Garden Estates Residents Welfate Association (Regd), Gurgaon V. ITO, Gurgaon

ITA 5990/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6623 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 24-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Capital asset; Charitable institution; Rule of consistency; Cost of acquisition; Capital receipt; Revised return; TDS; Set aside; Capital Gains; FORM 26AS
• Section: 2(14); 43; 48; 13; 22; 28; 11

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO. 5990/DEL/2016 ASSTT. YEAR: 2013-14 O R D E R PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL IS PREFERRED BY THE ASSES SEE AGAINST ORDER DATED 3.10.2016 PASSED BY THE LD. COMMISSIONER OF I NCOME TAX (APPEALS) I, GURGAON {CIT (A)} AND PERTAINS TO ASS ESSMENT YEAR 2013-14. 2.0 BRIEF FACTS OF THE CASE ARE THAT THE AS SESSEE IS A RESIDENT WELFARE ASSOCIATION AND HAD COME INTO EXISTENCE ON 6.09.1991. THIS ASSOCIATION WAS REGISTERED WITH REGISTRAR OF F IRM AND SOCIETIES, HARYANA ON 22.7.1992. THIS ASSOCIATION H AS BEEN GARDEN ESTATE RESIDENTS WELFARE ASSOCIATION (REGD.) GARDEN ESTATE, M.G. ROAD, DLF CITY, PHASE-III, GURGAON VS. INCOME TAX OFFICER WARD-1(4) GURGAON (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI CS AGGARWAL, SR. ADV DEPARTMENT BY : SHRI S.N. MEENA, SR. DR ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 2 FORMED BY THE RESIDENTS OF THE RESIDENTIAL COMPLEX CALLED GARDEN ESTATE, GURGAON. AS PER THE MEMORANDUM OF ASSOCIATI ON OF THE ASSESSEE SOCIETY, ONLY THOSE PERSONS WHO ARE THE OW NERS OF THE DWELLING UNITS IN GARDEN ESTATE OR NOMINATED PERSON S OF THE CORPORATE FIRMS, INSTITUTIONS OR ORGANISATIONS WHIC H OWN THE DWELLING UNITS CAN BE THE MEMBERS OF THE SOCIETY. 2.1 IN THE INSTANT ASSESSMENT YE AR, THE ASSESSEE HAD FURNISHED ITS RETURN OF INCOME SHOWING A TOTAL INCO ME OF RS. 90,53,170/- WHICH WAS IN TERMS OF PROFIT AND LOSS ACCOUNT. SUBSEQUENTLY, A REVISED RETURN WAS FILED WHEREIN TH E RETURN WAS FILED DECLARING A LOSS OF RS. 54,193/-. THE ASSESSE ES CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND SUBSEQUENTLY THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS. 2,66,1 4,833/- AFTER MAKING THE FOLLOWING ADDITIONS: 1. BANK INTEREST RS. 18,09,368/- 2. RECEIPTS FROM ADVERTISEMENT RS. 4, 69,030/- 3. RECEIPTS FROM CONTRACTUAL PAYMENTS RS. 28,42,085/- 4. RENTAL RECEIPTS RS. 2,00,500/- 5. COMPENSATION RECEIPTS RS.1,67,15,029/- 6. 50% OF INTEREST ON ENHANCED COMPENSATIO N RS. 45,78,771/- 2.2 AGGRIEVED, THE ASSESSEE APPROACHED TH E LD. FIRST APPELLATE AUTHORITY CONTENDING THAT THE ADDITIONS M ADE BY THE AO ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 3 WERE UNSUSTAINABLE BOTH ON FACTS AND IN LAW AND SIN CE THE ASSOCIATION HAD BEEN FORMED BY THE FLAT OWNERS AND WAS FOR THEIR BENEFITS ONLY, THE EXCESS OF RECEIPTS OVER EXPENDIT URE COULD NOT BE REGARDED AS INCOME. THE LD. CIT (A), HOWEVER, ONLY ALLOWED A MINOR RELIEF TO THE ASSESSEE IN RESPECT OF ADDITION MADE ON ACCOUNT OF RECEIPTS FROM ADVERTISEMENT AND UPHELD T HE DISALLOWANCE/ADDITION OF ALL OTHER ITEMS BY HOLDING THAT ALL THE ADDITIONS WERE IN THE NATURE OF INCOME WHICH WAS TA XABLE AND WAS NOT SAVED BY THE PRINCIPLE OF MUTUALITY. 2.3 AGGRIEVED, THE ASSESSEE IS N OW BEFORE THE ITAT AND HAS CHALLENGED THE UPHOLDING OF THE ADDITIONS B Y THE LD. CIT (A) BY RAISING FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LEARNED CIT (A) HAS ERRED BOTH ON FACTS AN D IN LAW IN CONFIRMING THE ASSESSMENT FRAMED BY THE LEAR NED AO DISREGARDING THAT THE ASSESSEE IS A MUTUAL BENEF IT SOCIETY AND THAT THE RECEIPTS WHICH HAS BEEN BROUGH T TO TAX COULD NOT HAVE BEEN TREATED AS PART OF THE TOTA L INCOME OF THE ASSESSEE SOCIETY. 