Confederation of Real Estate Developers Association, Bangalore V. Commissioner of Income Tax, Bangalore

ITA 2299/BANG/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0778 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-06-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 23-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHINI MISRA
• Assessee Lawyers: MUKESH P SHET
• Keywords: Business income; Opportunity of being heard; Maximum Marginal Rate; Set aside
• Section: 250; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES : B , BANGALORE BEFORE SHRI B.R.B A SKARAN , A CCOUNTANT M EMBER AND S HRI PAVAN KUMAR GADALE, J UDICIAL M EMBER ITA NO . 2299 (BANG)/20 16 (ASSESSMENT YEAR : 20 12 - 13 ) CONFEDERATION OF REAL ESTATE DEVELOPERS ASSOCIATION OF INDIA, NO.84, BARTON COURT CENTRE, MG ROAD, BANGALORE - 560 001 PAN NO.A AAAK11730 APPELLANT VS THE COMMISSIONER OF INCOME T AX (A) - 1, BANGALORE . RESPONDENT APPELLANT BY : S HRI MUKESH P SHET, CA REVENUE BY : S HRI PRIYADARSHINI MISRA, J CIT DATE OF HEARING : 0 9 - 06 - 2020 DATE OF PRONOUNCEMENT : O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER : TH E ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 02 - 09 - 2016 PASSED BY LD.CIT( A) - 1, BANGALORE AND IT RELAT ES TO ASSESSMENT YEAR 2012 - 13. 2. THE GROUNDS OF APPEAL URG ED BY THE ASSESSEE READ AS UNDER; 1. THE ORDER PASSED U/S 250 OF THE CIT(A), BANGALORE DID NOT DELETE THE WRONG A DDITION BY THE AO OF THE MEMBERSHIP FEES RECEIVED FROM MEMBERS RS.13.00 LAKHS TREATING IT AS COLLECTION FROM NON - MEMBERS. ITA NO. 2299 / BANG/201 6 PAGE 2 OF 5 2. THE LD. CIT(A), BANGALORE FAILED TO ALLOW THE CLAIM TO TAX AT NORMAL RATE OF TAX INSTEAD OF MMR AS ASSESSED BY THE AO. 3. THE LD. CIT(A), BANGALORE FAILED TO ALLOW THE CLAIM FOR DEDUCTION FROM THE INCOME OF REALITY EXHIBITION IN PROPORTION TO MEMBERS CONTRIBUTION FROM THE INCOME FROM REALITY EXHIBITION TO THE EXTENT OF RS.1,23,03,772/ - ON THE PRINCIPLE OF MUTUALITY. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRIEF. THE ASSESSEE IS AN ASSOCIATION OF PERSONS. IT FILE D ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 04 - 07 - 2013 DECLARING A TAXABLE INCOME OF RS.29,59,962/ - UNDER THE HEAD INCOME FROM BUSINESS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED A SUM OF RS .38 . 60 LAKHS AS MEMBERSHIP FEE AND CLAIMED THE SAME AS EXEMPT UNDER THE P RINCIPLE OF MUTUALITY . THE AO NOTICED THAT THE ABOVE SAID MEMBERSHIP FEE ALSO INCLUDED A SUM OF RS.13.00 LAKHS RECEIVED FROM NON - MEMBERS . THE NAMES OF SUCH NON - MEMBERS ARE LISTED IN THE ASSESSMENT ORDER. ACCORDINGLY, T HE AO HELD THAT THE P RINCIPLE OF MUTUALITY WILL NOT APPLY TO THE FEES RECEIVED FROM NON - MEMBERS. ACCORDINGLY, THE ASSESSING OFFICER ASSESSED THE ABOVE SAID AMOUNT OF RS.13.00 LAKHS AS INCOME OF THE ASSESSEE. 4. THE AO ALSO NOTICED THAT THE ASSESSEE HAS CONDUCTED EXHIBITION S OF REAL ESTATE PROJECTS. DURING THE YEAR UNDER CONSIDERATION THE EXHIBITIONS HAVE BEEN CONDUCTED IN BANGALORE ITA NO. 2299 / BANG/201 6 PAGE 3 OF 5 AND DUBAI . THE C UMULATIVE INCOME (GROSS RECEIPTS LESS EXPENSES RELATING TO E XHIBITIONS) F ROM BOTH THE EVENTS WORKED OUT TO RS.1,29,74,413/ - . THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED EXPEN SES NOT RELATING TO EXHIBITIONS ALSO, AGAINST THE ABOVE SAID NET INCOME RECEIVED ON CONDUCTING EXHIBITION S . THE AO TOOK THE VIEW THAT THE OTHER EXPENDITURE CLAIMED BY THE ASSESSEE ACTUALLY RELATE TO MEMBERSHIP FEE, WHICH HAS BEEN CLAIMED AS EXEMPT UND ER THE P RINCIPLE OF MUTUALITY . ACCORDINGLY, HE HELD THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM THOSE EXPENSES AGAINST EXHIBITION INCOME. AC CORDINGLY HE DISALLOWED THE CLAIM OF ALL OTHER EXPENSES AND COMPUTED THE BUSINESS INCOME AT RS.1,29,74,413/ - , AS AGAINST THE AMOUNT OF RS.29,59,960/ - DECLARED BY THE ASSESSEE. 5. THE ASSESSEE CHALLENGED BOTH THE ADDITIONS BY FILING APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) DID NOT ADJUDICATE THE GROUND RELATING TO ADDITION OF RS.13.00 LAKHS , I.E., THE FEES RECEIVED FROM NON - MEMBERS. 6. WITH REGARD TO THE ADDITION OF RS.1,29,74,413/ - , THE LD. CIT(A) ADJUDICATED THE SAME AS UNDER: 4. IT IS SUBMITTED BY THE APPELLANT THAT IN THEIR OWN CASE (EARLIER NAME OF THE ORGANIZATION WAS THE KARNATAKA OWNERSHIP APARTMENT PROMOTERS A SSOCIATION, 4/3, BARTON CENTRE, 84, MG ROAD, BANGALORE - 560 001) IN ITA NO.1188(BANG)/2010 FOR THE ASSESSMENT YEAR 2006 - 07 (SIC. THE I TAT) HAS RULED IN THEIR FAVOUR ON THE SAME ISSUE. THE HONBLE ITAT HAD OBSERVED THAT WE HOLD THAT PROPORTIONATE EXPENDITU RE ITA NO. 2299 / BANG/201 6 PAGE 4 OF 5 FOR EARNING RS.49,76,291/ - RECEIVED FROM NON - MEMBER IS TO BE DEDUCTED AND THE NET AMOUNT ALONE SHOULD BE BROUGHT TO TAX. HENCE, G ROUND NO(III) MENTIONED ABOVE IS ALLOWED. ACCORDINGLY, THE PROPORTIONATE EXPENDITURE FOR EARNING, RECEIVED FROM NON - MEMBERS IS TO BE DEDUCTED AND THE NET AMOUNT ALONE IS TO BE BROUGHT TO TAX. THOUGH, LD. CIT(A) HAS MENTIONED THAT THE APPEAL HAS BEEN ALLOWED, YET THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL ON THE GROUND S MENTIONED ABOVE. 7. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORDS. ADMITTEDLY, THE LD. CIT(A) DID NOT ADJUDICATE THE GROUND RELATING TO THE ADDITION OF RS.13.00 LAKHS PERTAINING TO FEE RECEIVED FROM NON - MEMBERS. ACCORDINGLY WE SET ASIDE THIS GROUND TO THE FILE OF LD CIT(A) FOR ADJUDICATING THE SAME. 8. WITH REGARD TO THE ADDITION OF RS.1,29,74,413/ - IT IS THE SUBMISSION OF THE LD. AR THAT THE ORDER PASSED BY THE LD. CIT(A) IS NOT CLEAR IN AS MUCH AS THE LD.CIT(A) HAS GIVEN A GENERAL DIRECTION WITHOUT HAVING REGARD TO THE FACTUAL ASPECTS OF RECEIPTS AND EXPENDITURE RELATING TO EXHIBITION S PRESENTED BEFORE HIM. IT IS THE PLEA OF THE LD. AR THAT A CLEAR CUT DIREC TION FROM LD. CIT(A) IN THIS REGARD WOULD BE HELPFUL TO BOTH THE ASSESSEE AND THE AO. 9. WE HAVE HEARD THE LD. DR ON THIS ISSUE. HAVING REGARD TO THE SUBMISSIONS MADE BY LD. AR, WE ARE OF THE VIEW THAT THIS ISSUE IS ALSO REQUIRED TO BE RESTORED TO THE F ILE OF THE LD. CIT(A) FOR ITA NO. 2299 / BANG/201 6 PAGE 5 OF 5 ADJUDICATING IT AFRESH AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE THEREFORE, SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) ON TH IS ISSUE AND RESTORE THE SAME TO THE FILE OF LD. CIT(A) FOR ADJUDICATING IT AFRESH. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED A S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON (PAVAN KUMAR GADALE ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: *AM COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5. DR 6 .GUARD FI LE BY ORDER ASST.REGISTRAR