Delhi Gymkhana Club Ltd., New Delhi V. ACIT, New Delhi

ITA 187/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3683 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 13-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: P K SAHU
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A. NOS.187, 188 & 189/DEL/2011 ASSESSMENT YEARS : 2004-05, 2006-07 & 2007-08 DELHI GYMKHA DELHI GYMKHA DELHI GYMKHA DELHI GYMKHANA CLUB LIMITED, VS. NA CLUB LIMITED, VS. NA CLUB LIMITED, VS. NA CLUB LIMITED, VS. ASSTT. C.I.T., ASSTT. C.I.T., ASSTT. C.I.T., ASSTT. C.I.T., 2, SAFDARJUNG ROAD, 2, SAFDARJUNG ROAD, 2, SAFDARJUNG ROAD, 2, SAFDARJUNG ROAD, CIRCLE 10(1), CIRCLE 10(1), CIRCLE 10(1), CIRCLE 10(1), NEW DELHI NEW DELHI NEW DELHI NEW DELHI NEW DELHI NEW DELHI NEW DELHI NEW DELHI PAN NO.AAACD 0896L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.K. SAHU, ADVOCATE RESPONDENT BY : MS. Y. KAKKAR, SR. DR ORDER PER RAJPAL YADAV:JM: THE PRESENT THREE APPEALS ARE DIRECTED AT THE INSTA NCE OF THE ASSESSEE AGAINST THE SEPARATE ORDERS OF EVEN DATE I.E. 22 ND OCTOBER, 2010 PASSED BY LEARNED CIT(A) IN ASSESSMENT YEAR 2004-05, 2006-07 AND 2007-08. 2. THE FIRST COMMON ISSUE IN ALL THESE APPEALS IS WHETHER ADDITIONS MADE BY THE ASSESSING OFFICER IN RESPECT OF INCOME EARNE D ON INVESTMENT, IS INTEREST ON BANK DEPOSIT AND PROFIT ON SALE OF INVE STMENT ARE TO BE TAXED IN THE HANDS OF ASSESSEE ON THE PRINCIPLE OF MUTUALITY OR NOT? 2 2.1 THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VER Y OUT SET SUBMITTED THAT ASSESSEE HAS INCOME FROM INVESTMENTS MADE WITH THE BANK, SUCH AS INTEREST INCOME ETC. IT HAS CLAIMED EXEMPTION FROM TAXABILI TY OF THIS INCOME ON THE GROUND OF MUTUALITY. IDENTICAL ISSUES AROSE IN T HE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2003-04. THE LEARNED CIT(A) DID NO T AGREE WITH THE CONTENTION OF ASSESSEE IN THAT AY, BECAUSE ACCORDIN G TO THE CIT(A), THE CASE LAW RELIED UPON BY THE ASSESSEE IN THE CASE OF DIT( E) VS. ALL INDIA ORIENTAL BANK OF COMMERCE WELFARE SOCIETY REPORTED IN 184 CT R 274, THE INTEREST INCOME EARNED BY THE SOCIETY WAS BY ADVANCING LOAN TO ITS MEMBERS. IN THE PRESENT CASE, THE INTEREST INCOME HAS BEEN EARNED B Y INVESTMENT OF SURPLUS FUNDS AVAILABLE WITH THE CLUB IN THE BANKS AND NOT TO MEMBERS. ACCORDING TO THE LEARNED CIT(A), A THIRD PARTY I.E., THE BANK HA D COME IN THE PICTURE IN THE PRESENT CASE AND, THEREFORE, PRINCIPLE OF MUTUALITY WOULD NOT BE APPLICABLE. LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT T HIS ISSUE TRAVELLED UPTO THE TRIBUNAL IN I.T.A. NO.3585/D/06 IN ASSESSMENT YEAR 2003-04. THE TRIBUNAL HAS ACCEPTED THE CONTENTION OF ASSESSEE AND DELETED THE ADDITION. THEREAFTER, REVENUE HAS CHALLENGED THE ORDER OF TRIBUNAL BEFORE THE HONBLE HIGH COURT IN I.T.A. NO.1288 OF 2010. THE HONBLE HIGH COURT HAS DISMISSED THE APPEAL OF REVENUE BY AN ORDER RENDERED ON 09.12.201 0. HE PLACED ON RECORD COPY OF THE HONBLE HIGH COURTS DECISION AS WELL A S COPY OF THE TRIBUNALS ORDER. 