Social Club and Kreeda Bhavan, Belgavi V. ITO, Ward - 2(1), Belgavi

ITA 385/PAN/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3454 (ITAT-PANAJI)
• Duration Of Justice: 3 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 26-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: B B CHANDARGI
• Keywords: Business income; TDS
• Section: 43B; 40(a)(ia); 201; 40a(ia); 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI, BENCH PANAJI , , BEFORE SHRI LALIET KUMAR, JM AND DR. MITHA LAL MEENA, AM ITA NO. 385 /PAN/201 7 (A Y: 20 13 - 20 1 4 ) SOCIAL CLUB AND KREEDA BHAVAN, COLLEGE ROAD, BELAGAVI - 590002 PAN NO.AA CAS 6996 A VS ITO, WARD - 2(1), BELAGAVI ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI B.B.CHANDARGI, CA /RE VENUE BY : SHRI SOURABH NAYAK , SR.D R / DATE OF HEARING : 0 7 /1 0 /202 1 / DATE OF PRONOUNCEMENT : 07 /10 /202 1 / O R D E R PER BENCH : THIS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER PASSED BY THE CIT (A) , GULBAR GA , DATED 19.10.2017 FOR THE ASSESSMENT YEAR 20 13 - 201 3 , ON THE FOLLOWING GROUNDS : - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), BELGAUM HAS ERRED IN UPHOLDING THE ORDER ASSESSING OFFICER DISALLOWING EXPENSES UNDER THE HEAD BUSINESS OR PROFESSION EVEN THOUGH INCOME IS EXEMPTED AS MUTUAL CONCERN BY THE ASSESSING OFFICER. THIS IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), KALBURGI HAS ERRED IN DISALLOWING THE EXPENSES U/S 40A(IA) AND 43B OF INCOME TAX ACT 196 1 WHICH ARE APPLICABLE TO EXPENSES RELATING TO BUSINESS OR PROFESSION. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), KALBURGI HAS ERRED IN NOT APPRECIATING THE FACT THAT AO HAS ASSESSED THE INCOME OF THE ASSESSEE AS MUTUAL CONCERN ITA NO. 385 /PAN/201 7 2 AND NOT TAXED THE SU RPLUS ARISING AMONG DEALING FROM MEMBERS BUT DISALLOWED THE EXPENSES RELATING TO SUCH INCOME. 4. THE APPELLANT CRAVES TO LEAVE,ADD/ALTER ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF FINAL HEARING. 2. LD. AR BEFORE US SUBMITTED THAT THE A SSESSEE IS A CLUB AND A MUTUAL CONCERN WHICH IS ACCEPTED BY THE DEPARTMENT. HE ALSO SUBMITTED THAT THIS MATTER IS ALSO UPHELD BY THE HON'BLE SUPREME COURT IN THE CASE OF BANKIPR CLUB LTD CIVIL APPEAL NOS.854 - 858 OFL994 DATED 08/05/1997 AS WELL AS IN CIT VS.RANCI CLUB LTD(1992) 196 ITR 137.AMOUNT RECEIVED FROM MEMBERS IS CLAIMED AS EXEMPT ON THE PRINCIPLE OF MUTUALITY AND ANY INCOME WHICH IS RECEIVED OTHER THAN MEMBERS IS OFFERED FOR TAXATION UNDER THE HEAD INCOME FROM OTHER SOURCES (SECTION 56) AND TAX IS PAID ON THE SAME. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT THE ASSESSING OFFICER HAS ASSESSED THE INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AND NOT UNDER THE HEAD BUSINESS OR PROFESSION FOR THE AY 2013 - 14, BUT THE ASSESSING OFFICER HAS DISALLOWED THE EXPENSES U/S 40(I)(A) & 43B OF THE ACT . THEREFORE, IT WAS SUBMITTED BY THE LD.AR OF THE ASSESSEE THAT T HE ADDITION UNDER BOTH THE SECTIONS ARISES ONLY IN CASE ASSESSEE IS DERIVING INCOME FROM BUSINESS OR PROFESSION NOT OTHERWISE. THE ADDITION MADE TO INCOME IS NOT AS PER THE PROVISIONS OF INCOME TAX ACT,1961. ACCORDINGLY, LD.AR SUBMITTED THAT THE ASSESSING OFFICER MAY KINDLY BE DIRECTED TO CORRECT THE ASSESSMENT ORDER BY DROPPING THE ADDITIONS MADE TO THE TAXABLE INCOME AS MENTIONED ABOVE. ITA NO. 385 /PAN/201 7 3 3. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. FOR COMPLETENESS OF THE ORDER, WE WOULD LIKE TO REPRODUCE THE FINDINGS RECORDED BY THE CIT(A) AT PARA 4 WHICH READS AS UNDER: - 4. GR.NO.4:[DISALLOWANCE U/S 40(A)(IA) OF RS.2,62,692 & RS.3,36,000 U/S 43B] THE APPELLANT'S REPRESENTATIVE APPEARED AND THE CASE WAS DISCUSSED. I HAVE PERUSED THE FACTS OF THE CASE AND THE APPELLANT'S GROUNDS. THE AO STATED THAT THE ASSESSEE HAD MADE PAYMENT OF RS. 1,25,000/ - TO CIVIL CONTRACTOR AND RS. 1,37,692/ - MADE TOWARDS PAYMENT OF SECURITY CHARGES. THE ASSESSEE FAILED TO MAKE TDS AS REQUIRED UNDER TDS PROVISIONS. THEREFORE, THE SAME IS BROUGHT TO TAX U/S 40(A)(IA) OF RS.2,62,692/ - . 5. ON P ERUSAL OF THE ABOVE OBSERVATIONS OF THE CIT(A) , WITH REGARD DISALLOWANCE MADE U/S.40(A)(IA) OF THE ACT, WE FOUND THAT BOTH THE AUTHORITIES BELOW HAVE DISALLOWED THE SAME AS THE ASSESSEE FAILED TO MAKE TDS AS REQUIRED UNDER TDS PROVISIONS. ACCORDINGLY, WE D O NOT SEE ANY REASON TO INTERFERE WITH THE ORDER PASSED BY THE CIT(A) AND, THEREFORE, WE DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 6 . WITH REGARD TO DISALLOWANCE MADE ON ACCOUNT OF SECTION 43B OF THE ACT, WE FOUND THAT BOTH THE AUTHORITIES BELOW HAVE CHARGED THE LUXURY TAX. IN OUR OPINION, THE ASSESSEE IS A MUTUAL CONCERN FOR THE MUTUAL BENEFIT OF ITS MEMBERS AND IS REGISTERED UNDER KARNATAKA SOCIETIES REGISTRATION ACT. IN OUR OPINION, LUXURY TAX SHOULD NOT BE INCLUDED IN THE TOTAL BUSINESS INCOME OF THE ASSESSEE. THUS, WE ARE NOT IN AGREEMENT WITH THE FINDINGS RECORDED BY BOTH THE AUTHORITIES BELOW IN THIS REGARD. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE MADE U/S.43B OF ITA NO. 385 /PAN/201 7 4 THE ACT ON ACCOUNT OF LEVYING LUXURY TAX. THIS GROU ND OF APPEAL OF THE ASSESSE IS ALLOWED. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 / 10 / 2021. SD/ - SD/ - ( ) (DR. M ITHA LAL MEENA ) ( ) (LAL IET KUMAR) / ACCOUNTANT MEMBER / JUDICIAL MEMBER /PANAJI ; DATED 07 /10 /202 1 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , /ITAT, PANAJI 1. / THE APPELLANT - SOCIAL CLUB A ND KREEDA BHAVAN, COLLEGE ROAD, BELAGAVI - 590002 PAN NO.AACAS 6996 A 2. / THE RESPONDENT - ITO, WARD - 2(1), BELAGAVI 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, PANJAJI 6. / GUARD FILE. //TRUE COPY//