Calcutta Cosmopolitan Club Ltd., Kolkata V. ITO, Ward-12(1), Kol, Kolkata

ITA 450/KOL/2023

AI Insights

The case involves the Calcutta Cosmopolitan Club Ltd, which appealed against the orders of the National Faceless Appeal Centre (CIT(A)), which had confirmed the Assessing Officer's decision that the interest income earned from bank deposits is taxable. The club argued that it is a mutual organization and income from mutual transactions should not be taxed under the principle of mutuality. However, both the Assessing Officer and the CIT(A) rejected this claim, leading to the appeal in the Tribunal. The Tribunal's decision was influenced by a recent Supreme Court ruling which clarified that interest income from bank deposits does not qualify for tax exemption under the principle of mutuality.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128338 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-07-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 07-05-2023
• Other Referred Cases: Secundrabad Club etc. vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 153

Judgement Text

आयकर अपीलȣय अͬधकरण, कोलकाता पीठ ‘सी’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH KOLKATA Įी संजय गग[, ÛयाǓयक सदèय एवं Įी मनीष बोरड, लेखा सदèय के सम¢ Before Shri Sanjay Garg, Judicial Member and Dr. Manish Borad, Accountant Member I.T.A Nos.450&451/Kol/2023 Assessment years: 2013-14 & 2014-15 Calcutta Cosmopolitan Club Ltd.........................................................Appellant 58/2, Ballygunj Circular Road, Kolkata – 700019. [PAN: AABCC2833K] vs. ITO, Ward-12(1), Kolkata...............................................................Respondent Appearances by: Shri S. M. Surana, Advocate, appeared on behalf of the appellant. Shri Kapil Mondal, Addl. CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : July 25, 2023 Date of pronouncing the order : September 27, 2023 आदेश / ORDER संजय गग[, ÛयाǓयक सदèय ɮवारा / Per Sanjay Garg, Judicial Member: The captioned appeals have been preferred by the assessee against the separate orders dated 18.12.2022 & 30.11.2022 of the National Faceless Appeal Centre (hereinafter referred to as the ‘CIT(A)’) passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’) respectively. 2. The sole issue involved in these appeals is as to whether the principle of mutuality will apply on the interest income earned by the assessee on the deposits with the bank. 3. The brief facts of the case are that the assessee-club claimed before the Assessing Officer that it is a mutual organisation comprising of its members and the surplus income earned from mutual transactions is I.T.A No.450&451/Kol/2023 Calcutta Cosmopolitan Club Ltd 2 not taxable as per the principle of mutuality. The Assessing Officer however noted that the doctrine of mutuality did not apply on the interest income on FDRs and security deposits as the same are income earned from third party. 4. The ld. CIT(A) confirmed the addition so made by the Assessing Officer. 5. We have heard the rival contentions and gone through the record. The issue is squarely covered by the recent decision of the Hon’ble Supreme Court in the case of Secundrabad Club etc. vs. CIT order dated 17.08.23 reported in [2023] 153 taxman.com 441(SC), wherein, the Hon’ble Supreme Court has categorically held that the principle of mutuality does not exempt from tax interest income earned by clubs from FDs in banks, irrespective of whether the banks are corporate members of the club or not. The issue, therefore, has been settled by the Hon’ble Supreme Court and therefore, there is no infirmity in the orders of the lower authorities. There is no merit in the appeals of the assessee and the same are accordingly dismissed. 6. In the result, both the appeals of the assessee stand dismissed. Kolkata, the 27 th September, 2023. Sd/- Sd/- [डॉÈटर मनीष बोरड /Dr. Manish Borad] [संजय गग[ /Sanjay Garg] लेखा सदèय /Accountant Member ÛयाǓयक सदèय /Judicial Member Dated: 27.09.2023. RS Copy of the order forwarded to: 1. Calcutta Cosmopolitan Club Ltd 2. ITO, Ward-12(1), Kolkata 3. CIT(A)- 4. CIT- , I.T.A No.450&451/Kol/2023 Calcutta Cosmopolitan Club Ltd 3 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches