Addl. CIT, Noida V. M/s Noida Golf Course Society (Regd.), Noida

ITA 47/DEL/2011

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0113 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 14-03-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 05-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH SONKAR SENIOR
• Assessee Lawyers: KRISHAN KUMAR
• Section: 12A; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.47/DEL./2010 (ASSESSMENT YEAR : 2007-08) ADDL.CIT, NOIDA RANGE, VS. M/S. NOIDA GOLF COURSE SOCIETY (REGD.), NOIDA. SECTOR 38, NOIDA. (PAN : AAAJN0017A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KRISHAN KUMAR, CA REVENUE BY : SHRI PEEYUSH SONKAR, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF THE ORDER OF CIT (APPEALS), GHAZIABAD DATED 08.10.2010. THE GROUND S OF APPEAL READ AS UNDER :- 1. THAT THE LD. CIT (A) HAS ERRED IN LAW AND ON FA CTS BY HOLDING THAT THE INTEREST INCOME IS NOT TAXABLE IN THE HANDS OF THE ASSESSEE ON THE PRINCIPLE OF MUTUALITY WITHOUT APPRECIATING THAT UNDER THE INCOME TAX ACT, THE INTEREST INCOME IS TAXABLE UNDER THE SECTION 56 IRRESPECTIVE OF ITS LINKAGES W ITH ANY OTHER KIND OF INCOME AS HELD IN VARIOUS SUPREME COURT DEC ISIONS VIZ V.P. GOPINATHAN, AUTO CAST LTD. ETC.? 2. LD. CIT (APPEAL) HAS ERRED IN LAW AND ON FACTS B Y TREATING THE INTEREST INCOME BEING EXEMPT UNDER THE PRINCIPLE OF MUTUALITY WHEREAS THE INCOME WAS DERIVED BY WAY OF INTEREST ITA NO.47/DEL./2011 2 EARNED ON FDRS AND MUTUAL FUNDS AND WAS NOT IN NATU RE OF PROFIT FROM CONTRIBUTION FROM AMONGST THE MEMBERS? 3. LD. CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS BY HOLDING THAT ACTIVITY OF EARNING INTEREST HAS ARISE N OUT OF THE ACTIVITIES TO PROMOTE THE GAME OF GOLF. WHEREAS IT IS AN INCOME EARNED IN COMMERCIAL MANNER BY KEEPING THE SURPLUS FUND IN FDR WITH THE BANK. 4. LD. CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE SPECIFIC FINDING OF THE A.O. THAT THE INVESTMENT HAD BEEN MADE BY THE ASSESSEE FOR' PURELY COMMERCIA L PURPOSE. 3. THE ONLY ISSUE INVOLVED IS REGARDING THE TAX LIA BILITY ON THE INTEREST INCOME EARNED ON THE FDRS ON THE BASIS OF PRINCIPLE OF MUTUALITY. 4. THE ASSESSEE IS A SOCIETY REGISTERED UNDER SOCIE TY REGISTRATION ACT, 1860 AND ALSO REGISTERED U/S 12A OF INCOME-TAX ACT, 1961. THIS HAS BEEN ESTABLISHED FOR PROMOTION OF GOLF IN INDIA. THE RE VENUE CLAIMS THAT THE EARNING OF INTEREST HAS NOT ARISEN OUT OF THE ACTIV ITIES OF PROMOTION OF GOLF BUT IT HAS EARNED IN A COMMERCIAL MANNER BY KEEPING THE SURPLUS FUND IN THE FDR WITH THE BANK. THE DECISION OF MAKING FDRS WITH BA NK WAS PURELY FOR COMMERCIAL PURPOSES. HE PLEADED TO SET ASIDE THE O RDER OF CIT (A). 5. ON THE OTHER HAND, THE LEARNED AR SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON'BL E ALLAHABAD HIGH COURT IN THE ASSESSEES OWN CASE WHEREIN THE HON'BLE HIGH CO URT HAS HELD AS UNDER :- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE HON'BLE ITAT WAS JUSTIFIED IN HOLDING THAT THE DOCT RINE OF MUTUALITY WOULD ALSO APPLY IN ASSESSEES CASE EVEN WHEN THE QUESTION OF EARNING INTEREST INCOME ON FDRS AND MUT UAL FUNDS ITA NO.47/DEL./2011 3 ARISES OUT OF THE FUNDS INVESTED WITH NON-MEMBERS, WHICH IS NOT THE CASE OF THE ASSESSEE? SIMILAR QUESTION WAS ALSO INVOLVED IN INCOME TAX AP PEAL (30) OF 2003. THE COMMISSIONER OF INCOME TAX-11 & ANOTH ER VS. M/S. NOIDA GOLF COURSE SOCIETY. THIS COURT HAS DIS MISSED THE APPEAL ON 26.5.2010. IN VIEW OF THE ABOVE, THE APPEAL IS DISMISSED. 6. WE HAVE HEARD BOTH THE PARTIES. THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IS IN THE ASSESSEES OWN CASE. THEREFOR E, RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE APPEAL OF THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 18 TH DAY OF MARCH, 2011. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 18 TH DAY OF MARCH, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A), GHAZIABAD. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.