Rani Meyyammai Towers Owner's Association, CHENNAI V. ITO, CHENNAI

ITA 2132/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7764 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-03-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 09-11-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Keywords: Reopening of assessment; Period of limitation
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , . , # $ BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NOS.2128 TO 2132/MDS/2015 ( / ASSESSMENT YEARS: 2007-08 TO 2011-12) M/S.RANI MEYYAMMAI TOWERS OWNERS ASSOCIATION, 66/94. SATHYADEV AVENUE, MRC NAGAR, R.A.PURAM, CHENNAI-600 028. VS INCOME TAX OFFICER, NON-CORPORATE WARD-2(3), CHENNAI-34. PAN: AAAAR4170M ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SAROJ KUMAR PARIDA, ADVOCATE /RESPONDENT BY : MR. A.V.SREEKANTH, JCIT /DATE OF HEARING : 1 ST MARCH, 2016 /DATE OF PRONOUNCEMENT : 18 TH MARCH, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE FIVE APPEALS ARE FILED BY THE ASSESSEE AGGRIEVED BY THE COMMON ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX, (APPEALS)-2, , CHENNAI DATED 28.08.2015 IN ITA NOS. 220 TO 224/CIT(A)-2/ 2013-14 PASSED UNDER SECTION 143(3) R.W.S 147 & 250(6) OF T HE ACT FOR THE ASSESSMENT YEARS 2007-08 TO 2011-12. SINCE THE ISSUE INVOLVED IS COMMON, ALL THESE FIVE APPEALS ARE DISP OSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NOS.2128 TO 2132/MDS/2015 2. THE ASSESSEE IN THESE FIVE APPEALS HAS RAISED S EVERAL ELABORATE GROUNDS, HOWEVER, THE CRUXES OF THE ISSUE S IN ALL THESE APPEALS ARE AS FOLLOWS:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE REOPENING OF ASSESSMENTS MADE BY THE LEARNED ASSESSING OFFICER F OR THE RELEVANT ASSESSMENT YEARS UNDER CONSIDERATION A ND PARTICULARLY WITH RESPECT TO THE ASSESSMENT YEAR 20 07- 08 AS IT WAS BEYOND THE PERIOD OF LIMITATION. II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT PRINCIPLE OF MU TUALITY DOES NOT APPLY TO THE FACTS AND CIRCUMSTANCES OF TH E CASE OF THE ASSESSEE WITH RESPECT TO INCOME EARNED ON FIXED DEPOSITS AND SAVINGS BANK ACCOUNTS MAINTAINED WITH BANKS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN ASSOCIATION CONSISTING OF OWNERS OF RESIDENTIAL APA RTMENTS IN THE BUILDING RANI MEYYAMMAI TOWERS FILED ITS RET URNS OF INCOME FOR THE RESPECTIVE ASSESSMENT YEARS CLAIMING EXEMPTION UNDER THE PRINCIPLE OF MUTUALITY. RETURNS OF INCOME WERE PROCESSED UNDER SECTION 143(1) AND ACCEPTED BY THE REVENUE. SUBSEQUENTLY IT WAS OBSERVED THAT THE ASSE SSEE HAS RECEIVED INTEREST FROM BANKS IN ALL THE ABOVE A SSESSMENT YEARS WHICH WERE CLAIMED AS EXEMPT UNDER THE PRINCI PLE OF MUTUALITY. SINCE THERE WERE NUMBER OF DECISIONS AGA INST THE ASSESSEE ON THIS ISSUE, THE REVENUE REOPENED THE 3 ITA NOS.2128 TO 2132/MDS/2015 ASSESSMENT MADE UNDER SECTION 143(1) OF THE ACT BY ISSUANCE OF NOTICE. 4. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE REOPENING OF THE ASSESSMENT WAS BAD IN LAW AND THEREFORE THE ORDERS OF THE REVENUE PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT SHOULD BE QUAS HED. 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT EXCEPT FOR THE ASSESS MENT YEAR 2007-08, ASSESSMENT WAS REOPENED WITHIN FOUR Y EARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IN ALL OTHER CASES. FURTHER THE REASONS FOR REOPENING IN ALL THE SE APPEALS WAS DUE TO THE OBSERVATION OF THE LEARNED ASSESSING OFFICER THAT THE ASSESSEE HAS RECEIVED INTEREST FROM BANKS WHICH IS REQUIRED TO BE TAXED AS THE SAME DO NOT FALL UNDER THE PRINCIPLES OF MUTUALITY. THEREFORE IT WAS ARGUED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT REOPENING WAS VALID AND IN ACCORDANCE WITH LAW. IT WAS FURTHER SU BMITTED THAT BASED ON THESE FINDINGS THE ASSESSMENT WAS REOPENED FOR THE ASSESSMENT YEAR 2007-08 ALSO WHICH FALLS BEYOND THE 4 ITA NOS.2128 TO 2132/MDS/2015 PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR BUT WITHIN THE PERIOD OF STIPULATED SIX YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND THEREFORE, THE REOPENING IS VALID BECAUSE THERE WERE FRESH MATERIALS ON RECO RD. 6. AFTER HEARING BOTH SIDES, WE FIND MERIT IN THE C ONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE. ONLY IN THE CASE OF ASSESSMENT YEAR 2007-08 THE PERIOD FALLS BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR HOWEVER, IT APPARENT FROM THE FACTS OF THE CASE THAT FRESH M ATERIALS HAS COME ON RECORD THAT THE INCOME HAS ESCAPED ASSESSME NT DUE TO THE FINDINGS IN THE SUBSEQUENT ASSESSMENT YE ARS ALL OF WHICH FALLS WITHIN THE PERIOD OF FOUR YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR. FURTHER IN ALL THESE ASSE SSMENT YEARS ASSESSMENT WAS ONLY MADE UNDER SECTION 143(1) OF THE ACT. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDER ED VIEW THAT THE REVENUE IS JUSTIFIED IN REOPENING THE ASSE SSMENT FOR ALL THE ABOVE MENTIONED YEARS. THUS, THE FIRST GRO UND RAISED BY THE ASSESSEE IS DECIDED AGAINST IT. 5 ITA NOS.2128 TO 2132/MDS/2015 7. WITH RESPECT TO THE OTHER ISSUE REGARDING TAXABI LITY OF INTEREST RECEIVED FROM FIXED DEPOSITS, SAVINGS BANK ACCOUNT FROM BANKS, RENTAL INCOME RECEIVED FROM OPEN SPACE (LETTING OUT OF CAR PARKING AREA IN FRONT OF THE CLUB) AND I NCOME RECEIVED FROM MULTIPURPOSE HALL ETC., IT HAS BEEN C ATEGORICALLY HELD BY VARIOUS HIGHER JUDICIARY THAT SUCH INCOME W ILL BE TAXABLE IN THE HANDS OF THE ASSESSEE AS THE SAME CA NNOT BE SAID TO SATISFY THE MUTUALITY CONCEPT. THE HONBLE MADRAS HIGH COURT IN THE CASE OF MADRAS GYMKHANA CLUB VS. CIT REPORTED IN 183 TAXMANN 333 HELD FOLLOWING THE DECI SION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF BAN GALORE CLUB REPORTED IN 287 TR 263 THAT THE INTEREST EARNE D ON INVESTMENT OF SURPLUS FUNDS CAN NOT BE HELD TO SATI SFY THE MUTUALITY CONCEPT AND THEREFORE IT IS TAXABLE. IT I S PERTINENT TO MENTION HERE THAT THE DECISION OF THE HONBLE KARNA TAKA HIGH COURT WAS CONFIRMED BY HONBLE SUPREME COURT IN TH E CASE OF BANGALORE CLUB VIDE CIVIL APPEAL NO.124 & 125 OF 2007 AND 272 TO 276 & 278 OF 2013 ARISING OUT OF SLP (CI VIL) NO.1879 OF 2010 DATED 14.01.2013. THEREFORE, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF TH E LEARNED ASSESSING OFFICER AND LEARNED COMMISSIONER OF INCOM E TAX 6 ITA NOS.2128 TO 2132/MDS/2015 (APPEALS) WHO HAS HELD THAT THE RENTAL INCOME RECEI VED FROM LETTING OUT OF SHOPS, LETTING OUT OPEN SPACE, LETTI NG OF MULTIPURPOSE HALL, INTEREST FROM BANK DEPOSITS ETC. WILL BE TAXABLE IN THE HANDS OF THE ASSESSEE SINCE THE PRIN CIPLES OF MUTUALITY WILL NOT APPLY. 8. IN THE RESULT, ALL THE FIVE APPEALS OF THE ASSES SEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 18 TH MARCH, 2016 SD/- SD/- ( . ) ( . ) (G.PAVAN KUMAR) ( A.MOHAN ALANKAM ONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 18 TH MARCH, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF