIT BASIS, PUBLISHED A MONTHLY MAGAZINE FOR THE BENEFIT OF ITS MEMBERS. THE ASSOCIATION RECEIVED ADVERTISEMENTS FROM NON-MEMBERS AS WELL AS MEMBERS AND CHARGED FROM THE PUBLICATION THEREOF. THE ASSOCIATION CONTENDED THAT ADVERTISEMENT CHARGES RECEIVED FROM MEMBERS WERE NOT TAXABLE AS IN COME. ALTERNATIVELY, IT WAS CONTENDED THAT THE ENTIRE COST OF PRODUCTION OF THE MAGAZINE SHOULD, IN ANY EVENT, BE DEDUCTED IN COMPUTING THE INCOME FROM ADVERTISEMENT. THE TAX AUTHORITIES OVERRULED BOTH THE CONTENTIONS AND TRE ATED THE ADVERTISEMENT CHARGES RECEIVED FROM MEMBERS AS ASSES SABLE INCOME AND ALLOWED ONLY A PART OF COST OF PRODUCTION TO BE SET OFF AGAINST THE ADVERTISEMENT RECEIPTS. ON A REFERENCE, THE HIGH COUR T HELD THAT THE PROFIT EARNED BY THE ASSOCIATION WENT TO INCREASE THE FUNDS OF THE ASSOCIATION AND BENEFITS OUT OF THE SAME CAME TO THE MEMBERS QUA MEMB ERS, BUT NOT QUA CONTRIBUTORS OR ADVERTISERS. IT FOUND THAT SINCE THE MONEY WAS COLLECTED BY THE ASSESSEE ASSOCIATION, BY WAY OF ADVERTISEMENT CH ARGES, FROM A CERTAIN NUMBER OF MEMBERS, BUT THE PROFIT MADE THEREFROM WAS NOT DISTRIBUTED AMONGST THEM AS ADVERTISERS, THERE WAS ABSENCE OF MU TUALITY AND THIS MADE THE PROFIT THE INCOME OF THE ASSESSEE ASSOCIATION AND TAXABLE AS SUCH. FROM THE ABOVE DISCUSSION, IT SEEMS CLEAR TO US THAT THE IN COME RECEIVED BY THE ASSESSEE-CLUB BY WAY OF INTEREST IS EXIGIBLE TO TAX . IT WAS LASTLY ARGUED BY COUNSEL FOR THE ASSESSEE THAT THE INVESTMENT OF THE UNU TILIZED SURPLUS IN FIXED DEPOSITS WAS MERELY INCIDENTAL TO THE MAIN OBJECTS O F THE CLUB AND, THEREFORE, THE INCOME FROM INTEREST RECEIVED FROM THE BANKS ON THE FIXED DEPOSITS COULD NOT BE BROUGHT TO TAX. IN SUPPORT OF THIS CONTENTION, I.T.A. NO. 142/JAB/2013 ASSESSMENT YEAR 2005-06 PAGE 6 OF 8 CONSIDERABLE RELIANCE WAS PLACED ON THE FOLLOWING O BSERVATION FOUND AT P. 696 IN IRC VS. WESTLEIGH ESTATES CO. LTD. (1925) 12 T AX CASES 657 : I THINK THE PROPER MODE OF REGARDING THE COMPANY IN T HE PRESENT CASE IS A CONVENIENT INSTRUMENT OR MEDIUM FOR ENABLING THE MEM BERS TO CONDUCT A SOCIAL CLUB THE OBJECTS OF WHICH ARE IMMUNE FROM EVER Y TAINT OF COMMERCIALITY, THE TRANSACTIONS OF SALE AND PURCHASE BEING MERELY INCIDENTAL TO THE ATTAINMENT OF THE MAIN OBJECT THESE OBSERVATIONS MUST BE READ IN THE CONTEXT OF THE FACTS OF THE CASE. THERE A COMPANY WAS INCORPORATED AS A COMPANY LIMITED BY GUARANTEE. ITS MAIN OBJECT WAS TO PROMOTE SOCIAL INTERCOURSE BETWEEN GE NTLEMEN CONNECTED (DIRECTLY OR INDIRECTLY) WITH LITERATURE, ART, MUSIC , DRAMA, SCIENTIFIC AND LIBERAL PROFESSIONS, SPORTS AND COMMERCE AND WITH A VIEW THERETO TO ESTABLISH, MAINTAIN AND CONDUCT A CLUB OF A NON-POL