M/s. COMMON EFFLUENT TREATMENT PLANT (THANE BELAPUR) ASSOCIATION, MUMBAI V. ITO Wd. - 10(3)(4), MUMBAI

ITA 3575/MUM/2006

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75281 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-01-2014
• Assessment Year: 1998-1999
• Appeal Filed On: 08-06-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: RAJA B SINGH
• Keywords: Opportunity of being heard; Question of law
• Section: 244A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ./I.T.A. NO.2228/M/2005 (AY: 1997 - 1998) ./I.T.A. NO.3575/M/2006 (AY: 1998 - 1999) ./I.T.A. NO.3576/M/2006 (AY: 1999 - 2000) ./I.T.A. NO.3577/M/2006 (AY: 2000 - 2001) ./I.T.A. NO.3578/M/2006 (AY: 2004 - 2005) ./I.T.A. NO.7622/M/ 2005 (AY: 2003 - 2004 ) ./I.T.A. NO. 2229 /M/2005 ( AY: 2002 - 2003 ) ./I.T.A. NO.152/M/2004 (AY: 2001 - 2002) M/S. COMMON EFFLUENT TREATMENT PLANT (THANE - BELAPUR) ASSOCIATION, P - 20, ANAND BHAKAMKAR COMMON FACILITY CENTRE, KHAIRNE, MIDC, NAVI MUMBAI - 400705. / VS. THE ITO, WARD - 10(3)(4), R.NO.429, AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400020. ./ PAN : AABCC 4712 H ( / APPELLANT) .. ( / RESPONDENT ) ./I.T.A. NO.8135/M/2003 (AY: 2001 - 2002) ./I.T.A. NO.2230/M/2005 (AY: 2002 - 2003) ./I.T.A. NO. 7213 /M/2005 (AY: 2003 - 2004) ./I.T.A. NO. 4001/M/2006 (AY: 1998 - 19 99 ) ./I.T.A. NO.4002/M/2006 (AY: 1999 - 2000) ./I.T.A. NO.4003/M/2006 (AY: 2000 - 2001) ./I.T.A. NO.4004/M/2006 (AY: 2004 - 2005) THE ITO, WARD - 10(3)(4), R.NO.429, AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400020. / VS. M/S. COMMON EFFLUENT TREATMENT PLANT (THANE - BELAPUR) ASSOCIATION, P - 20, ANAND BHAKAMKAR COMMON FACILITY CENTRE, KHAIRNE, MIDC, NAVI MUMBAI - 400705. ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI RAJA B SINGH / REVENUE BY : SHRI M.L. PERUMAL , DR / DATE OF HEARING : 21.1.2014 / DATE OF PRONOUNCEMENT : 21 .1.2014 2 / O R D E R PER B ENCH : THERE ARE 15 APPEALS UNDER CONSIDERATION. OUT OF 15 APPEALS, 8 APPEALS ARE FILED BY THE ASSESSEE AND 7 APPEALS ARE FILED BY THE REVENUE. THERE ARE THREE CROSS APPEALS FOR THE AYS 2001 - 02, 2002 - 03 AND 2003 - 04. ALL THESE APPEALS ARE FILED FOR GIVING EFFECT TO THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY VIDE INCOME TAX APPEAL NO.2060 OF 2009 AND OTHERS, DATED 17 TH JUNE, 2010 . SINCE, THE ISSUES INVOLVED IN ALL THESE APPEALS ARE IDENTICAL, THEREFORE, FOR THE SAKE OF CONVENIENCE, ALL THESE 15 APPEALS ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF I N THIS CONSOLIDATED ORDER. 2. AT THE OUTSET, SHRI RAJA B SINGH , LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE QUESTION OF LAW RAISED BEFORE THE HONBLE HIGH COURT OF BOMBAY WHICH READ AS UNDER: A. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE EXCESS OF INCOME OVER EXPENDITURE IS RESPECT OF THE EFFLUENT TREATMENT RECEIPTS IS EXEMPT FROM INCOME TAX ON THE PRINCIPLE OF MUTUALITY; B. WHETHER THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT INTER EST ON BANK FIXED DEPOSITS, OTHER DEPOSITS AND INCOME TAX REFUNDS IS NOT CHARGEABLE TO TAX ON THE PRINCIPLE OF MUTUALITY; 3. B RINGING OUR ATTENTION TO PARA 10 OF THE SAID JUDGMENT OF THE HONBLE HIGH COURT, LD COUNSEL MENTIONED THE FIRST QUESTION RELATIN G TO WHETHER THE EXCESS OF INCOME OR EXPENDITURE OF THE ASSESSEE IS EXEMPTED FROM INCOME TAX ON THE PRINCIPLES OF MUTUALITY IS ANSWERED IN FAVOUR OF THE ASSESSEE. RELEVANT LINES IN THIS REGARD FROM THE SAID PARA 10 READS AS UNDER: 10THE FIRST QUESTIO N OF LAW WOULD ACCORDINGLY HAVE TO BE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 4. BRINGING OUR ATTENTION TO QUESTION NO.2, WHETHER THE ISSUE OF TAXABILITY OR OTHERWISE OF INTEREST ON BANK FIXED DEPOSITS AND OTHER DEPOSITS AND INCOME TAX REFUNDS , LD COUNSEL BROU GHT OUR ATTENTION TO PARA 29 & 30 APPEARING ON PAGE 29 OF THE SAID JUDGMENT OF THE HONBLE HIGH COURT AND READ OUT THE SAME WHICH READ AS UNDER: 3 29.FOR ALL THE REASONS, THE SECOND QUESTION OF LAW AS FORMULATED WOULD HAVE TO BE ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 30. IN SO FAR AS THE TAXABILITY OF OTHER DEPOSITS AND INTEREST ON INCOME TAX REFUNDS IS CONCERNED, WE FIND FROM A READING OF THE ORDER OF THE TRIBUNAL THAT THIS ISSUE HAS NOT BEEN SPECIFICALLY DEA LT WITH OR CONSIDERED. HENCE, WE ARE OF THE VIEW THAT IT WOULD BE FAIR TO PERMIT THE PARTIES TO URGE ALL APPROPRIATE SUBMISSIONS BEFORE THE TRIBUNAL. WE ACCORDINGLY RESTORE THE QUESTION OF THE TAXABILITY OF OTHER DEPOSITS AND INCOME TAX REFUNDS FOR DECIS ION BY THE TRIBUNAL AFRESH. 5. ELABORATING THE ABOVE, LD COUNSEL MENTIONED THAT THE QUESTION OF APPLICABILITY OF PRINCIPLE OF MUTUALITY TO THE INTEREST INCOME EARNED ON THE FIXED DEPOSITS L AYING WITH THE BANK IS ANSWERED AGAINST THE ASSESSEE AND IN FAVO UR OF THE REVENUE . FURTHER, BRINGING OUR ATTENTION TO THE TAXABILITY OR OTHERWISE OF THE INTEREST INCOME ON OTHER DEPOSITS SUCH AS INTEREST EARNED ON THE DEPOSITS WITH THE ELECTRICITY DEPARTMENT, MIDC AND INCOME TAX DEPARTMENT, LD COUNSEL MENTIONED THAT THESE ISSUES ARE REFERRED TO THE FILES OF THE APPROPRIATE AUTHORITY WITH A DIRECTION TO THE ASSESSEE TO MAKE ALL THE APPROPRIATE SUBMISSIONS BEFORE THE TRIBUNAL. ACCORDINGLY, THESE ISSUES ARE REMANDED TO THE FILES OF THE TRIBUNAL FOR FRESH ADJUDICAT ION. 6. IN THE BACKGROUND OF THE ABOVE FACTS AND THE DEVELOPMENTS BEFORE THE HIGHER JUDICIARY, LD COUNSEL MENTIONED THAT THERE ARE TWO ISSUES RELATING TO THE APPLICABILITY OF THE PRINCIPLE OF MUTUALITY I.E., (I) WITH REGARD TO THE EXCESS INCOME OR EXPEND ITURE AND (II) TAXABILITY OF INTEREST INCOME TO THE FIXED DEPOSITS LAYING WITH THE BANK AND THEY ARE ALREADY ANSWERED. THEREFORE, N OW THERE IS NO ISSUE ABOUT THE A B O V E I S S U E S FOR ADJUDICATION BEFORE THE TRIBUNAL. ONLY THE ISSUE WHICH REQUIRES TO BE ADJUDICATE D AFRESH RELATES TO THE TAXABILITY OF INTEREST INCOME EARNED FROM ELECTRICITY DEPARTMENT, MIDC AND INCOME TAX DEPARTMENT. 7. REFERRING TO THIS ISSUE, LD COUNSEL BROUGHT OUR ATTENTION TO THE ORDERS OF THE AO AND STATED THAT THE DISCUSSION GIVEN BY THE AO IS VERY CRYPTIC AND THEY CANNOT BE DESCRIBED AS SPEAKING ORDERS. IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION TO SUB - PARA (C) AND (D) OF THE PARA 5.1 OF THE ASSESSMENT ORDER. FURTHER, HE ALSO BROUGHT OUR ATTENTION TO THE IMPUGNED ORDER OF THE CIT (A) AND MENTIONED THAT THE CIT (A) ALSO HAS NOT ADJUDICATED THE ISSUE WITH REFERENCE TO THE INTEREST INCOME EARNED FROM ELECTRICITY DEPARTMENT, MIDC AND INCOME TAX DEPARTMENT. HE FAIRLY 4 MENTIONED THAT NO R E L E V A N T FACTS WERE B R O U G H T T O T H E R E C O R D S O R I S S U E S DISCUSSED AT ALL IN EITHER OF THESE ORDERS MENTIONING THE DATE OF DEPOSIT, REASONS FOR DEPOSIT, NEXUS OF THE SAME FOR DEPOSITING ETC IN THIS REGARD. 8. ON THE OTHER HAND, LD DR REITERATED THE POSITION THAT THE ONLY ISSUE FOR ADJUDICATION BY THE TRIBUNAL IS THE CHARGEABILITY OF INTEREST EARNED FROM ELECTRICITY DEPARTMENT, MIDC AND INCOME TAX DEPARTMENT AND IT IS FAIR IF THESE FILES ARE REMANDED TO THE FILES OF THE AO FOR WANT OF RELEVANT FACTS. 9. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND FIND THERE IS NO DISPUTE ON THE ABSENCE OF THE RELEVAN T FACTS RELATING TO THE INTEREST RECEIPTS ON THE DEPOSITS WITH ALL THESE THREE DEPARTMENTS I.E., ELECTRICITY DEPARTMENT, MIDC AND INCOME TAX DEPARTMENT. OTHER ISSUES RELATING TO THE APPLICABILITY OF PRINCIPLE OF MUTUALITY OF THE EXCESS INCOME OVER THE E XPENDITURE OF THE ASSOCIATION AS WELL AS THE CHARGEABILITY OF THE INTEREST ON FIXED DEPOSITS HAVE ATTAINED FINALITY AT THE LEVEL OF THE HONBLE HIGH COURT. THEREFORE, CONSIDERING THE CONCURRENCE OF THE PARTIES BEFORE THE BENCH FOR REMANDING THE ISSUES, WE SET ASIDE THE ISSUES RESTORED BY THE HONBLE HIGH COURT TO THE FILES OF THE AO WITH A DIRECTION THAT HE SHOULD CULL OUT THE FACTS LEADING TO THE KEEPING UP THE DEPOSITS WITH ELECTRICITY DEPARTMENT, MIDC AND INCOME TAX DEPARTMENT AND PAYMENT OF EXCESS TAX LEADING TO THE INTEREST INCOME U/S 244A ETC. ASSESSEE IS DIRECTED TO FURNISH RELEVANT INFORMATION BEFORE THE AO. AO IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE DURING THE SET ASIDE PROCEEDINGS. ACCORDINGLY, ALL THE 15 A PPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, ALL THE 15 APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNC ED I N THE OPEN COURT ON 2 1 S T JANUARY, 2014. S D / - S D / - (SANJAY GARG) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 21 .1 .201 4 . . ./ OKK , SR. PS 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI