Jammu Club, Jammu V. The Income-tax Officer, Jammu

ITA 392/ASR/2012

• Counselvise Citation: 39220914 RSA 2012
• Duration Of Justice: 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 17-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.392(ASR)/2012 ASSESSMENT YEAR:2009-2010 PAN :AAAAJ3616N M/S. JAMMU CLUB, VS. INCOME TAX OFFICER, M.A. SPORTS COMPLEX, WARD 2(1), JAMMU. JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. R.K. GUPTA, CA RESPONDENT BY:SH. TARSEM LAL, DR DATE OF HEARING:22/11/2012 DATE OF PRONOUNCEMENT:29/11/2012 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JAMMU DATED 28.08.2011 FOR THE ASSESSMENT YEAR 2009 -2010. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE WORTHY CIT(A) IS NOT JUSTIFIED ON LAW IN CONFIRMING THE ACTION OF LD. A. O. FOR TREATING THE INTEREST F ROM BANK AMOUNTING TO RS.13,40,950/- AS TAXABLE ON THE PLEA THAT IT IS NOT COVERED BY THE PRINCIPLE OF MUTUALITY. ITA NO.392(ASR)/2012 2 2. THE APPELLANT CRAVES, LEAVES TO ALTER AND ADD TO SU BSTITUTE ANY GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE FILED RETURN DECLARING NIL INCOME ON 28.05.2010. THE ASSESSEE IS A CLUB A T JAMMU AND HAS SHOWN RECEIPTS FROM SUBSCRIPTIONS, CATERING, BAR SPORTS C ARDROOM GUEST HOUSE, INTEREST FROM BANK AND OTHER HEADS... A SURPLUS OF INCOME OVER EXPENDITURE OF RS.7,03,645/- IS CLAIMED AS EXEMPT ON THE BASIS OF ASSESSEE BEING A MUTUAL INSTITUTION. BEFORE THE AO, THE ASSESSEE ARG UED ON THE STRENGTH OF CERTAIN CASE LAWS, THAT THE INTEREST ON FDR ALSO WA S EXEMPT ON THE PRINCIPLE OF MUTUALITY. THE AO SHOW CAUSED THE ASSESSEE THAT IN VIEW OF THE DECISION OF JURISDICTIONAL HIGH COURT OF J & K, IN CASE OF A NOTHER CLUB OPERATING AT JAMMU I.E. IN THE CASE OF M/S. AMAR SINGH CLUB, JAM MU, 229 CTR 447 FOR A.Y. 2003-04, WHEREIN IT WAS DECIDED THAT INTEREST INCOME FROM BANKS WAS NOT COVERED BY MUTUALITY AND THE CASE LAW CITED IN SUPPORT BY ASSESSEE I.E. THE CASE OF M/S. CHELMSFORD CLUB 159 CTR (SC) 235 W AS DULY CONSIDERED IN THAT DECISION. THE AO HELD THAT EVEN IN THE CASE OF CAWNPORE CLUB 140 TAXMAN 379 (SC) AS CONTENDED BY ASSESSEE THAT THE S AME WAS NOT CONSIDERED AS IT WAS NOT BROUGHT TO THE NOTICE OF H ONBLE HIGH COURT OF J & K, IT WAS HELD THAT NO USEFUL PURPOSE COULD BE SERV ED TO GO INTO SPECIFIC QUESTIONS WHEN THE CLUB CANNOT BE TAXED ON THE PRIN CIPLES OF MUTUALITY. IN ITA NO.392(ASR)/2012 3 CONSEQUENCE THE AO TAXED AN AMOUNT OF RS.13,40,950/ - ON ACCOUNT OF INTEREST ON FDRS WITH BANKS. 3. BEFORE THE LD. CIT(A), THE LD. COUNSEL FOR THE A SSESSEE, SH. R.K. GUPTA, CA SUBMITTED THAT THE CASE OF M/S. CAWNPORE CLUB 140 TAXMAN 378 (SC) WAS NOT BEFORE THE HONBLE J & K HIGH COURT WH ILE DECIDING THE CASE OF M/S. AMAR SINGH CLUB, JAMMU 229 CTR 446. THE LD. COUNSEL FOR THE ASSESSEE MADE WRITTEN SUBMISSIONS BEFORE THE LD. CI T(A), WHICH ARE AVAILABLE IN HIS ORDER IN PARA 3.1. THE LD. CIT(A) VIDE PARA 3.2 TO 3.4 OF HIS ORDER CITED THE VARIOUS CASE LAWS AND OBSERVED THAT THE DECISION OF THE HONBLE J & K HIGH COURT IN THE CASE OF AMAR SINGH CLUB , JAMMU (SUPRA) WAS DIRECT AND SPECIFIC ON THE ISSUE AND ACCORDINGL Y, HE UPHELD THE ACTION OF THE AO IN BRINGING TO TAX AN AMOUNT OF RS.13,40,950 /-. 