ITICAL CHARACTER FOR THE ACCOMMODATION OF MEMBERS OF THE CLUB AND THEIR FRIEND S, AND TO PROVIDE A CLUB HOUSE AND OTHER CONVENIENCES, AND GENERALLY TO A FFORD TO MEMBERS AND THEIR FRIENDS ALL THE USUAL PRIVILEGES, ADVANTAGES, C ONVENIENCE AND ACCOMMODATION OF A CLUB. INCIDENTALLY, CERTAIN OTHER THINGS WHICH ARE USUALLY DONE BY SOCIAL CLUBS, FOR EXAMPLE, BUYING, PREPARING AND SELLING OF PROVISIONS, WAS INCLUDED IN THE MEMORANDUM. THE INCOM E AND PROPERTY OF THE CLUB WERE TO BE APPLIED TOWARDS PROMOTION OF THE OBJECTS OF THE CLUB AS SET OUT ABOVE. ALL THE MEMBERS OF THE COMPANY WERE M EMBERS OF THE CLUB. NO PAYMENT FOR PROVISIONS SUPPLIED IN THE CLUB WERE TAKEN FROM ANY PERSON WHO WAS NOT A MEMBER THEREOF. IN THIS BACKGROUND THE QU ESTION AROSE WHETHER THE PROFITS COULD BE CHARGED TO TAX AND IT IS I N THIS CONTEXT THAT THE ABOVE OBSERVATION CAME TO BE MADE WHICH ONLY SHOWS THAT THE OBJECTS OF THE CLUB SHOULD BE IMMUNE FROM EVERY TAINT OF COMMERCIAL ITY AND THIS ALSO APPLIED TO THE TRANSACTIONS OF SALE AND PURCHASE WHICH WERE BEING INCIDENTALLY UNDERTAKEN FOR THE ATTAINMENT OF THE MAI N OBJECT OF THE CLUB. THE BUYING, PREPARING AND SELLING OF PROVISIONS WHICH WERE INCIDENTAL TO THE MAIN OBJECT OF THE CLUB WERE ALSO LIMITED TO THE MEMB ERS OF THE CLUB AND NOT EXTENDED TO OUTSIDERS. THIS INCIDENTAL ACTIVITY WAS ALSO, THEREFORE, IMMUNE FROM THE TAINT OF COMMERCIALITY. WE ARE, THEREFORE, OF THE OPINION THAT THE ABOVE OBSERVATION ON WHICH CONSIDERABLE RELIANCE WAS PLACED BY COUNSEL FOR THE ASSESSEE CANNOT GO TO THE AID OF THE ASSESSEE. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT ALL THE THREE QUESTIONS FORMULATED BY THE TRIBUNAL AND REFERRED TO US MUST BE ANSWERED IN THE AFFIRMATIVE, THAT IS, IN FAVOUR OF THE REVENUE AND AG AINST THE ASSESSEE. THE REFERENCE IS DISPOSED OF ACCORDINGLY WITH NO ORDER A S TO COSTS.' 17. THIS ISSUE AGAIN CAME UP FOR CONSIDERATION BEFORE K ARNATAKA HIGH COURT IN CIT VS. BANGALORE CLUB (SUPRA). THEIR LORDSHIPS PL ACING RELIANCE ON SPORTS CLUBS CASE (SUPRA) AND DISTINGUISHING TWO SU PREME COURTS DECISIONS RELIED ON BY LEARNED COUNSEL FOR ASSESSEE AS REPORT ED IN CHELMSFORD CLUB VS. CIT (SUPRA) AND CIT VS. BANKIPUR CLUB LTD. (SUPRA) TOOK THE SAME VIEW AS I.T.A. NO. 142/JAB/2013 ASSESSMENT YEAR 2005-06 PAGE 7 OF 8 WAS TAKEN BY GUJARAT HIGH COURT IN SPORTS CLUBS CAS E (SUPRA). THIS IS WHAT THEIR LORDSHIPS HELD WHILE HOLDING THE INTEREST INCOME T O BE EXIGIBLE TO TAX IN HANDS OF ASSESSEE : ON THE FACTS OF THIS CASE AND IN THE LIGHT OF THE LEGA L PRINCIPLES IT IS CLEAR TO US THAT WHAT HAS BEEN DONE BY THE CLUB IS NOTHING BUT WHAT COULD HAVE BEEN DONE BY A CUSTOMER OF A BANK. THE PRINCIPLE OF NO M AN CAN TRADE WITH HIMSELF IS NOT AVAILABLE IN RESPECT OF A NATIONALIZ ED BANK HOLDING A FIXED DEPOSIT ON BEHALF OF ITS CUSTOMER. THE RELATIONSHIP IS ONE OF A BANKER AND A CUSTOMER. 