ITO 5(1)(4), MUMBAI V. HILL PROPERTIES LTD, MUMBAI

ITA 2477/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83515 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 21-08-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 01-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: FARUKH IRANI
• Keywords: Benefit of exemption

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.2477/MUM/2013 (A.Y.2010-11) THE ITO 5(1)(4), AAYKAR BHAVAN, R.NO.569, 5 TH FLOOR, MK ROAD, MUMBAI 400020 (APPELLANT ) VS. M/S.HILL PROPERTIES LTD., HILL PARK ESTATE, A.G.BELL ROAD, MALABAR HILL, MUMBAI 400006 PAN:AABCH 7578L (RESPONDENT) APPELLANT BY : SHRI PITAMBAR DAS RESPONDENT BY : SHRI FARUKH IRANI DATE OF HEARING : 21/08/2014 DATE OF PRONOUNCEMENT : 21 /08/2014 ORDER PER I.P.BANSAL, J.M, THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST ORDER PASSED BY LD. CIT(A)-9, MUMBAI DATED 24.1.2013 FOR ASSESSMEN T YEAR 2010-11. THE GROUNDS OF APPEAL READ AS UNDER: 1. WHETHER ON THE FACTS, CIRCUMSTANCES AND IN THE L AW, THE LD.CIT(A) HAS ERRED IN HOLDING THAT, THE SHARE TRANSFER FEES OF RS.19,1O,0 00/-, NOMINEE OCCUPANCY CHARGES OF RS.23,25,000/- AND NON-REFUNDABLE SECURITY DEPOSIT OF RS.11,82,000/-, RECEIVED BY THE ASSESSEE COMPANY, ON TRANSFER OF FLATS, AS EXEMPT F ROM INCOME TAX, ON PRINCIPLE OF MUTUALITY? 2. WHETHER ON THE FACTS, CIRCUMSTANCES AND IN THE L AW, THE LD.CIT(A) HAS ERRED IN HOLDING THAT, THE TENNIS SPORTS FEES OF RS.1,85,000 /-, RECEIVED FROM THE MEMBERS FOR USING THE TENNIS COURT BY THE CLIENTS THROUGH THE M EMBERS OF THE CLUB ARE NOT TAXABLE, ON THE PRINCIPLE OF MUTUALITY? 2. THE ASSESSEE IS AN UNLISTED PUBLIC COMPANY, OWNI NG PREMISES ON WHICH FIVE RESIDENTIAL BUILDINGS ARE CONSTRUCTED. EVERY MEMBER OF THE ASSESSEE COMPANY IS ENTITLED TO RENT FREE OCCUPATION OF A FLAT AND IS OBLIGED TO PAY A DUE PROPORTION OF ALL ITA NO.2477/MUM/2013 (A.Y.2010-11) 2 EXPENSES AND OUTGOINGS NECESSARY FOR THE MAINTENANC E, UPKEEP, RUNNING AND MANAGEMENT OF THE COMPANYS PROPERTY. THUS, IT HAS CLAIMED THAT IT IS A MUTUAL CONCERN, NOT CARRYING OUT ANY ACTIVITY WITH THE INT ENTION OF EARNING PROFITS/GAINS AND ALSO DOES NOT CLAIM ANY EXPENDITURE IN THE RETURN O F INCOME. IT HAS FILED ITS RETURN OF INCOME AT RS.1/- CLAIMING THAT ITS INCOME IS EXEM PT ON THE BASIS OF PRINCIPLE OF MUTUALITY. HOWEVER, AO DID NOT ACCEPT SUCH SUBMISS ION OF THE ASSESSEE AND MADE FOLLOWING DISALLOWANCES: ADD: ADDITIONS AS DISCUSSED ABOVE. 