PYC Hindu Gymkhana, Pune V. Deputy Commissioner of Income-tax,

ITA 179/PUN/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1654 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-09-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 20-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Principle of natural justice
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY , JM . / I TA NO.179 /PUN/20 15 / ASSESSMENT YEAR : 2010 - 11 PYC HINDU GYMKHANA, 766, BHANDARKAR ROAD, SHIVAJINAGAR, PUNE - 411 004. PAN : AAATP1121F ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 4, PUNE. / RESPONDENT A SSESSEE BY : SHRI SUNIL PATHAK REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 06 .0 9 .2019 / DATE OF PRONOUNCEMENT : 06 .0 9 .2019 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(APPEALS) - II, PUNE DATED 11.11.2014 FOR THE ASSESSMENT YEAR 2010 - 11 AS PER THE GROUNDS OF APPEAL ON RECORD. 2 ITA NO. 179 /PUN/20 15 A.Y. 2010 - 11 2. AT THE VERY OUTSET, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE APPEAL FILED BEFORE US IS FOR LIMITED PURPOSE AND THAT PURPOSE EMANATES FROM THE EARLIER ROUND OF APPEAL IN RESPECT OF ASSESSEE. IN THE EARLI ER ROUND, THE CO - ORDINATE BENCH OF THE TRIBUNAL , PUNE IN ITA NO.179/PUN/2015 AND ITA NO.187/PUN/ 2015 FOR ASSESSMENT YEAR 2010 - 11 D ATED 23.07.2018 HAS HELD AND OBSERVED AS FOLLOWS: 15. IN THE LIGHT OF THE ABOVE DIVERGENT STANDS OF THE PARTIES TO THE LITIGATION, WE FIND IT IS A DECIDED ISSUE THAT THE RUNNING OF RESTAURANTS , HIRING ROOMS TO MEMBERS AN D NON MEMBERS, HIRING OF THE CONFERENCE HALLS, SALE OF SPORTS GOODS THROUGH ITS OUTLET IN THE CLUB, RUNNING BARS ET C., BEING AUXILIARY ACTIVI TIES TO THE CORE OBJECTS OF THE TRUST, CONSTITUTE INCIDENTAL ACTIVITIES TO THE OBJECTS OF THE GYMKHANA. FOR THIS, WE RELY ON CATENA OF DECISIONS AND BINDING JUDGMENTS CITED BY THE LD. AR F OR THE ASSESSEE BEFORE US AND ALSO IN ITS WRITTEN SUBMISSIONS. THEREFORE, ON THE ISSUES OF COMMERCIAL NATURE OF THE SAID ACTIVIT IES OF THE TRUST, THE GROUND NOS. 1 TO 5 AND ALL THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED IN PRINCIPLE . HOWEVER, THE TAXATION OF THE SURPLUS INCOME IS SUBJECTED TO THE FINDING ON THE PROFIT MOTIVE OF THE SAID ACTIVITIES. THEREAFTER, AT PAGE NO.20, PARA 26 OF THE SAID ORDER (SUPRA.) , THE CO - ORDINATE BENCH OF THE TRIBU NAL HAS FINALLY HELD AS FOLLOWS: 26. ON HEARING BOTH THE REPRESENTATIVES, WE FIND THAT THE ISSUE OF APPLICABILITY OF PRINCIPLE OF MUTUALI TY TO THE EXCESS PROFITS OF RS. 1 .22 CRORES IS LINKED TO THE EXCESS EARNING OF THE TRUST AS WELL AS THE PROFIT MOTIVE OF THE TRUST. WE DEALT WITH THIS ISSUE WHI LE ADJUDICATING THE GROUND NOS. 1 TO 5 ALONG WITH THE ADD ITIONAL GROUNDS RAISED BY THE ASSESSEE. WHILE HOLDING THAT THE SO CALLED COMMERCIAL ACTIVITIES CONSTITUTE INCIDENTAL ACTIVITIES TO THE OBJECTS OF THE TRUST, WE REMANDED THE ISSUE OF 'PROFIT