2. THAT THE LEARNED CIT (A) HAS ERRED BOTH ON FACTS AN D IN LAW IN CONFIRMING THE ADDITION MADE OF RS. 1,67,15, 029/- UNDER THE HEAD CAPITAL GAIN BY DISREGARDING THE F ACTUAL SUBSTRATUM OF THE CASE AND THAT THE AFORESAID AMOUN T DID NOT REPRESENT EVEN ITS RECEIPT MUCH LESS AN INC OME. 3. THAT THE LEARNED CIT (A) HAS FURTHER ERRED IN CONFI RMING AN ADDITION OF A SUM OF RS. 18,09,368/- BEING THE B ANK INTEREST, AS AN INCOME LIABLE TO BE INCLUDED IN THE TOTAL INCOME. HE HAS FAILED TO COMPREHEND THE FACTUAL SUBSTRATUM OF THE CASE AND SUSTAINED THE ADDITION O N THE ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 4 APPLICATION OF THE PRINCIPLES LAID DOWN BY THE APEX COURT IN THE CASE OF BANGLORE CLUB VS. CIT REP ORTED IN 350 ITR 509, WHICH WAS WHOLLY DISTINGUISHABLE O N THE FACTS. 3.1 THAT IN SUSTAINING THE AFORESAID ADDITION THE L EARNED CIT (A) HAS FAILED TO APPRECIATE THE FACTUAL SUBSTRATUM OF THE CASE AS STATED BY THE ASSESSEE IN ITS REPLY DATED 10.2.2016. 4. THAT THE LEARNED CIT (A) HAS FAILED TO APPRECIATE T HAT THE ASSESSEE HAD FURNISHED THE RETURN OF TOTAL INCOME DECLARING A LOSS OF RS. 54,193/- AND WHILE COMPUTIN G THE TOTAL INCOME, IT HAD INCLUDED THE AMOUNTS RECEIVED FROM NON-MEMBERS FOR THE SERVICES RENDERED TO THE MEMBER S AS ITS INCOME AND AS SUCH SAID SUM OUGHT NOT TO HAV E BEEN BROUGHT TO BE SEPARATELY TAXED, WHILE COMPUTIN G THE TOTAL INCOME. THUS THE ADDITION MADE WHILE COMPUTIN G THE TOTAL INCOME OF RS. 35,11,665/- BY WAY OF INTEREST AND OF A FURTHER SUM OF RS. 45,78,771/- REPRESENTING THE I NTEREST RECEIVED ON COMPUTATION IN RESPECT OF THE LAND NOT BEING BELONGING TO THE ASSESSEE WAS NOT SUSTAINABLE. 5. THAT THE LEARNED CIT (A) HAS THUS ERRED IN UPHOLDIN G THE FINDINGS OF THE LEARNED AO (SEE PARA 7 OF AOS ORDE R) THAT THE EXCESS OVER THE EXPENDITURE AMOUNTING TO RS. 1,05,49,082/- HAD RIGHTLY BEEN SET OFF AGAINST THE CORPUS FUNDS ACCUMULATED YEAR TO YEAR AND NOT FROM THE REC EIPTS OF : (I) RS. 18,09,368/- (IF HELD AS TAXABLE), REPRESENTING INTEREST RECEIVED FROM BANKS (II) RS. 35,11,665/- REPRESENTING CONTRACTUAL RECEIPTS (III) RS. 45,78,771/- REPRESENTING INTEREST AND ADDITIONAL INTEREST RECEIVED ON COMPENSATION I 6. THAT THE LEARNED CIT (A) HAS FURTHER ERRED IN UPHOL DING AN ADDITION MADE UNDER THE HEAD CAPITAL GAIN OF RS. 1,67,15,029/- DISREGARDING THAT NO SUCH CAPITAL GAI N HAD ACCRUED TO THE ASSESSEE EITHER ON FACTS AND IN LAW AND ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 5 THUS THE ADDITION MADE IS COMPLETELY MISCONCEIVED I N LAW AND ON FACTS. 7. THAT THE LEARNED CIT (A) HAS FAILED TO APPRECIATE T HAT SUCH A SUM OF RS. 1,67,15,029/- DID NOT REPRESENT A N AMOUNT ASSESSABLE IN THE HANDS OF THE ASSESSEE BY WAY OF CAPITAL GAIN, DISREGARDING THAT THE ASSESEE WAS NOT THE OWNER OF THE LAND IN RESPECT OF WHICH THE ASSESSEE HAD RECEIVED THE COMPENSATION AND WAS INCHOATE RECEIPT IN LAW. IN SUSTAIN THE AFORESAID ADDITION THE LEARNED CIT (A) HAS OVERLOOKED THE STATUTORY PROVISIONS OF SECTION 45 OF THE INCOME TAX ACT. 8. THAT THE FINDINGS OF THE LEARNED CIT (A) THAT, THE LEARNED AO HAD CORRECTLY COMPUTED THE TOTAL INCOME, WHEN HE HAD SET OFF THE EXPENDITURE INCURRED, NOT OUT OF THE RE CEIPTS OF THE SOCIETY OF THE INSTANT YEAR AND HELD TAXABLE OF THE INSTANT YEAR BUT FORM THE CORPUS IS MISCONCEIVED BO TH IN LAW AND ON FACTS, AS HE HAD OVERLOOKED THAT EVEN ON THE BASIS OF FIRST PRINCIPLE, THE INCOME IS TO BE COMPU TED ON YEAR TO YEAR BASIS AND THUS WHILE COMPUTING THE TOT AL INCOME ALL THE RECEIPTS HAD TO BE NECESSARILY SET O FF FROM THE OUTGOINGS I.E. THE EXPENDITURE INCURRED BEFORE COMPUTING THE TOTAL INCOME. 9. IT IS THEREFORE PRAYED THAT THE ADDITIONS MADE AND SUSTAINED BY THE LEARNED CIT (A) BE HELD AS NOT TAX ABLE WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE AN D INCOME RETURNED BY THE ASSESSEE, A MUTUAL BENEFIT SOCIETY OUGHT TO HAVE BEEN ACCEPTED WITHOUT MAKING ANY ADDITION TO ITS RETURNED INCOM E. 3.0 THE LD. AR SUBMITTED THAT A SUM OF RS. 1,67,15,029/- REPRESENTS AN AMOUNT OF COMPENSATION GRANTED BY THE LAND ACQUISITION COMMISSIONER (LAC) UNDER AN AW ARD DATED 11.9.2007 AND ADDITIONAL COMPENSATION GRANTED BY AN ORDER OF THE LD. ADDL. DISTRICT JUDGE DATED 31.08.2012 IN RE SPECT OF TWO AWARDS, ONE BEING NO. 96/2008 AND ANOTHER BEING 790 /2008. ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 6 BOTH THE AWARDS PERTAIN TO THE LAND SITUATED IN THE AREA DEVELOPED BY M/S. GULMOHAR ESTATES INDIA PVT. LTD. ON WHICH FLATS WERE DEVELOPED AND HAD BEEN ACQUIRED BY THE V ARIOUS FLAT OWNERS NUMBERING 373. IT WAS SUBMITTED THAT THE SAI D SUM OF RS. 1,67,15,029/- HAD BEEN RECEIVED DURING THE FINA NCIAL YEAR (FY) 2012-13 RELEVANT TO ASSESSMENT YEAR (AY) 2013- 14. IT WAS SUBMITTED THAT THE AFORESAID SUM OF COMPENSATION RE PRESENTS 80% OF THE AGGREGATE AMOUNT OF THE AWARD INCLUDING THE ADDITIONAL COMPENSATION AND THE REMAINING 20% OF TH E AMOUNT OF THE AWARD HAD ACCRUED TO ONE SHRI DINESH KUMAR. 3.1 IT WAS SUBMITTED BY THE LD. AR THAT SO FAR AS THE ASSESSEE ASSOCIATION IS CONCERNED, IT IS NOT THE OW NER OF THE LAND ACQUIRED AND THE AMOUNT RECEIVED BY IT WAS CONDITIO NAL AND INCHOATE AND THAT THE LAND BELONGED TO THE FLAT OWN ERS AND NOT TO THE ASSESSEE. IT WAS SUBMITTED THAT IT BECAME ENTIT LED TO RECEIVE THE AFORESAID AMOUNT NOT AS AN OWNER BUT WHEN IT HA D UNDERTAKEN TO USE THE COMPENSATION AMOUNT, ONLY FOR THE BENEFIT AND BETTERMENT OF THE GARDEN ESTATE COLONY, WHICH I NCLUDED THE AMOUNT TO BE PAID TO THE STATE OF HARYANA TOWARDS E XTERNAL DEVELOPMENT CHARGES, AS WAS TO BE PAID BY M/S. GULM OHAR ESTATES INDIA PVT. LTD., IF HELD AS PAYABLE. THE LD . AR ARGUED ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 7 THAT, THUS, THE AMOUNT OF COMPENSATION RECEIVED BY IT IS INCHOATE NOT ONLY BECAUSE OF THE QUANTIFICATION BUT ALSO BECAUSE IT IS NOT ENTITLED IN LAW TO RECEIVE SUCH COMPENSAT ION. IT HAD RECEIVED THE SAID SUM ONLY AS A REPRESENTATIVE OF T HE FLAT OWNERS AND THAT TOO, THE AFORESAID SUM WAS TO BE ONLY UTIL IZED TO MAKE THE PAYMENT TO STATE OF HARYANA TOWARDS EXTERNAL DE VELOPMENT CHARGES AND ALSO FOR THE BETTERMENT OF THE SOCIETY SINCE SUCH FLAT OWNERS WERE THE OWNERS OF THE LAND. IT WAS SUBMITTE D THAT UNDER THE HARYANA APARTMENT OWNERSHIP ACT, 1983 IT IS VER Y WELL DEFINED THAT THE LAND BENEATH THE STRUCTURE AND ADJ ACENT LAND WOULD BELONG TO THE FLAT OWNERS IN THE PROPORTION T O THE AREA OWNED AND HELD BY THEM. 3.2 IT WAS FURTHER SUBMITTED BY THE LD. AR THAT THE FINDINGS OF THE LEARNED CIT (A) ARE WHOLLY ERRO NEOUS AND UNSUSTAINABLE IN LAW AS THE ASSESSEE SOCIETY IS NOT THE OWNER OF THE LAND. ON THE CONTRARY, THE LAND IS CLAIMED TO B E OWNED BY M/S. GULMOHAR ESATTES LTD. AND, IN FACT, IN THE ORD ER OF ENHANCEMENT DATED 31.08.2012, IT HAS BEEN STATED TH AT THE LAND CONTINUES TO BE RESIDENTIAL AND IS JOINTLY SHARED B Y 373 APARTMENT OWNER' . IT WAS SUBMITTED THAT IN SUCH A SITUATION THERE C AN BE NO JUSTIFICATION TO BRING TO TAX THE AMOUNT OF COMPENS ATION RECEIVED ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 8 BY IT IN THE HANDS OF THE ASSESSEE. IT WAS REITERAT ED THAT THE IMPUGNED SUM WAS RECEIVED TO BE PAID TO THE STATE O F HARYANA SINCE THEY WERE CLAIMING EXTERNAL DEVELOPMENT CHARG ES FROM THE OWNER OF THE LAND I.E. M/S. GULMOHAR ESTATES LTD. T HE LD. AR SOUGHT TO RELY ON THE JUDGMENT OF THE HIGH COURT OF DELHI IN THE CASE OF CIT VS. SUMAN DHAMIJA REPORTED IN 382 ITR 3 43. 3.3 IT WAS FURTHER SUBMITTED THAT THE ASSESSEE SO CIETY IS INCORPORATED FOR THE WELFARE AND WELL-BEING OF ' GARDEN ESTATE' (GE) TO ENSURE THAT THE GE COMPLEX IS PROPERLY MANA GED, ADMINISTERED AND MAINTAINED IN A MANNER CONDUCIVE T O COMFORTABLE, HASSLE-FREE LIVING COMPATIBLE WITH THE STANDARDS AND EXPECTATIONS OF THE ITS MEMBERS. THE LD. AR SUBMITT ED THAT THE OBJECTS OF THE ASSESSEE DO NOT AUTHORIZE IT TO OWN ANY LAND ON BEHALF OF ITS MEMBERS AND NOR IS THE ASSESSEE OWNIN G ANY LAND. IT WAS SUBMITTED THAT UNDER THE BUILDER-BUYER AGREEMEN T, IT IS THE INDIVIDUAL FLAT OWNERS WHO HAVE RIGHT IN THE COMMON UNDIVIDED AREA AND, THEREFORE, AS SUCH, THE FINDING OF THE LE ARNED CIT (A) THAT THE ASSESSEE WAS THE RIGHTFUL OWNER OF THE LAN D IS WHOLLY ERRONEOUS AND UNSUSTAINABLE IN LAW. IT WAS SUBMITT ED THAT EVEN THE DECISION OF THE LD. ADDL. DISTRICT JUDGE, GURGA ON, DATED 31.08.2012 IN THE CASE OF GARDEN ESTATE RESIDENT WE LFARE ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 9 ASSOCIATION VS. STATE OF HARYANA AND OTHERS DOES NO T HOLD THAT THE ASSESSEE IS THE OWNER OF THE LAND. IT WAS SUBMI TTED THAT IN THE AFORESAID DECISION IT HAS BEEN HELD THAT M/S. G ULMOHAR ESTATES LTD. HAS PURCHASED THE LAND WHICH WAS LEASE D OUT TO ONE SHRI DINESH KUMAR AND THE PLOT-HOLDERS OF THE ASSES SEE ASSOCIATION BUT SINCE THE LEASE GRANTED TO M/S. GUL MOHAR ESTATES LTD. HAS BEEN CANCELLED, AS SUCH THE ASSESSEE ASSOC IATION WAS ENTITLED FOR THE COMPENSATION. IT WAS SUBMITTED BY THE LD. AR THAT IN THE AFORESAID DECISION, IT HAS NOT BEEN HEL D THAT THE ASSESSEE IS THE OWNER OF THE LAND. THE LD. CIT (A) OBSERVED THAT SINCE THE 373 APARTMENT OWNERS HAD UNDIVIDED AND UN - PARTITIONED INTEREST IN THE LAND AS SUCH, THE ASSES SEE ASSOCIATION WAS THE RIGHTFUL OWNER OF THE LAND. IT WAS SUBMITTE D THAT THE LEARNED CIT (A) HAS COMPLETELY FAILED TO CONSIDER T HAT THE ASSESSEE ASSOCIATION WAS FORMED ONLY FOR THE WELFAR E OF ITS MEMBERS AND THAT IT HAS NO RIGHT OVER THE PROPERTIE S OF ITS MEMBERS. THE LD. AR ARGUED THAT ITS DUTY IS LIMITED TO MANAGE, ADMINISTER AND MAINTAIN THE GARDEN ESTATE IN A MANN ER CONDUCIVE TO COMFORTABLE, HASSLE-FREE LIVING COMPAT IBLE WITH THE STANDARDS AND EXPECTATIONS OF THE ITS MEMBERS. HE A RGUED THAT IN ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 10 SUCH CIRCUMSTANCES THE FINDING THAT THE ASSESSEE WA S THE RIGHTFUL OWNER OF THE LAND IS WHOLLY ERRONEOUS AND MISCONCEI VED IN LAW. 3.4 IT WAS SUBMITTED THAT IN THE CONTEXT OF HUF, WHEREIN HUF IS ALSO THE BODY OF THE INDIVIDUAL FAMI LY MEMBER, IT IS SETTLED LAW THAT INCOME ARISING FROM THE SALE OF THE PROPERTIES OF THE MEMBERS CANNOT BE TAXED IN THE HANDS OF THE HUF. RELIANCE WAS PLACED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF RAJNISH CHAUDHARY (HUF) VS. ACIT REPORTED IN (2015) 68 SOT 166 (DELHI-TRIB.) IN THIS REGARD. 3.5 IT WAS FURTHER ARGUED THAT THE SCHEME FOR CHARGING CAPITAL GAINS TO TAX CAN BE CULLED OUT FRO M A CONJOINT READING OF THE PROVISIONS OF SECTIONS 45, 48, 49 AN D 55 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) . IT WAS SUBMITTED THAT SECTION 45 PRESCRIBES THAT ON TRANS FER OF A CAPITAL ASSET EFFECTED IN A PREVIOUS YEAR, THE DIFFERENCE A RISING BY WAY OF ANY PROFITS OR GAINS SHALL BE CHARGED TO INCOME-TAX UNDER THE HEAD CAPITAL GAINS AND SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. IT WAS SUBMITTED THAT THE TERMS CAPITAL ASSET AND TRANSFER ARE DEFINED RESPECTIVELY IN SECTIONS 2(14) AND 2(47) OF THE ACT AND THAT FOR THE PURPOSE OF COMPUTING THE INCOME CHARGEABLE AS SPECI FIED UNDER ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 11 SECTION 45, THE MODE OF COMPUTATION HAS BEEN PRESCR IBED IN SECTION 48 OF THE ACT. THE LD. AR SUBMITTED THAT IT IS LAID DOWN THAT FOR THE PURPOSE OF ASCERTAINING THE INCOME WHI CH IS CHARGEABLE TO CAPITAL GAINS TAX, THE EXPENDITURE WH ICH IS INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANS FER AND THE COST OF ACQUISITION OF THE ASSET ALONG WITH THE COS T OF IMPROVEMENT, IF ANY, WILL HAVE TO BE DEDUCTED FROM THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING ON SUCH TRANS FER TAKING PLACE. IT WAS FURTHER SUBMITTED THAT SECTION 55 SPE CIFIES THE MEANING OF THE TERMS COST OF IMPROVEMENT AND COS T OF ACQUISITION AND THAT SECTION 49 LAYS DOWN THE MOD ALITY OF ASCERTAINING THE COST OF ACQUISITION