1. TRANSFER FEES RECEIVED FROM NON-MEMBERS 19,10 ,000 2. NOMINEE OCCUPANCY CHARGES 23,25,000 3. SECURITY DEPOSITS FOR REPAIRS 11,82,500 4. INTEREST INCOME 32,70,578 5. TENNIS COURT FEES 1,85,100 88,73.178 TOTAL RS. 88,73,178 THE AFOREMENTIONED ADDITIONS WERE CHALLENGED IN AN APPEAL FILED BEFORE LD. CIT(A). BEFORE LD. CIT(A) IT WAS CLAIMED THAT DISALLOWANC ES STATED AT SL. 1 TO 3 ARE COVERED IN FAVOUR OF THE ASSESSEE AS PER EARLIER ORDER OF T HE TRIBUNAL IN ASSESSEES OWN CASE. FOR DISALLOWANCES AT SL.NO.4 IT WAS SUBMITTED THAT IT WAS DECIDED AGAINST THE ASSESSEE IN A.Y 2007-08. FINDING THAT THE CONTENTI ON OF THE ASSESSEE IS CORRECT LD. CIT(A) DELETED THE DISALLOWANCES MENTIONED AT SL.NO . 1 TO 3 AND UPHELD DISALLOWANCES STATED AT SL.NO.4, AGAINST WHICH AS PER SUBMISSIONS MADE BY LD. AR ASSESSEE DID NOT FILE ANY APPEAL. SO FAR AS IT RELATES TO DISALLO WANCES STATED AT SL.NO.5, LD. CIT(A) HAS ALLOWED THE RELIEF TO THE ASSESSEE ON THE BASIS OF DECISION OF HONBLE PATNA HIGH COURT IN THE CASE OF CIT VS. BANKIPUR CLUB LTD. 198 ITR 261(PAT) AND SMC BENCH DECISION OF RAJKOT ITAT IN THE CASE OF SUMMAIR SPOR TS CLUB VS. ACIT, 1 SOT 360 (RAJKOT). THE DEPARTMENT IS AGGRIEVED BY THE AFOR EMENTIONED ORDER OF LD. CIT(A) AND HAS AGITATED IN GROUND NO.1, THE DELETION OF DISAL LOWANCE STATED AT SL.NO.1 TO 3 AND IN GROUND NO.2 THE DEPARTMENT IS AGITATING THE DELE TION OF DISALLOWANCES STATED AT SL.NO.5. ITA NO.2477/MUM/2013 (A.Y.2010-11) 3 3. AT THE OUTSET IT WAS POINTED OUT BY LD. AR THAT THE DELETION OF THREE DISALLOWANCES AGITATED BY REVENUE IN GROUND NO.1 AR E COVERED BY THE FOLLOWING DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASE: SR. NO. GROUND NO.(BY DEPTT. AND BY ASSESSEE ) PARTICULARS PAGE NO. OF COMPI- LATION PARA NO. OF ORDER WHETHER IN FAVOUR/AG AINST THE ASSESSEE 1. SHARE TRANSFER FEE ITAT ORDER FOR AY 2009-10 2-3 PARA-6 FAVOUR (GROUND OF APPEAL NO.1 BY DEPTT. ITAT ORDER FOR AY 2008-09 8-9 PARA4 FAVOUR ITAT ORDER FOR AY 2007-08 13-14 PARA 7 AND 8 FAVOUR ITAT ORDER FOR AY 2006-07 18-19 PARA 2 AND 3 FAVOUR ITAT ORDER FOR AY 2005-06 29-31 PARA 8-9 FAVOUR ITAT ORDER FOR AY 2001-02, 2000-01 AND 1998-99 35-36 PARA 8 FAVOUR ITAT ORDER FOR AY 1997-98 38 PARA 3 FAVOUR ITAT ORDER FOR AY 1995-96 42-44 PARA 6 AND 7 FAVOUR 2-3 PARA 6 FAVOUR 2. NOMINEE OCCUPANCY CHARGES ITAT ORDER FOR AY 2009-10 ITAT ORDER FOR AY 208-09 8-9 PARA 4 FAVOUR (GROUND OF APPEAL NO.1 BY DEPTT. ITAT ORDER FOR AY 2007-08 14-15 PARA 12 AND 13 FAVOUR ITAT ORDER FOR AY 2006-07 24 PARA 2 FAVOUR ITAT ORDER FOR AY 2005-06 32 PARA 15 FAVOUR 3 NON REFUNDABLE SECURITY DEPOSIT ITAT ORDER FOR AY 2009-10 2-3 PARA 6 FAVOUR (GROUND OF APPEAL NO.1 BY DEPTT.) ITAT ORDER FOR AY 2008-09 8-9 PARA 4 FAVOUR ITAT ORDER FOR AY 2007-08 14 PARA 9 AND 10 FAVOUR ITAT ORDER FOR AY 2006-07 19-20 PARA 4 AND 5 FAVOUR ITAT ORDER FOR AY 2005-06 31 PARA 10 FAVOUR 4 TENNIS SPORTS FRESH GROUND ITA NO.2477/MUM/2013 (A.Y.2010-11) 4 FEES (GROUND OF APPEAL NO.2 BY DEPTT.) 3.1 SO FAR AS IT RELATES TO DELETION OF DISALLOWAN CE OF TENNIS SPORTS FEE LD. AR RELIED UPON THE DECISION IN THE CASE OF SUMMAIR SPORTS CL UB (SUPRA). LD. AR SUBMITTED THAT SOURCE OF RECEIPT IS MEMBER WHO HAS PAID THE MONEY ON BEHALF OF GUEST AND THUS, IMMEDIATE SOURCE OF RECEIPT BY THE ASSESSEE I S MEMBER OF THE COMPANY THEREFORE, PRINCIPLE OF MUTUALITY WILL BE APPLICAB LE. 4. ON THE OTHER HAND, LD. DR COULD NOT DENY THAT AF OREMENTIONED DELETION OF DISALLOWANCES STATED AT SL.NO. 1 TO 3 ARE COVERED B Y THE DECISION OF TRIBUNAL IN EARLIER YEARS AS STATED IN THE CHART FILED BY LD. AR BUT HE RELIED UPON THE ORDER PASSED BY AO AND CONTENDED THAT DISALLOWANCE SHOULD NOT HAVE BEEN DELETED BY LD. CIT(A). SO FAR AS IT RELATES TO DISALLOWANCE STATED AT SL.NO.5 IT WAS THE SUBMISSION OF LD. DR THAT THE PAYMENT IS NOT MADE FOR MEMBER THOUGH IT MAY BE MADE BY THE MEMBER, THEREFORE, PRINCIPLE OF MUTUALITY DOES NOT APPLY A S THE IDENTITY BETWEEN MEMBER AND THE COMPANY DOES NOT EXIST. 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. SO FAR AS IT RELATES TO DISALLOWANCES STATED AT SL.NO.1 TO 3 AND WHICH ARE SUBJECT MATTER OF GROUND NO.1, WE FOUND THAT ALL TH E THREE DISALLOWANCES ARE RIGHTLY DELETED BY LD. CIT(A) FOLLOWING THE EARLIER ORDERS OF THE TRIBUNAL IN WHICH SIMILAR ISSUES WERE RAISED BY THE REVENUE. FOR THE SAKE OF COMPLETENESS THE LATEST ORDER AVAILABLE IN RESPECT OF A.Y 2009-10 I.E. IMMEDIATE PRECEDING ASSESSMENT YEAR CAN BE REFERRED. IT IS AN ORDER DATED 9/12/2013 PASSED IN ITA NO.2999/MUM/2012 IN DEPARTMENT APPEAL AND CO NO.100/MUM/2013,( ASSESSEE S C.O). COPY OF THIS ORDER IS PLACED AT PAGES 1 TO 4 OF THE PAPER BOOK. THE G ROUNDS RAISED BY THE REVENUE IN RESPECT OF THESE THREE DISALLOWANCES WERE AS UNDER: A) WHETHER ON THE FACTS, CIRCUMSTANCES AND IN LAW S, THE LD CIT (A) HAS ERRED IN HOLDING THAT THE SHARE TRANSFER FEES OF RS. 30,00,0 00/- RECEIVED BY THE ASSESSEE ITA NO.2477/MUM/2013 (A.Y.2010-11) 5 COMPANY, ON TRANSFER OF FLATS, AS EXEMPT FROM INCOM E TAX, ON PRINCIPLE OF MUTUALITY? B) WHETHER ON THE FACTS, CIRCUMSTANCES AND IN THE L AW, THE LD CIT (A) HAS ERRED IN HOLDING THAT THE NOMINEE OCCUPANCY CHARGES OF RS. 2 4,25,000/- RECEIVED BY THE ASSESSEE FROM ITS NON-MEMBERS (TENANTS) ARE COVERED BY THE CONCEPT OF MUTUALITY. C) WHETHER ON THE FACTS, CIRCUMSTANCES AND IN THE L AW, THE LD CIT (A) HAS ERRED IN HOLDING THAT THE NON-REFUNDABLE SECURITY DEPOSITS O F RS. 10,45,000/- RECEIVED BY THE ASSESSEE COMPANY FOR ALLOWING REPAIRS TO FLATS IS EXEMPT FROM INCOME TAX ON PRINCIPLE OF MUTUALITY. AFTER HEARING BOTH THE PARTIES THE DECISION OF THE TRIBUNAL ON THESE ISSUES IS AS UNDER: 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE (SUPRA) DATED 3.4.2013. ON PERUSAL OF THE SAID TRIBUNALS ORDER, WE FIND TH AT PARA 4 IS RELEVANT IS RELEVANT IN THIS REGARD AND THE SAME READS AS UNDER: 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT A LL THE THREE ISSUES RAISED IN THIS APPEAL OF THE REVENUE ARE SQUARELY COVERED IN FAVOU R OF THE ASSESSEE BY THE ORDERS OF THE TRIBUNAL FOR THE EARLIER YEARS, WHERE IN SIMILAR ISSUES HAVE BEEN CONSISTENTLY DECIDED BY THE TRIBUNAL IN FAVOUR OF T HE ASSESSEE. IN ONE OF SUCH ORDERS PASSED FOR THE IMMEDIATELY PRECEDING AY I.E. , 2007-2008, THE COORDINATE BENCH OF THIS TRIBUNAL VIDE ITS ORDER DATED 21.10.2 011 PASSED IN ITA NO. 6381/M/2010 HAS HELD THAT TRANSFER FEES RECEIVED BY THE COMPANY BEING A MUTUAL CONCERN, WHETHER FROM OUT COMING OR INCOMING MEMBERS IS NOT LIABLE TO TAX BECAUSE OF PRINCIPLE OF MUTUALITY. THE TRIBUNAL ALS O HELD THAT THE REFUNDABLE SD HAVING BEEN COLLECTED BY THE ASSESSEE COMPANY FROM ITS MEMBERS ARE ALSO EXEMPT FROM TAX AS THE PRINCIPLES OF MUTUALITY ARE CLEARLY APPLICABLE TO THE SAID CHARGES. AS REGARD THE NOMINEE OCCUPANCY CHARGES, T HE TRIBUNAL RELIED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF MITTAL COURT PREMISES COOPERATIVE SOCIETY LTD. VS. ITO [2009] 184 TAXMAN 292 (BOM.) TO HOLD THAT PRINCIPLES OF MUTUALITY ARE APPLICABLE EVEN TO THE NOMINEE OCCUPANCY CHARGES ALTHOUGH THE SAME WERE RECEIVED FROM THE TENANTS WH O ARE NOT THE MEMBERS OF THE ASSESSEE COMPANY. AS THE ISSUES INVOLVED IN THE YEAR UNDER CONSIDERATION AS RAISED IN THE PRESENT APPEAL FILED BY THE REVENUE AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THAT OF AY 2007-200 8, WE RESPECTFULLY ALLOW THE ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL PASS ED IN ASSESSEES OWN CASE FOR THE AY 2007-2008 AND UPHOLD THE IMPUGNED ORDER OF THE LD CIT (A) GIVING RELIEF TO THE ASSESSEE ON THESE ISSUES. THE APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. 6. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THA T ALL THE THREE ISSUES RAISED BY REVENUE I.E., (I) SHARE TRANSFER FEES RECEIVED BY T HE ASSESSEE COMPANY, ON TRANSFER OF ITA NO.2477/MUM/2013 (A.Y.2010-11) 6 FLATS; (II) NOMINEE OCCUPANCY CHARGES AND (III) NON -REFUNDABILITY OF SECURITY DEPOSITS ARE SQUARELY COVERED, IN FAVOUR OF THE ASSESSEE, BY THE SAID ORDER OF THE TRIBUNAL (SUPRA) DATED 3.4.2013. IT IS ALSO EVIDENT THAT SIMILAR ISS UES HAVE BEEN CONSISTENTLY DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. CONSIDERING THE SETTLED NATURE OF THE ISSUES INVOLVED IN THE GROUNDS RAISED BY REVENUE, WE ARE O F THE OPINION THAT THEY SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, GR OUNDS RAISED BY THE REVENUE ARE DISMISSED. 5.1 RESPECTFULLY FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL WE DECLINE TO INTERFERE IN THE RELIEF GRANTED BY LD. CIT(A) IN RESPECT OF AFOR EMENTIONED THREE DISALLOWANCES, WHICH COVER GROUND NO.1 OF THE REVENUE AND GROUND NO.1 OF THE REVENUE IS DISMISSED. 6. APROPOS GROUND NO.2, IT MAY BE MENTIONED HERE TH AT IT WAS NOT DISPUTED BY LD. AR THAT THE SAID AMOUNT OF RS.1,85,000/- WAS RE CEIVED FROM MEMBERS FOR USER OF TENNIS COURT BY THE CLIENTS THROUGH MEMBERS OF THE CLUB. THUS, THIS AMOUNT DOES NOT RELATES TO UTILIZATION OF FACILITY OF THE ASSESSEE COMPANY BY ITS MEMBERS. IT IS AN AMOUNT WHICH IS CONTRIBUTED FOR THE FACILITIES AVA ILED BY THE CLIENTS THROUGH MEMBERS OF THE CLUB. AS PER DECISION OF HONBLE SU PREME COURT IN THE CASE OF BANGALORE CLUB VS. CIT, 350 ITR 509, ONE OF THE PRI MARY CONDITIONS TO APPLY THE PRINCIPLE OF MUTUALITY IS THAT THERE MUST BE COMPLE TE IDENTITY BETWEEN CONTRIBUTORS AND THE PARTICIPATORS. FOR THIS PURPOSE THEIR LORD SHIPS OF HONBLE SUPREME COURT HAVE REFERRED TO THE FIRST DECISION LAID DOWN BY LO RD MACMILLAN IN THE CASE OF MUNICIPAL MUTUAL INSURANCE LTD. VS. HILLS AND FOLLO WING OBSERVATIONS WERE NOTED FROM THE SAID DECISION: 'THE CARDINAL REQUIREMENT IS THAT ALL THE CONTRIBUT ORS TO THE COMMON FUND MUST BE ENTITLED TO PARTICIPATE IN THE SURPLUS AND THAT ALL THE PARTICIPATORS IN THE SURPLUS MUST BE