18. WE ARE COMPLETELY IN AGREEMENT WITH THE VIEW TAKEN B Y GUJARAT AND KARNATAKA HIGH COURTS IN AFOREMENTIONED TWO CASES BE CAUSE IN THE FIRST PLACE, THE SAME IS IN ACCORD WITH THE LAW DEALING WITH SUCH TYPES OF CASES. SECONDLY, THE LAW LAID DOWN IN THESE TWO DECISIONS C ONTINUES TO HOLD THE FIELD AND IS NOT EITHER OVERRULED OR DISTINGUISHED BY ANY D ECISIONS OF THE SUPREME COURT. THAT APART, WE DO NOT FIND ANY GOOD GROUND TO DEVIATE FROM THE PRINCIPLE LAID DOWN THEREIN. IN OUR VIEW, THE LAW LAI D DOWN IN THESE TWO DECISIONS SQUARELY APPLIES TO THE FACTS OF THE CASE I N HAND, BECAUSE IN THIS CASE ALSO THE ASSESSEE HAD DEPOSITED ITS SURPLUS MON EY IN FDR AND EARNED INTEREST ON FDR FROM THE BANK. 19. IN OUR OPINION, WHERE ASSESSEE DEPOSITS THE MONEY IN BANK FOR EARNING AN INTEREST, THEIR RELATIONS ARE NOT BASED ON MUTUAL ITY BUT THEY ARE OF CUSTOMER AND THE BANKER. THE PRINCIPLE OF MUTUALITY I N SUCH TRANSACTION IS THEREFORE, TOTALLY MISSING. A TRANSACTION OF SUCH NAT URE, WHICH BRINGS INTO ACCOUNT SOME INCOME, CAN ALWAYS BE SEPARATED FROM O THER INCOME FOR BEING TAXED IN THE HANDS OF ASSESSEE NOTWITHSTANDING EXISTE NCE OF MUTUALITY BEING MADE APPLICABLE FOR OTHER INCOME OF THE ASSESSEE. IN OTHER WORDS, EVEN IF PRINCIPLE OF MUTUALITY IS APPLIED FOR A INCOME OF SUCH ASSESSEE, THEN IT DOES NOT NECESSARILY MEAN THAT IT ALSO APPLIES TO B INC OME OF ASSESSEE. ONE IS THUS REQUIRED TO EXAMINE IN EACH CASE THE SOURCE OF IN COME OF THE ASSESSEE WHICH IS SOUGHT TO BE TAXED AND TO FIND OUT WHO ARE PAR TIES TO SUCH TRANSACTION WHICH BROUGHT THE SAID INCOME TO THE ASSESSE E. 9. ONCE HONBLE JURISDICTIONAL HIGH COURT HOLDS SO, IT IS NOT OPEN TO US TO BE GUIDED BY THE CONTRARY VIEWS EXPRESSED BY HONBLE N ON JURISDICTIONAL HIGH COURT. WE, THEREFORE, SEE NO LEGALLY SUSTAINABLE MERITS IN PLEA OF THE ASSESSEE. THERE IS NO REASON NOT TO FOLLOW THE EARLIER YEARS ORDER IN ASSESSEES OWN CASE. RESPECTFULLY FOLLOWING THE SAME, WE APPROVE THE STA ND OF THE AUTHORITIES BELOW. I.T.A. NO. 142/JAB/2013 ASSESSMENT YEAR 2005-06 PAGE 8 OF 8 10. IN VIEW OF THE ABOVE DISCUSSIONS, WE REJECT THE GRIEVANCE OF THE ASSESSEE AND CONFIRM THE IMPUGNED ADDITION. NO INTERFERENCE IS CALLED FOR. 11. IN THE RESULT, APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON 27 TH MARCH, 2015. SD/- SD/- I C SUHDIR PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 27 TH DAY OF MARCH, 2015 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR