ITO (E) II(1), MUMBAI V. PARMANANDDAS JIVANDAS HINDU GYMKHANA, MUMBAI

ITA 1629/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8929 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-01-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 03-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Keywords: Business income
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI B. RAMAKO TAIAH,(AM) ITA NO.1629/MUM/2010 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER(EXEMPTION)-II(1) ROOM NO.509, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI 400 012. ..( APPELLANT ) VS. PARMANANDDAS JIVANDAS HINDU GYMKHANA NETAJI SUBHASH ROAD MARINE DRIVE MUMBAI-400 020. ..( RESPONDENT ) P.A. NO: (AAACP 3868 Q) APPELLANT BY : SHR I SUMEET KUMAR RESPONDENT BY : SHRI NIRAJ SHETH O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 30.10.2009 PASSED BY THE LD. CIT(A) FOR T HE ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE PARMANANDDAS JIVANDAS HINDU GYMKHANA, AN AOP, IS A MEM BERS CLUB OPERATING ON THE PRINCIPLE OF MUTUALITY. THE MAIN O BJECT OF THE ASSESSEE IS TO ENCOURAGE AND TO PROMOTE GAMES AND SPORTS O F ANY FORM. THE RETURN WAS FILED DECLARING A LOSS OF RS.9,73, 890/-. DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSEE WAS ASKED AS TO ITA NO.1629/M/10 A.Y:05-06 2 WHY THE INTEREST INCOME OF RS.19,45,253/- SHOULD NOT BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES AND ALSO THE CLAIM OF PROPORTIONATE EXPENDITURE SHOULD NOT BE DISALLOWED. THE ASSESSING OFFICER AFTER CONSIDERING THE ASSESSEE'S REPLY THAT INVESTME NT OF THE FUNDS AND EARNING OF THE INTEREST THEREON ARE THUS AN INTEGRAL PART OF THE GYMKHANAS BUSINESS ACTIVITIES AND THE INTEREST INCOM E IS INEXTRICABLY LINKED WITH THE GYMKHANAS BUSINESS, THEREF ORE, THE SAME HAS BEEN CORRECTLY OFFERED TO TAX AS INCOME FROM BUSINESS, WHILE RELYING ON CERTAIN DECISIONS TREATED THE INCOME FROM FI XED DEPOSITS EARNED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES AND ACCO RDINGLY COMPLETED THE ASSESSMENT AT AN INCOME OF RS.15,23,397/- V IDE ORDER DATED 31.12.2007 PASSED U/S.143(3) OF THE INCOME TAX A CT, 1961 (THE ACT). ON APPEAL THE LD. CIT(A) FOLLOWING THE DECISI ON OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2001-02 IN ASSESSEE'S OWN CASE HAS HELD THAT INTEREST INCOME SHOULD BE ASSESSED AS BUSINESS INCOME AND NOT T HE INCOME FROM OTHER SOURCES. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US TAKING THE FOLLOWING GROUNDS OF APPE AL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) MUMBAI ERRED IN HOLDING THAT THE INTEREST EARNED BY THE ASSESSEE ON FIXED DEPOSI TS MADE BY THE ASSESSEE SHOULD BE ASSESSED AS INCOME F ROM BUSINESS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) MUMBAI ERRED IN PLACING RELIANCE ON ITATS ORDERS IGNORING THE FACT THAT A REFERENCE UNDER SECTION 256 OF THE I.T. ACT HAS ALR EADY BEEN FILED FOR ASSESSMENT YEAR 1985-86 BEFORE THE HONBLE HIGH COURT, MUMBAI AND THE SAME IS PENDING AN D APPEALS UNDER SECTION 260A HAVE BEEN FILED FOR ITA NO.1629/M/10 A.Y:05-06 3 ASSESSMENT YEAR 1998-99 AND 2003-04 WHICH ARE ALSO PENDING. 4. AT THE TIME OF HEARING THE LD. DR SUPPORTS THE OR DER OF THE ASSESSING OFFICER. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE WH ILE RELYING ON THE ORDER OF THE LD. CIT(A) ALSO RELIED ON THE OR DER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ITA NO.2963/BOM/1989 ORDER DATED 29 .8.1996 FOR THE ASSESSMENT YEAR 1985-86, RA NO.08/MUM/1997 ORDE R DATED 14.7.1997 FOR THE ASSESSMENT YEAR 1985-86, RA NO.09/BOM /1997 DATED 6.12.2000 FOR THE ASSESSMENT YEAR 1986-87, ITA NO.5585/MUM/1999 ORDER DATED 20.8.2004 FOR THE ASSESSME NT YEAR 1995-96, ITA NO.1917/MUM/2005 ORDER DATED 19.3.2008 FOR THE ASSESSMENT YEAR 2001-02 AND ITA NO.847/MUM/2007 ORDER D ATED 26.2.2009 FOR THE ASSESSMENT YEAR 1998-99. HE ALSO PLACED ON RECORD THE COPY OF THE SAID ORDER OF THE TRIBUNAL IN A PAPER BOOK. 6. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL P ARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND ME RIT IN THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE IS SQUARELY COVERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE BY TH E ORDER OF THE TRIBUNAL IN ITA NO.2963/BOM/89 FOR ASSESSMENT YEAR 1985 -86 DATED 29.8.1996 WHEREIN THE TRIBUNAL BY FOLLOWING THE ORD ER OF THE TRIBUNAL IN ITO VS. THE FIRE SALVAGE ASSOCIATION OF BOMBAY LIMIT ED IN ITA NO.1889 & 1461/BOM/73-74 HAS HELD VIDE PARA-9 OF ITS ORDER THAT THE INTEREST INCOME DERIVED BY THE ASSESSEE FROM FIXED DEPOSI TS IS TO BE TREATED AS BUSINESS INCOME AND DEDUCTION BE ALLOWED AS IN THE EARLIER YEARS. THE ABOVE ORDER OF THE TRIBUNAL HAS BEEN FOLL OWED BY THE TRIBUNAL IN THE SUBSEQUENT ASSESSMENT YEARS AS ABOVE. IN T HE ITA NO.1629/M/10 A.Y:05-06 4 ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENUE WE, RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL HOLD THAT THE INTEREST INCOME DERIVED BY THE ASSESSEE FR OM THE FDRS SHOULD BE ASSESSED AS INCOME FROM BUSINESS AND ACCORDINGLY WE A RE INCLINED TO UPHOLD THE FINDING OF THE LD. CIT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE. THE GROUNDS TAKEN BY THE REVENUE, ARE, TH EREFORE, REJECTED. 7. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.1.2011. SD/- SD/- (B. RAMAKOTAIAH) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 14.1.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.