CONTRIBUTORS TO THE COMMON FUND ; IN OTHER WORDS, THERE MUST BE COMPLETE IDENTITY BETWEEN THE CONTRIBUTORS AND THE PARTICIPATORS.' THEREAFTER, THEIR LORDSHIPS HAVE REFERRED TO THE OT HER HALSBURYS LAW OF ENGLAND, FOURTH EDITION, REISSUE, VOLUME 23, PARAGRAPHS 161 AND 162 (PAGES 130 AND 132) WHICH DESCRIBE THE DOCTRINE SPECIALLY WITH REGARD T O NON-MEMBERS AND OBSERVATIONS OF THEIR LORDSHIPS ARE AS UNDER: ITA NO.2477/MUM/2013 (A.Y.2010-11) 7 ON THIS ASPECT OF THE DOCTRINE, ESPECIALLY WITH RE GARD TO THE NON-MEMBERS, HALSBURY'S LAWS OF ENGLAND, FOURTH EDITION, REISSUE , VOLUME 23, PARAGRAPHS 161 AND 162 (PAGES 130 AND 132) STATES : 'WHERE THE TRADE OR ACTIVITY IS MUTUAL, THE FACT TH AT, AS REGARDS CERTAIN ACTIVITIES, CERTAIN MEMBERS ONLY OF THE ASSOCIATION TAKE ADVANT AGE OF THE FACILITIES WHICH IT OFFERS DOES NOT AFFECT THE MUTUALITY OF THE ENTERP RISE. . . MEMBERS' CLUBS ARE AN EXAMPLE OF A MUTUAL UNDERTAKI NG ; BUT, WHERE A CLUB EXTENDS FACILITIES TO NON-MEMBERS, TO THAT EXTENT T HE ELEMENT OF MUTUALITY IS WANTING. . . ' THIS DISTINCTION HAS FURTHER BEEN POINTED OUT IN SIMONS TAXES, VOLUME B, THIRD EDITION, PARAGRAPHS B1.218 AND B1.222 (PAGES 159 AN D 167) FORMULATE THE LAW ON THE POINT AND REFERENCE CAN BE MADE TO THE FOLLOWIN G OBSERVATIONS: A MEMBERS' CLUB IS ASSESSABLE, HOWEVER, IN RESPEC T OF PROFITS DERIVED FROM AFFORDING ITS FACILITIES TO NON-MEMBERS. THUS, IN CARLISLE AND SILLOTH GOLF CLUB V. SMITH [1913] 3 KB 75, WHERE A MEMBERS' GOLF CLUB ADMITTED NON- MEMBERS TO PLAY ON PAYMENT OF GREEN FEES IT WAS HEL D THAT IT WAS CARRYING ON A BUSINESS WHICH COULD BE ISOLATED AND DEFINED, AND THE PROFIT OF WHICH WAS ASSESSABLE TO INCOME-TAX. BUT THERE IS NO LIABILIT Y IN RESPECT OF PROFITS MADE FROM MEMBERS WHO AVAIL OF THEMSELVES OF THE FACILITIES PROVIDED FOR MEMBERS.' (EMPHASIS SUPPLIED) REFERRING TO ALL THESE CASE LAWS, THEIR LORDSHIPS H AVE OBSERVED THAT THERE HAS TO BE A COMPLETE IDENTITY BETWEEN CLASS OF PARTICIPATORS AN D CLASS OF CONTRIBUTORS; THE PARTICULAR LABEL OR FORUM BY WHICH THE MUTUAL ASSO CIATION IS KNOW IS OF NO CONSEQUENCE. THEREAFTER THEIR LORDSHIPS HAVE REF ERRED TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ROYAL WESTERN INDIA TURF CLUB LTD. 24 ITR 551(SC) AND OBSERVED THAT SINCE CLUB REALIZE MONEY FROM BOTH MEMBERS AND NON- MEMBERS, IN LIEU OF THE SAME SERVICES RENDERED IN T HE COURSE OF THE SAME BUSINESS, THE EXEMPTION OF MUTUALITY COULD NOT BE GRANTED