3 2.2 LEARNED DR WAS UNABLE TO CONTROVERT THE CONTENT ION OF LEARNED COUNSEL FOR THE ASSESSEE. 2.3 WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AN D GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE HONBLE HIGH COURT IN THE CASE OF ASSESSEES OWN CA SE. THE JUDGMENT REFERRED BY THE LEARNED CIT(A) IN THE CASE OF CHELM SFORD CLUB 243 ITR 89, SPORTS CLUB OF GUJARAT VS. CIT AND DIT (E) VS. ALL INDIA ORIENTAL BANK OF COMMERCE WELFARE SOCIETY HAVE BEEN CONSIDERED BY TH E HONBLE HIGH COURT. THE JUDGMENT IS FULLY APPLICABLE ON THE FAC TS OF THE PRESENT THREE ASSESSMENT YEARS. CONSIDERING THE DECISION OF HON BLE DELHI HIGH COURT, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE FACTS AND CIRCUMSTANCES IN RESPECT OF INCOME EARNED FROM INVESTMENT, INTEREST AND SALE OF INVESTMENT IN THE LIGHT OF ORDER OF THE ITAT IN ASSESSMENT YEAR 2 003-04 AS WELL AS IN THE LIGHT OF THE HONBLE HIGH COURTS DECISION IN ASSES SMENT YEAR 2003-04. IN OTHER WORDS, LEARNED ASSESSING OFFICER SHALL GIVE S AME EFFECT TO THE RECEIPTS IN THESE THREE YEARS AS WAS GIVEN IN ASSESSMENT YEA R 2003-04. 3. GROUND NO.1 IS GENERAL IN NATURE. IT DOES NOT R EQUIRE ANY SPECIFIC ADJUDICATION. 4. GROUND NO.5 RELATES TO CHARGING OF INTEREST U/S 234A, 234B AND 234D. THE CHARGING OF INTEREST WOULD BE CONSEQUENTIAL. 4 5. IN GROUND NO.6, THE ASSESSEE HAS PLEADED THAT LE ARNED ASSESSING OFFICER HAS ERRED IN INITIATING PENALTY PROCEEDING U/S 271(1)(C). THIS GROUND IS PREMATURE IN NATURE, BECAUSE ASSESSEE WOULD BE A BLE TO PUT ITS CASE IN THE PENALTY PROCEEDING, IF ANY, COMMENCED AGAINST IT. HENCE, THIS GROUND IS ALSO REJECTED. 6. IN GROUND NO.4 IN ALL THE THREE ASSESSMENT YEARS , THE DISPUTE IS THAT ASSESSEE HAS MADE PAYMENT OF TAXES WHOSE CREDIT WAS NOT GIVEN TO IT. IT HAS CHALLENGED THE ACTION OF ASSESSING OFFICER BEFORE T HE LEARNED CIT(A) AND PLEADED THAT WHILE COMPUTING THE DEMAND OF TAX AND INTEREST, ASSESSING OFFICER HAS NOT GIVEN CREDIT OF PREPAID TAXES. LEA RNED CIT(A) DIRECTED THE ASSESSING OFFICER TO VERIFY THE PAYMENT OF TAXES FR OM THE RECORD AND GIVE CREDIT FOR THE SAME. 6.1 BEFORE US, THE ASSESSEE HAS PLEADED THAT CIT(A) OUGHT TO HAVE DECIDED THIS ISSUE ON MERITS, BECAUSE LEARNED FIRST APPELLA TE AUTHORITY CAN NOT REMIT ANY ISSUE TO THE ASSESSING OFFICER AFTER THE AMENDM ENT CARRIED OUT IN SECTION 251(1)(A) W.E.F. 1 ST JUNE, 2001. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT CREDIT O F PREPAID TAXES HAS TO BE GIVEN BY THE ASSESSING OFFICER AND THIS CAN BE GIVE N ONLY AFTER VERIFICATION OF THE RECORD. THEREFORE, WE REMIT THIS ISSUE TO T HE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF THE PAYMENT MADE BY THE ASSESSEE AND TO GIVE CREDIT, IF ANY. 5 7. IN RESULT, ALL THE THREE APPEALS ARE PARTLY ALLO WED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 24.0 6.2011. SD/- SD/- ( K.G. BANSAL ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 24.06.2011. NS COPY FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).