WITH REFERENCE TO CERTAIN MODES OF ACQUISITION SPECIFIED UNDER SUB-SECTION (1 ) OF THE SAID SECTION. THE LD. AR SUBMITTED THAT IN THE PRESENT C ASE, UNDISPUTEDLY, THE LAND BELONGED TO THE MEMBERS OF T HE ASSESSEE ASSOCIATION, HOWEVER, SINCE ALL THE 373 MEMBERS OF THE ASSESSEE SOCIETY HAVE A RIGHT IN THE LAND AND THE ASSESSEE H AS NO RIGHT IN THE LAND, AND FURTHER, THE COST OF THE LAND IS NOT DETERMINABLE EVEN IN THE HANDS OF ITS MEMBERS, AS SUCH, COST OF ACQUISITION OF LAND IN THE HANDS OF ITS MEMBERS IS ALSO INDETERMIN ATE AND HENCE THE WHOLE COMPUTATION MECHANISM WILL FAIL, AND HENC E, IN THE ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 12 ABSENCE OF ASCERTAINED COST OF ACQUISITION, THE CHA RGE UNDER THE HEAD CAPITAL GAINS CANNOT BE FASTENED TO THE FULL VALUE OF CONSIDERATION. IT WAS SUBMITTED THAT, FURTHER, THE LEARNED CIT (A) HAS UPHELD THE ACTION OF THE ASSESSING OFFICER (AO) IN ADOPTING THE COST AT NIL WHICH IS LEGALLY UNSUSTAINABLE IN L AW. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HONBLE GUJARAT H IGH COURT IN THE CASE OF CIT VS. MANOHARSJINHJI P. JADEJA REPORT ED IN 281 ITR 19. 3.6 IT WAS FURTHER ARGUED BY THE LD. AR THAT THE SUM RECEIVED BY THE ASSESSEE IS NOT A SUM RECEIVED IN T HE COURSE OF ITS ACTIVITIES AND HENCE THE SAME IS A CAPITAL RECEIPT. IT WAS AGAIN EMPHASISED THAT THE ASSESSEE IS A MUTUAL BENEFIT SO CIETY, AND AS SUCH, ALL THE RECEIPTS OF THE ASSESSEE ARE APPLIED TOWARDS THE BENEFIT OF ITS INDIVIDUAL MEMBERS AND, THEREFORE, E VEN ON THE PRINCIPLE OF MUTUALITY, SUCH RECEIPT IS NOT TAXABLE IN THE HANDS OF THE ASSESSEE. 3.7 THE LD. AR REITERATED THAT THE AO HAS FAILED TO COMPREHEND THE DISTINCTION BETWEEN APPLICATION OF I NCOME AND DIVERSION OF SUCH AN INCOME BY AN OVERRIDING TITLE AT SOURCE. THE INCOME BY WAY OF LONG TERM CAPITAL GAIN, IF AT ALL ARISEN, HAD ARISEN IN THE HANDS OF FLAT OWNERS WHEREIN THE ASSE SSEE (SOCIETY) ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 13 HAD NO RIGHT, TITLE OR INTEREST. THE MERE FACT THAT THE AMOUNT HAD BEEN RECEIVED BY THE SOCIETY WOULD ONLY AMOUNT TO A N APPLICATION OF INCOME BY THE FLAT OWNERS AND THERE BEING NO DIV ERSION OF SUCH INCOME BY AN OVERRIDING TITLE IN FAVOUR OF THE SOCI ETY, NO SUCH INCOME COULD BE SAID TO HAVE ACCRUED TO IT AND ASSE SSED IN ITS HANDS. IT WAS SUBMITTED THAT IT IS IMPORTANT TO BE NOTED THAT THE LEARNED ADDL. DISTRICT JUDGE HAD GRANTED THE COMPEN SATION, AS SPECIFICALLY STATED BY HIM, TO THE LAND OWNERS. 3.8 IT WAS FURTHER SUBMITTED BY THE LD. AR THAT T HE ENTIRE SUM OF RS. 91,57,542/- RECEIVED IS INTEREST PAID UNDER SECTION 28 OF THE LAND ACQUISITION ACT AND HAS THE SAME CHARACTER AS THAT OF COMPENSATION. IT WAS SUBMITTED THAT IT HAS BEEN HELD BY THE HON'BLE APEX COURT IN CIT VS. GHAN SHYAM HUF REPORTED IN 315 ITR 1 (SC) THAT THE INTEREST UNDER SECTION 28 IS PART OF COMPENSATION WHEREAS INTEREST UNDER SECTION 34 IS ONLY FOR THE DELAY IN MAKING THE PAYMENT AFTER THE COMPE NSATION AMOUNT IS DETERMINED. INTEREST UNDER SECTION 28 IS A PART OF ENHANCED VALUE OF THE LAND WHICH IS NOT SO IN THE C ASE OF PAYMENT OF INTEREST UNDER SECTION 34. THE LD. AR DR EW OUR ATTENTION TO THE FOLLOWING CHART DEPICTING THE DETA ILS OF INTEREST RECEIVED AMOUNTING TO RS. 91,57,542/- U/S 28 AND SU BMITTED ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 14 THAT THE INTEREST OF RS. 91,57,542/- COULD NOT HAVE BEEN INCLUDED IN THE TOTAL INCOME: ASSTT. YEAR COMPENSATION ADDITIONAL COMPENSATION TOTAL INTEREST U/S 28 @ 9% INTEREST U/S 28 @ 15% INTEREST U/S 28 @ 9% INTEREST U/S 28 @ 15% 2008-09 3,55,320.00 1,47,571.00 5,02,891.00 2009 - 10 3,55,320.00 5,92,200.00 1,47,572.00 4,22,148.00 15,17,240.00 2010-11 11,84,400.00 8,44,297.00 20,28,697.00 2011-12 11,84,400.00 8,44,297.00 20,28,697.00 2012-13 11,84,400.00 8,44,297.00 20,28,697.00 2013-14 2,77,380.00 7,73,940.00 10,51,320.00 