AN D THE RELEVANT OBSERVATIONS OF THEIR LORDSHIPS ARE AS UNDER: THEREFORE, IN THE CASE OF ROYAL WESTERN INDIA TUR F CLUB LTD. (SUPRA), SINCE THE CLUB REALIZED MONEY FROM BOTH MEMBERS AND NON-M EMBERS, IN LIEU OF THE SAME SERVICES RENDERED IN THE COURSE OF THE SAME BU SINESS, THE EXEMPTION OF MUTUALITY COULD NOT BE GRANTED. THIS COURT HELD THU S* : ITA NO.2477/MUM/2013 (A.Y.2010-11) 8 'AS ALREADY STATED, IN THE INSTANT CASE, THERE IS N O MUTUAL DEALING BETWEEN THE MEMBERS INTER SE AND NO PUTTING UP OF A COMMON FUND FOR DISCHARGING THE COMMON OBLIGATIONS TO EACH OTHER UN DERTAKEN BY THE CONTRIBUTORS FOR THEIR MUTUAL BENEFIT. ON THE CONTR ARY, WE HAVE HERE AN INCORPORATED COMPANY AUTHORISED TO CARRY ON AN ORDI NARY BUSINESS OF A RACE COURSE COMPANY AND THAT OF LICENSED VICTUALLER S AND REFRESHMENT PURVEYORS AND IN FACT CARRYING ON SUCH A BUSINESS. THERE IS NO DISPUTE THAT THE DEALINGS OF THE COMPANY WITH NON-MEMBERS T AKE PLACE IN THE ORDINARY COURSE OF BUSINESS CARRIED ON WITH A VIEW TO EARNING PROFITS AS IN ANY OTHER COMMERCIAL CONCERN.' (EMPHASIS SUPPLIED) IN VIEW OF THE AFOREMENTIONED POSITION OF LAW EXPLA INED BY HONBLE SUPREME COURT, IT IS HELD THAT SO FAR AS IT RELATES TO RECEIPTS OF T HE ASSESSEE OF TENNIS SPORTS FEES AMOUNTING TO RS.1,85,000/- THERE IS A LACK OF IDENT ITY BETWEEN THE CONTRIBUTORS AND PARTICIPATORS, THEREFORE, THE CARDINAL REQUIREMENT OF PRINCIPLE OF MUTUALITY IS ABSENT AND BENEFIT OF EXEMPTION ON THE PRINCIPLE OF MUTUAL ITY WILL NOT BE AVAILABLE TO THE ASSESSEE. 6.1 RELIANCE BY THE ASSESSEE ON THE DECISION IN THE CASE OF SUMMAIR SPORTS CLUB VS. ACIT IS MISPLACED AS THE SAID DECISION IS NOT I N ACCORDANCE WITH THE PRINCIPLES OF LAW LATER ON EXPLAINED BY HONBLE SUPREME COURT IN THE CASE OF AFOREMENTIONED DECISION OF BANGALORE CLUB (SUPRA). ACCORDINGLY, GROUND NO.2 IS ALLOWED. 7. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/08/2 014 ! ' #$ % &'( 21/08/2014 ' ) SD/- SD/ - ( /SANJAY ARORA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; &' DATED 21/08/2014 ITA NO.2477/MUM/2013 (A.Y.2010-11) 9 ! ! ! ! ' '' ' *+, *+, *+, *+, -,$+ -,$+ -,$+ -,$+ / COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. *0./ / THE RESPONDENT. 3. 1 ( ) / THE CIT(A)- 4. 1 / CIT 5. ,2) *+' , , / DR, ITAT, MUMBAI 6. )3 4 / GUARD FILE. !' !' !' !' / BY ORDER, 0,+ *+ //TRUE COPY// 5 55 5 / 6 6 6 6 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ' . ./ VM , SR. PS