The R.S.Puram Club, Coimbatore V. ITO, Coimbatore

ITA 2201/CHNY/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9849 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-05-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 01-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: R RAJAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI ... , ! ', $ %& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ ITA NO.2201/MDS/2014 ( )( / ASSESSMENT YEAR : 2010-11 M/S THE R.S. PURAM CLUB, NO.1, TRC SUBRAMANIAM ROAD, R.S. PURAM, COIMBATORE 641 002. PAN : AAAAT 8258 Q V. THE INCOME TAX OFFICER, COMPANY WARD I, COIMBATORE. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI R. RAJAN, FCA -.+, / 0 / RESPONDENT BY : SHRI P. RADHAKRISHNAN, JCIT 1 / 2$ / DATE OF HEARING : 05.05.2015 34) / 2$ / DATE OF PRONOUNCEMENT : 08.05.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIMBAT ORE, DATED 12.06.2014 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2 I.T.A. NO.2201/MDS/14 2. THERE WAS A DELAY OF 13 DAYS IN FILING THIS APPE AL BY THE ASSESSEE. THE ASSESSEE HAS FILED A PETITION FOR CO NDONATION OF DELAY. WE HAVE HEARD THE LD. REPRESENTATIVE AND TH E LD. D.R. WE FIND THAT THERE WAS SUFFICIENT CAUSE FOR NOT FILING THE APPEAL BEFORE THE STIPULATED TIME. THEREFORE, WE CONDONE THE DEL AY AND ADMIT THE APPEAL. 3. SHRI R. RAJAN, THE LD. REPRESENTATIVE FOR THE AS SESSEE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS WITH REGARD TO ADDITION OF ` 4,42,498/- TOWARDS INTEREST FROM BANK DEPOSITS. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE I S A CLUB AND THE ENTIRE INCOME IS EXEMPTED FROM TAXATION ON THE PRIN CIPLE OF MUTUALITY. THE LD. REPRESENTATIVE FURTHER SUBMITTE D THAT THE ASSESSEE DEPOSITED THE SURPLUS FUNDS WHICH ARE NOT REQUIRED IMMEDIATELY, IN THE BANK ACCOUNT AND EARNED INTERES T. THE INTERESTS EARNED BY THE ASSESSEE WERE USED IN THE CLUB ACTIVI TIES. THEREFORE, THE INTEREST EARNED BY THE ASSESSEE IS ELIGIBLE FOR EXEMPTION ON THE PRINCIPLE OF MUTUALITY. REFERRING TO THE JUDGMENT OF THE APEX COURT IN CIT V. BANGALORE CLUB IN CIVIL APPEAL 124 OF 200 7, THE LD. REPRESENTATIVE SUBMITTED THAT IN THE CASE OF BANGAL ORE CLUB (SUPRA), THE BANK WAS A MEMBER IN THE CLUB. THEREFORE, THE APEX COURT FOUND THAT THE INTERESTS EARNED BY THE CLUB ON DEPO SIT OF SURPLUS 3 I.T.A. NO.2201/MDS/14 FUNDS WITH SUCH BANKERS ARE NOT ENTITLED FOR EXEMPT ION. IN THIS CASE, ACCORDING TO THE LD. REPRESENTATIVE, THE BANKS ARE NOT MEMBERS OF THE ASSESSEE-CLUB. THEREFORE, THE JUDGMENT OF THE APEX COURT IN BANGALORE CLUB (SUPRA) MAY NOT BE APPLICABLE TO THE FACTS OF THE CASE. 4. ON THE CONTRARY, SHRI P. RADHAKRISHNAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT MONEY W AS DEPOSITED WITH THE BANK FOR THE PURPOSE OF EARNING INTEREST. DURING THE COURSE OF BANKING BUSINESS, THE BANK ADVANCED MONEY TO ITS CUSTOMERS. THEREFORE, THE TRANSACTION MADE BY THE ASSESSEE WAS OUTSIDE THE SCOPE OF MUTUALITY, HENCE, IT CANNOT BE IDENTIFIED BY THE CONTRIBUTORS AND THE PARTICIPANTS. THEREFORE, THE PRINCIPLE OF MUTUALITY IS NOT APPLICABLE IN RESPECT OF BANK INTEREST. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE APEX COURT IN THE CASE OF BANGALORE CLUB (SUPRA) CONSIDERED THE ISSUE ELABORATELY AND FOUND THAT WHEN THE SURPLUS FUNDS ARE DEPOSITED WITH BANK, IT GOES OUTSIDE THE SCOPE OF MUTUALITY. THEREFORE, TH E TRANSACTION BETWEEN THE CONTRIBUTORS AND PARTICIPANTS CANNOT BE IDENTIFIED. THE ASSESSEE MADE AN ATTEMPT TO DISTINGUISH THIS JUDGME NT OF THE APEX COURT IN THE CASE OF BANGALORE CLUB (SUPRA) ON THE GROUND THAT THE 4 I.T.A. NO.2201/MDS/14 BANKS ARE NOT MEMBERS OF THE ASSESSEE-CLUB. THIS T RIBUNAL IS OF THE CONSIDERED OPINION THAT MERELY BECAUSE THE BANK S ARE NOT MEMBERS OF THE ASSESSEE-CLUB, THE SITUATION MAY NOT CHANGE. WHEN THE BANKS ARE NOT MEMBERS OF THE ASSESSEE-CLUB AND THEY RECEIVED DEPOSITS FROM THE ASSESSEE AND USED THE SA ME FOR BANKING BUSINESS, THIS TRIBUNAL IS OF THE CONSIDERE D OPINION THAT THE INTEREST EARNED BY THE ASSESSEE ON SUCH DEPOSITS CA NNOT HAVE THE BENEFIT OF MUTUALITY. IN OTHER WORDS, AS FOUND BY THE APEX COURT IN BANGALORE CLUB (SUPRA), IT GOES OUTSIDE THE SCOPE O F MUTUALITY. THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTI ON OF INTEREST EARNED ON THE BANK DEPOSITS. 6. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF THE CIT(APPEALS). ACCORDINGLY, THE SAME IS CONF IRMED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED ON 8 TH MAY, 2015 AT CHENNAI . SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ( ! ' ) ( ... ) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 8 TH MAY, 2015. KRI. 5 I.T.A. NO.2201/MDS/14 / -278 98)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 :2 () /CIT(A)-I, COIMBATORE 4. 1 :2 /CIT-I, COIMBATORE 5. 8; -2 /DR 6. <( = /GF.