MOTIVE', SURPLUS FUNDS AND THE RELATED ISSUES OF EXEMPT NATURE OF SUCH PROFIT IN VIEW OF THE PRINCIPLE OF MUTUALITY, TO THE FILE OF AO FOR WANT OF FACTS AND CONCLUSIONS OF THE AO ON THES E ISSUES . THEREAFTER, MISCELLANEOUS APPLICATION WAS FILED BY THE ASSESSEE IN MA NO.94/PUN/2018 WHEREIN IT WAS CONTENDED THAT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE WERE NOT ADJUDICATED BY THE TRIBUNAL. THE TRIBUNAL ON HEARING BOTH THE PARTIES AND PERUS AL OF THE ADDITIONAL GROUNDS WAS OF THE OPINION THAT THE ADDITIONAL GROUNDS REMAINED TO BE ADJUDICATED AND THE ORDER WAS RECALLED. 3 ITA NO. 179 /PUN/20 15 A.Y. 2010 - 11 2.1 THAT THE LD. AR IN THIS BACKGROUND SUBMITTED THAT THE TRIBUNAL IN ITS EAR LIER ORDER HAD REMANDED THE ISSUE OF PROFIT MOTIVE , SURPLUS FUNDS AND THE RELATED ISSUES OF EXEMPT NATURE OF SUCH PROFIT FOR EXAMINATION BY THE ASSESSING OFFICER IN VIEW OF THE P RINCI PLE OF MUTUALITY . THEREFORE, IT WAS PRAYED BY THE LD. AR THAT THE ADDITIONAL GROUND MAY BE REMANDED BACK TO THE FILE OF ASSESSING OFFICER FOR ADJUDICATION IN TOTALITY. 3. THE LD. DR FAIRLY CONCEDED TO THE PRAYER MADE BY THE LD. AR OF THE ASSESSEE. 4. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVAL CONTENTIONS. W E OBSERVE THAT IN THE EARLIER OCCASION, THE TRIBUNAL HAD REMANDED THE MAIN ISSUE REGARDING EXAMINATION OF PROFIT MOTIVE , SURPLUS FUND AND THE RELATED ISSUES OF EXEMPT NATURE OF SUCH PROFIT FOR EXAMINATION IN VIEW OF THE PRINCIPLE OF MUTUALITY BY THE ASSESSING OFFICER. HOWEVER, THE ADDITIONAL GROUND FILED BEFORE TH E TRIBUNAL RE MAIN ED UN - ADJU DICATED AND IN THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE, THE TRIBUNAL HAD RECALLED ITS ORDER FOR ADJUDICATION OF THIS ADDITIONAL GROUND WHICH REMAIN ED UN - ADJUDICATED AT THE FIRST ROUND. THE PRAYER OF THE LD. AR IS THAT SINCE THE MAIN ISSUE HAS TO BE EXAMINED BY THE ASSESSING OFFICER IN THE LIGHT OF PRINCIPLE OF MUTUALITY AS PER DIRECTION OF THE TRIBUNAL IN THE EARLIER R OUND, SIMILARLY, THE ADDITIONAL GROUND MADE ALSO BE REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION IN TOTALITY. IN OUR CONSIDERED VIEW, THIS ARGUMENT IS FAIR IN THE INTEREST OF JUSTICE AND ACCORDI NGLY, WE REMAND THIS ADDITIONAL GROUND TO TH E FILE OF ASSESSING OFFICER FOR ADJUDICATION IN COMPLIANCE WITH THE PRINCIPLE S OF NATURAL JUSTICE. 4 ITA NO. 179 /PUN/20 15 A.Y. 2010 - 11 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED ON 06 TH DAY OF SEPTEMBER , 201 9 . SD/ - SD/ - R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 06 TH SEPTEMBER , 2019 . SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - II, PUNE. 4. THE CIT - II, PUNE. 5 . , , , / DR, ITAT, B BENCH, PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE . 5 ITA NO. 179 /PUN/20 15 A.Y. 2010 - 11 DATE 1 DRAFT DICTATED ON 06 .0 9 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 06 .0 9 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER