COMMON EFFLUENT TREATMENT PLANT ( THANE BELAPUR) ASSOCIATION, MUMBAI V. ITO 10(3)(1), MUMBAI

ITA 524/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84355 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 25-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 524/MUM/2012 ASSESSMENT YEAR: 2009-10 M/S. COMMON EFFLUENT TREATMENT PLANT (THANE BELAPUR) ASSOCIATION C/O R.K. KHANNA & ASSOCIATES, 402, REGENT CHAMBERS, NARIMAN POINT MUMBAI- 400 021 PAN: AABCC 4712 H VS. ITO 10(3)(1) MUMBAI (APPELLANT) (RESPON DENT) ASSESSEE BY : NONE REVENUE BY : SHRI PREMANAND J. DATE OF HEARING : 18 . 11 . 2014 DATE OF ORDER : 26 . 1 1 .2014 O R D E R PER AMIT SHUKLA, JM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST ORDER DATED 30.12.2011 PASSED BY LD.CIT(A)-22 MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED, U/S 143(3) FOR THE A.Y. 2009-10. THE ONLY ISSUE RAISED IN THE GROUNDS OF APPEAL IS THAT, LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN TAXING THE INTEREST INCOME OF RS.1,50,9 32/- RECEIVED ON COMMERCIAL DEPOSITS WITH MAHARASHTRA STATE ELECTRIC ITY BOARD (MSEB) WHICH WAS CLAIMED TO BE NON TAXABLE IN VIEW OF THE PRINCIPLE OF MUTUALITY. ITA NO. 524/MUM/2012 M/S. COMMON EFFLUENT TREATMENT PLANT ASSESSMENT YEAR: 2009-10 2 2. DESPITE SERVICE OF NOTICE TO THE APPELLANT ASSES SEE, NONE APPEARED ITS BEHALF, THEREFORE, WE ARE DECIDING THE APPEAL O N MERITS AFTER HEARING THE DEPARTMENTAL REPRESENTATIVE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ON ASSOCIATION INCORPORATED AS A COMPANY U/S 25 OF THE COMPANIES A CT 1956, WITH THE OBJECT OF SETTING UP EFFLUENT TREATMENT PLANT FOR T HE MEMBERS OF THE ASSOCIATION, WHO RUN INDUSTRIAL UNITS IN TRANS THAN E AREA. THE OBJECTS ARE MET BY THE CONTRIBUTION MADE BY THE MEMBERS FOR THE PURPOSE OF SETTING UP EFFLUENT TREATMENT FACILITY. THE ASSESS ING OFFICER HAS TREATED ALL THE INTEREST INCOME AS TAXABLE ON THE GROUND TH AT IT AS DOES NOT FALL WITHIN THE AMBIT OF PRINCIPLE OF MUTUALITY. THE L D.CIT(A) FOLLOWING THE EARLIER YEAR ORDER OF THE LD.CIT(A) UPHELD THE ORDE R OF THE AO. IN THE EARLIER ORDER, THE LD.CIT(A) HAS REFERRED TO THE DE CISION OF HONBLE BOMBAY HIGH COURT IN ASSESSEES OWN CASE FOR THE A. Y. 2001-02, WHEREIN THE HONBLE HIGH COURT VIDE JUDGMENT AND OR DER DATED 17.06.201, AFTER CONSIDERING THE ENTIRE LAW AND VAR IOUS JUDGEMENTS, HELD THAT INTEREST INCOME IS OUTSIDE THE PURVIEW OF PRI NCIPLE OF MUTUALITY. THIS BOMBAY HIGH COURT DECISION HAS BEEN FOLLOWED B Y THE ITAT IN THEIR SUBSEQUENT DECISIONS. 4. BEFORE US THE LD. DR SUBMITTED THAT IN THIS CASE THE ISSUE OF TAXABILITY OF INTEREST HAS BEEN DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE BY THE HONBLE BOMBAY HIGH CO URT IN THE CASE OF THE ASSESSEE ITSELF. THEREFORE, THE ORDER OF THE LD .CIT(A) SHOULD BE CONFIRMED. 5. AFTER CONSIDERING THE RELEVANT FINDING OF THE LD .CIT(A) AND ALSO THE MATERIAL PLACED ON RECORD, WE FIND THAT THE ISSUE O F TAXABILITY OF INTEREST ON FIXED DEPOSIT WITH BANK AND OTHER DEPOSITS, IN P RINCIPLE HAS BEEN ITA NO. 524/MUM/2012 M/S. COMMON EFFLUENT TREATMENT PLANT ASSESSMENT YEAR: 2009-10 3 DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE R EVENUE BY HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE ASSESS EE ITSELF, VIDE JUDGMENT AND ORDER DATED 17.06.2010, THE COPY OF WHICH IS AV AILABLE IN THE FILE. IT HAS BEEN INFORMED BY THE LD. DR, THAT THE TRIBUNAL IN THE A.Y. 2006-07 EARLIER YEARS HAS DECIDED THIS ISSUE IN FAVOUR OF T HE REVENUE. FROM THE PERUSAL OF THE ASSESSMENT ORDER IT IS SEEN THAT THE ASSESSEE HAS ITSELF OFFERED INTEREST ON BANK DEPOSIT AS TAXABLE INCOME, HOWEVER THE AMOUNT OF INTEREST OF RS.1,15,932/- WHICH WAS RECEIVED ON DEPOSIT WITH THE MSEB HAS BEEN CLAIMED AS EXEMPT PRINCIPLE OF MUTUA LITY. IN OUR OPINION EVEN THIS INTEREST INCOME WILL NOT COME WIT HIN THE PRINCIPLE OF MUTUALITY, AS THE INTEREST HAS BEEN RECEIVED FROM AN OUTSIDER, THAT IS, NONE MEMBER AND NOT DURING THE COURSE OF TRANSACTIO N BETWEEN THE MEMBERS OUR MEMBERS. THUS THE CHARACTER OF SUCH INT EREST INCOME WILL PARTAKE THE SAME CHARACTER OF THE INTEREST WHICH AR E RECEIVABLE ON THE DEPOSITS MADE WITH THE BANK. IN ANY CASE THIS MATTE R HAS BEEN NOW SETTLED BY THE HONBLE SUPREME COURT IN THE CASE OF BANGALORE CLUB VS. CIT REPORTED AT (2013) 350 ITR 509 (SC). THUS APPEAL FILED BY THE ASSESSEE IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF NOVEMBER, 2014. SD/ - SD/- (SANJAY ARORA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED:26.11.2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.