4. THE LD. COUNSEL FOR THE ASSESSEE, SH. R.K. GUPTA , REPEATED HIS SUBMISSIONS, WHICH WERE MADE BEFORE THE LD. CIT(A) AND BROUGHT TO OUR NOTICE THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. CAWNPORE CLUB LTD (2004) 140 TAXMAN 378(SC), WHICH FOR THE SAKE OF CLARITY IS REPRODUCED AS UNDER: ONE OF THE QUESTIONS WHICH THE HIGH COURT HAD DECI DED IN OTHER CASES RELATING TO SAME ASSESEE WAS THAT THE DOCTRI NE OF MUTUALITY ITA NO.392(ASR)/2012 4 APPLIED AND, THEREFORE, THE INCOME EARNED BY THE AS SESSEE FROM THE ROOMS LET OUT TO ITS MEMBERS COULD NOT BE SUBJECTED TO TAX. NO APPEAL HAD BEEN FILED AGAINST THE SAID DECISION AND THE MA TTERS STOOD CONCLUDED AS FAR AS THE ASSESSEE WAS CONCERNED. THI S BEING SO, NO USEFUL PURPOSE WOULD BE SERVED IN PROCEEDING WITH T HE APPEALS ON THE OTHER QUESTIONS WHEN THE RESPONDENT CANNOT BE TAXED BECAUSE OF THE PRINCIPLE OF MUTUALITY. 2. THE APPEALS WERE ACCORDINGLY DISMISSED. 5. IT WAS ALSO BROUGHT TO OUR NOTICE THE DECISIO N OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. CAWNPORE CLUB LTD , KANPUR, IN REFERENCE NO.28 OF 1998 DATED 20 TH JANUARY, 2005, WHICH FOR THE SAKE OF CLARITY IS REPRODUCED AS UNDER THE ITAT, ALLAHABAD HAS REFERRED THE FOLLOWING QU ESTION OF LAW U/S 256(2) OF THE INCOME-TAX ACT, 1961 FOR OPINION OF T HIS COURT: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE TRIBUNAL WAS CORRECT IN LAW IN HOLDING THAT THE INC OME OF INTEREST FROM FIXED DEPOSITS, N.S.C. AND DIVIDENDS ARE EXEMP TED ON PRINCIPLES OF MUTUALITY? BRIEFLY STATED THE FACTS GIVING RISE TO THE PRESENT REFERENCE ARE AS FOLLOWS: THE REFERENCE RELATES TO A.Y. 1982-83. THE RESPOND ENT-ASSESSEE IS A COMPANY REGISTERED U/S 25 OF THE COMPANIES ACT , 1956 AND IS RUNNING A CLUB AT KANPUR. IT HAD EARNED INTEREST FR OM DEPOSITORS AND NSC AND DIVIDENDS FROM U.T.I. WHICH IT HAS CLAIMED EXEMPT ON THE PRINCIPLE OF MUTUALITY. THE CLAIM WAS NOT ACCEPTED BY THE AO. HOWEVER, IN APPEAL THE CIT(A) HAD ACCEPTED THE CLAI M AND HAD HELD THAT SUCH INCOME CANNOT BE TAXED IN THE HANDS OF TH E ASSESSEE ON THE PRINCIPLE OF MUTUALITY WHICH ORDER HAS BEEN UPHELD BY THE TRIBUNAL. ITA NO.392(ASR)/2012 5 WE HAVE HEARD SH. SHAMBHU CHOPRA, LD. STANDING COUN SEL FOR THE REVENUE AND SH. S.D. SINGH LD. COUNSEL APPEARIN G FOR THE RESPONDENT-ASSESSEE. IT MAY BE MENTIONED HERE THAT THIS COURT VIDE ORDE R DATED 2 ND AUGUST, 1995 PASSED IN THE INCOME TAX REFERENCE NO. 82 OF 1994 HAD DECLINED TO CALL FOR SIMILAR QUESTIONS U/S 256(20 O F THE ACT AGAINST WHICH THE REVENUE HAD PREFERRED S.L.P. THE APEX CO URT VIDE ORDER DATED 5 TH JANUARY, 1998 PASSED IN CIVIL APPEAL NO.4777-78 OF 1989 ALONG WITH CIVIL APPEALS NO. 4534 OF 1991, 1773 OF 1992, 4303 OF 1995, 3840 OF 1996 AND 8046 OF 1995 DECIDED ON 5 TH FEB., 1998 HAS HELD THAT THE RESPONDENT-ASSESSEE CANNOT BE TAXED BECAUSE OF PRINCIPLE OF MUTUALITY AND DISMISSED ALL THE APPEAL S. IN VIEW OF THE DECISION OF THE APEX COURT, WE ANSW ER THE QUESTION TO US IN AFFIRMATIVE I.E. IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. HOWEVER, THERE SHALL BE NO ORDER AS TO COSTS. 6. THE LD. COUNSEL, THEREFORE, CONCLUDED HIS ARGUME NT THAT THE PRESENT ISSUE IS DIRECTLY COVERED BY THE DECISION OF THE HO NBLE SUPREME COURT IN THE CASE OF CANWPORE CLUB LTD. (SUPRA) AND THEREFORE, T HE LD. CIT(A) IS NOT JUSTIFIED IN FOLLOWING THE DECISION IN THE CASE OF M/S. AMAR SINGH CLUB (SUPRA) AND FURTHER PRAYED TO REVERSE THE ORDERS OF BOTH THE AUTHORITIES BELOW. 7. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF BOTH THE AUTHORITIES BELOW AND ARGUED THAT THE HONBLE SUPRE ME COURT HAS NOT DIRECTLY DECIDED THE ISSUE IN HAND AND THEREFORE, T HE ISSUE IN HAND IS DIRECTLY COVERED BY THE DECISION OF THE JURISDICTIONAL J & K HIGH COURT, IN THE CASE ITA NO.392(ASR)/2012 6 OF AMAR SINGH CLUB (SUPRA). THE LD. DR, THEREFORE, PRAYED TO UPHOLD THE ORDER OF THE LD. CIT(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT IS NOT UNDER DISPUTE THAT THE DECISION OF HONBL E SUPREME COURT IN THE CASE OF CIT VS. CAWNPORE CLUB LTD. REPORTED IN 140 TAXMAN 378, WAS NOT BEFORE THE HONBLE J & K HIGH COURT IN THE CASE OF M/S. AMAR SINGH CLUB REPORTED IN 229 CTR 447. ALSO THE LD. COUNSEL FOR T HE ASSESSEE HAS REFERRED TO THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. CAWNPORE CLUB LTD. (I.T.R. NO.28 OF 1998 DATED 20 TH JAN; 2005) MENTIONED HEREINABOVE. IT WILL BE IN THE INTEREST OF JUSTICE, IF THE MATTER IS DECIDED BY THE LD. CIT(A) AFTER CONSIDERING THE DECISION OF CI T VS. CAWNPORE CLUB LTD. (SUPRA) DECIDED BY THE HONBLE SUPREME COURT AND B Y THE HONBLE ALLAHABAD HIGH COURT MENTIONED HEREINABOVE AND KEEP ING IN VIEW THE DECISION OF THE HONBLE J & K HIGH COURT IN THE CAS E OF AMAR SINGH CLUB AS WELL. ACCORDINGLY, THE MATTER IS SET-ASIDE TO THE F ILE OF THE LD. CIT(A), WHO WILL ADJUDICATE THE ISSUE AFRESH AS DIRECTED HEREIN ABOVE BUT BY AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THUS, ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO.392(ASR)/2012 7 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.392(ASR)/2012 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH NOVEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27TH NOVEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. JAMMU CLUB, M.A. SPORTS COMPLEX, JAMMU. 2. THE ITO WARD 2(1), JAMMU. 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.