TOTAL 7,10,640.00 44,22,143.00 2,95,143.00 37,28,97 0.00 91,57,542.00 3.9 IT WAS FURTHER SUBMITTED THAT THE AO, WHILE FRAMING THE ASSESSMENT AND BRINGING TO TAX THE AMO UNT OF COMPENSATION RECEIVED, HAS HELD THAT THE COST OF AC QUISITION BE ADOPTED AS NIL BUT SINCE THE ASSESSEE HAS NOT ACQUI RED ANY LAND AND AS SUCH UNLESS AND UNTIL IT HAD ACQUIRED A LAND IT COULD NOT HAVE TRANSFERRED THE SAME. THE LD. AR ARGUED THAT I N THE INSTANT CASE, IT IS AN ADMITTED FACT THAT WHEN THE ORDER OF ACQUISITION WAS MADE ON 11.09.2007, THE SUPERSTRUCTURE HAD ALREADY BEEN CONSTRUCTED AND, THUS, THE OWNERS OF THE FLATS WERE STATUTORILY THE OWNERS OF THE LAND ALSO. THUS, IN THE ABSENCE O F THE ASSESSEE HAVING ACQUIRED THE LAND WHICH IS ADMITTED BY THE A O, PER SE THE PROVISIONS OF SECTION 45 OF THE INCOME TAX ACT HAVE NO APPLICATION. IT WAS SUBMITTED THAT THE AO IS NOT AS SESSING 373 OWNERS OF THE APARTMENTS WHO ALONE ARE THE OWNERS O F THE LAND. ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 15 IT WAS ARGUED THAT IT IS WELL SETTLED RULE OF LAW T HAT CORRECT INCOME IS TO BE ASSESSED IN THE RIGHT HANDS AND, TH US, THE AMOUNT OF COMPENSATION COULD NOT HAVE BEEN HELD TO BE TAXABLE IN THE HANDS OF THE ASSESSEE AND NOR EVEN THE INTER EST ON SUCH COMPENSATION RECEIVED BY THE ASSESSEE-SOCIETY. THE LD. AR SOUGHT TO RELY ON THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. CH. ATCHAIAH REPORTED IN 218 1TR 239 (SC). 3.10 IT WAS FURTHER SUBMITTED THAT IS ALSO WELL S ETTLED THAT NO INCOME CAN BE BROUGHT TO TAX UNDER ANY OTHE R HEAD OF INCOME, WHEN SUCH AN INCOME FAILED TO BE ASSESSED U NDER THE SPECIFIC HEAD. IT WAS SUBMITTED THAT THE HON'BLE AP EX COURT IN THE CASE OF CIT VS. HARPRASAD & CO. PVT. LTD. REPORTED IN 99 ITR 118 (SC) AT PAGE 125 HAS HELD THAT BEFORE AN INCOME CAN BE ASSESSED, THE SAID INCOME MUST BE CHARGEABLE TO TAX UNDER A SPECIFIC HEAD OF INCOME. IT WAS SUBMITTED THAT THE AFORESAID RECEIPT COULD NOT HAVE BEEN HELD TO BE ASSESSABLE I N THE HANDS OF THE ASSESSEE BY ANY STRETCH OF IMAGINATION. IT WAS ARGUED THAT IT IS AN UNDISPUTED FACT THAT NO CONVEYANCE DEED IN RE SPECT OF ANY LAND WAS EXECUTED IN FAVOUR OF THE ASSESSEE SOCIETY AND, THEREFORE, THERE COULD HAVE BEEN NO JUSTIFICATION W HATSOEVER EVEN ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 16 TO CONSIDER THE SAID SUM TAXABLE IN THE HANDS OF TH E ASSESSEE AS WELL AS INTEREST IN RESPECT THEREOF. IT WAS SUBMITT ED BY THE LD. AR THAT THE MERE APPLICATION OF RECEIPT DOES NOT ATTAI N THE CHARACTER OF A RECEIPT AS INCOME. THUS, WHAT COULD HAVE BEEN TAXED BY THE AUTHORITIES, IF AT ALL, WERE TO TAX 373 FLAT OWNERS AND NOT THE ASSESSEE. 3.11 WITHOUT PREJUDICE TO THE AFORESAID ARGUMEN TS, IT WAS FURTHER SUBMITTED BY THE LD. AR THAT IN THE INS TANT CASE, IT IS AN ADMITTED FACT BOTH BY THE AO AND THE LD. CIT (A ) THAT THE COST OF ACQUISITION IS NIL IN THE HANDS OF THE ASSESSEE AND AS SUCH THE COMPUTATION PROVISION FAILS AND ONCE THE COMPUTATIO N PROVISION FAILS FOR COMPUTING THE CAPITAL GAINS UND ER THE INCOME-TAX ACT, THERE CANNOT BE ANY LEVY OF CAPITAL GAINS TAX IN THE HANDS OF THE ASSESSEE AS HAS BEEN HELD BY THE H ON'BLE APEX COURT IN THE CASE OF CIT V. B.C. SRINIVASA SETTY 12 8 ITR 294 (SC). 4.0 WITH RESPECT TO GROUND NOS. 4 AND 5 (III) PERTAINING TO ADDITION OF RS. 45,78,771/- (INTEREST ON ENHANCED COMPENSATION) , THE LD. AR SUBMITTED THAT THE ADDIT ION WAS MADE OF RS. 45,78,771/- BEING 50% OF THE INTEREST O N ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 17 COMPENSATION AND ENHANCED COMPENSATION TOTALING TO RS. 91,57,542/-. IT WAS SUBMITTED THAT THE ASSESSEE, IN VIEW OF THE ORDER OF THE LD. ADDITIONAL DISTRICT JUDGE, GURGAON , DATED 31.08.2012, HAD RECEIVED COMPENSATION AND ENHANCED COMPENSATION ALONG WITH INTEREST THEREON. IT WAS AG AIN SUBMITTED THAT THE LAND IN RESPECT OF WHICH COMPENS ATION WAS RECEIVED WAS NOT OWNED BY THE ASSESSEE AND HENCE TH E COMPENSATION AND ENHANCED COMPENSATION IN RESPECT O F ACQUISITION OF LAND IS NOT TAXABLE IN THE HANDS OF THE ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSEE, ALONG WITH COMPENS ATION AND ENHANCED COMPENSATION, HAD ALSO RECEIVED INTEREST T HEREON TO THE TUNE OF RS. 91,57,542/- WHICH WAS SHOWN UNDER T HE HEAD 'OTHER INCOME' IN THE PROFIT AND LOSS ACCOUNT AS IS EVIDENT FROM SCHEDULE 9 OF THE PROFIT AND LOSS ACCOUNT. IT WAS S UBMITTED THAT SINCE THE INTEREST HAS BEEN RECEIVED ON THE COMPENS ATION AND ENHANCED COMPENSATION IN RESPECT OF THE ACQUISITION OF THE LAND AS SUCH, THE INTEREST RECEIVED BY THE ASSESSEE WOUL D BE PART OF THE COMPENSATION IN VIEW OF THE JUDGMENT OF THE HON 'BLE APEX COURT IN CIT V. GHANSHYAM (HUF) REPORTED IN [2009] 315 ITR 1 (SC), AND SINCE THE COMPENSATION RECEIVED BY THE AS SESSEE IS A CAPITAL RECEIPT, AS SUCH, INTEREST RECEIVED THEREON IS ALSO A CAPITAL ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 18 RECEIPT AND HENCE NOT TAXABLE. 5.0 WITH RESPECT TO GROUND NO 5 (I) PERTAINING TO ADDITION OF RS. 18,09,368/- RELATING TO BANK INTEREST, IT WA S SUBMITTED BY THE LD. AR THAT IN PARA 3 OF THE ORDER OF ASSESSMEN T, THE ASSESSING OFFICER HAS CONSIDERED THE RECEIPT OF INT EREST OF RS. 18,09,368/- IN RESPECT OF THE DEPOSITS MADE BY THE ASSESSEE AND HAS HELD THAT SINCE THE INTEREST HAS BEEN RECEIVED FROM BANKS WHICH ARE NOT THE MEMBERS OF THE ASSESSEE SOCIETY, HENCE IN ACCORDANCE WITH THE DECISION OF THE HONBLE APEX CO URT IN THE CASE OF BANGALORE CLUB VS. CIT REPORTED IN 350 ITR 509, SUCH AN AMOUNT RECEIVED BY THE ASSESSEE FROM BANKS ON THE S URPLUS DEPOSITED BY THE ASSESSEE IS TAXABLE IN THE HANDS O F THE ASSESSEE SOCIETY AS INCOME FROM OTHER SOURCES. IT WAS SUBMIT TED THAT THE ASSESSEE IS RECEIVING INTEREST ON THE BANK DEPOSITS SINCE THE AY 2002-03, AND IN AY 2002-03, THE AO HAD MADE ADDITIO N IN RESPECT THEREOF. HOWEVER, SUCH ADDITION WAS DELETED BY THE TRIBUNAL BY HOLDING THAT ITS INCOME IS NOT CHARGEAB LE TO TAX ON THE BASIS OF PRINCIPLE OF MUTUALITY. IT WAS FURTHER SUBMITTED THAT SIMILARLY FOR THE AY 2003-04, AN ADDITION HAD BEEN MADE BY THE AO WHICH ALSO WAS DELETED BY THE TRIBUNAL. OUR ATTE NTION WAS ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 19 DRAWN TO THE RELEVANT ORDERS OF THE TRIBUNAL AND IT WAS FURTHER SUBMITTED THAT, THEREAFTER, FROM AY 2004-05 TILL AY 2012-13, SUCH INTEREST INCOME HAS BEEN ACCEPTED TO BE NOT TA XABLE ON ACCOUNT OF PRINCIPLE OF MUTUALITY. HOWEVER, IT IS O NLY FOR THIS YEAR THAT THE REVENUE HAS PROCEEDED TO TREAT THE RECEIPT OF INTEREST AS NOT COVERED BY THE PRINCIPLE OF MUTUALITY. A CHART SHOWING THE RECEIPT FROM INTEREST SINCE AY 2002-03 AND TREATMEN T BY THE REVENUE IN RESPECT THEREOF WAS ALSO SUBMITTED BY TH E LD. AR AND IT WAS SUBMITTED THAT THE AFORESAID ACTION OF THE A O IS CONTRARY TO THE PRINCIPLE OF CONSISTENCY. THE LD. AR PLACED RELIANCE UPON THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. EXCEL INDUSTRIES LTD [2013] 358 ITR 295 (SC) WHEREIN IT HAS BEEN HELD THAT REVENUE CANNOT BE ALLOWED TO FLIP-FLOP ON THE ISSUE AND HAVING ACCEPT ED THE ORDER OF THE TRIBUNAL IN PRECEDING YEARS, REVENUE CANNOT BE ALLOWED TO TAKE A CONTRARY VIEW IN SUBSEQUENT ASSESSMENT YEARS . FURTHER, RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF THE CON STITUTION BENCH OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. J.K. CHARITABLE TRUST REPORTED IN 308 ITR 161(SC), WHEREIN IT HAS BEEN HELD THAT IF THE FACTS FOR THE YEAR UNDER ASSE SSMENT ARE IDENTICAL TO THE FACTS OF THE IMMEDIATELY PRECEDING YEAR, THEN IN ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 20 SUCH A SITUATION, THE REVENUE WOULD NOT BE PERMITTE D TO DEVIATE FROM THE POSITION THAT IT HAD ACCEPTED IN THE PRECE DING ASSESSMENT YEAR. THE LD. AR ARGUED THAT IT HAS BEEN CONSISTENTLY DECIDED TIME AND AGAIN BY THE HONBLE APEX COURT AN D THE HON'BLE HIGH COURTS THAT CLAIMS ONCE ALLOWED IN ANY ASSESSMENT YEAR MUST BE ALLOWED IN SUCCEEDING ASSESSMENT YEARS BY FOLLOWING THE RULE OF CONSISTENCY UNLESS AND UNTIL THERE IS A CHANGE IN THE POSITION OF LAW OR CHANGE IN FACTS OF THE CASE. THE LD. AR ARGUED THAT THERE IS NEITHER CHANGE IN FACTS OF THE CASE NOR ANY CHANGE IN THE POSITION OF LAW AND THAT THOU GH THE DOCTRINE OF RES JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS, BUT WHERE THE REVENUE HAS TAKEN A PARTICULAR STAND ON AN ISSUE ON SIMILAR/IDENTICAL FACTS IN THE CASE OF THE ASSES SEE, FOR THE SAKE OF CONSISTENCY, THE SAME VIEW SHOULD CONTINUE TO PR EVAIL IN THE CASE OF THE ASSESSEE UNLESS THERE IS MATERIAL DIFFE RENCE IN THE FACTS. 5.1 IT WAS FURTHER SUBMITTED THAT BOTH THE AO A ND THE LD. CIT (A) HAVE FAILED TO CONSIDER THE FACTUAL SUBSTRATUM OF THE CASE. IT WAS SUBMITTED THAT THE RESIDENTIAL COM PLEX GARDEN ESTATE WAS DEVELOPED BY THE GULMOHAR ESTATES LTD ON THE LAND ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 21 PURCHASED BY SUCH COMPANY AND CONDOMINIUMS AND FLAT S CONSTRUCTED BY THE COMPANY WERE SOLD TO THE BUYERS. IN THE AFORESAID RESIDENTIAL COLONY, THE SAID COMPANY HAS ALSO CONSTRUCTED CLUB HOUSE, ROADS AND OTHER FACILITIES BUT AFTER SELLING THE FLATS AND CONDOMINIUMS, THE SAID COMPAN Y HAD STARTED DEFAULTING IN MAKING THE PAYMENTS TO HUDA O N ACCOUNT OF EXTERNAL DEVELOPMENT CHARGES WHICH LED TO THE CA NCELLATION OF THE LICENSE OF THE COMPANY IN THE YEAR 1995. IT WAS SUBMITTED THAT AFTER THE CANCELLATION OF THE LICENSE, THE RES IDENTIAL COLONY WAS VESTED IN THE DIRECTOR, TOWN & COUNTRY PLANNING , CHANDIGARH, HARYANA AND THE BUYERS OF THE RESIDENTI AL COLONY HAD STARTED FACING PROBLEMS, AND IN SUCH CIRCUMSTAN CES THE ASSESSEE SOCIETY WAS FORMED FOR THE WELFARE OF THE RESIDENTS OF THE GARDEN ESTATE. IT WAS SUBMITTED THAT HUGE AMOUNT OF RS. 5.24 CRORES WAS DUE TO THE HUDA ON ACCOUNT OF THE EXTERN AL DEVELOPMENT CHARGES AND THE ASSESSEE SOCIETY HAS TA KEN CONTRIBUTIONS FROM THE MEMBERS TO THE TUNE OF RS. 3 ,58,98,972/- WHICH WAS KEPT IN FORM OF BANK DEPOSITS WITH THE BA NK TO BE PAID TO HUDA. IT WAS SUBMITTED THAT THE AFORESAID AMOUNT WAS KEPT AS RESERVE TO DISCHARGE THE OUTSTANDING LIABILITY A ND TO SAFEGUARD THE INTEREST OF THE GARDEN ESTATE RESIDENTS. ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 22 5.2 IT WAS FURTHER SUBMITTED THAT THE AMOUNT KEP T IN BANK DEPOSITS WAS NOT SURPLUS BUT RESERVE MAINTAINE D BY THE ASSESSEE SOCIETY TO DISCHARGE THE LIABILITY TOWARDS HUDA ON ACCOUNT OF EXTERNAL DEVELOPMENT CHARGES. IT WAS SUB MITTED THAT THE INTEREST RECEIVED BY THE ASSESSEE ON THE BANK D EPOSITS IS NOT TAXABLE AND IS COVERED BY THE PRINCIPLE OF MUTUALIT Y AS THE INTEREST HAS TO BE UTILIZED FOR THE BENEFIT OF THE MEMBERS OF THE SOCIETY ONLY. 5.3 THE LD. AR SUBMITTED THAT THE SAID RECEIPT CANNOT BE HELD TO BE TAXABLE, DESPITE THE FACT IT H AS NOT BEEN RECEIVED BY IT FROM THE MEMBERS, SINCE IT WAS THE F UNDS OF THE MEMBERS OF THE SOCIETY ALONE, WHICH HAD BEEN CONTRI BUTED BY THEM DEPOSITED FOR THEIR BENEFIT. IN SUPPORT OF THE CONTENTION THAT SUCH INTEREST IS NOT TAXABLE, THE LD. AR SOUGHT TO RELY UPON THE ORDER OF THE TRIBUNAL IN THE CASE REPORTED IN 101 I TD 391 IN THE CASE OF SHIVALIKA CO-OPERATION GROUP HOUSING SOCIET IES LTD. V. ITO WHEREIN, FOLLOWING THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF DIT VS. ALL INDIA ORIENTAL BAN K OF COMMERCE WELFARE SOCIETY 184 CTR 274, IT WAS HELD THAT INTEREST INCOME EARNED BY AN ASSESSEE EVEN ON THE SURPLUS FUND OF A MUTUAL ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 23 SOCIETY DEPOSITED IN THE BANK IS COVERED BY THE PRI NCIPLE OF MUTUALITY. IT WAS FURTHER SUBMITTED THAT A SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE DELHI HIGH COURT IN THE CA SE REPORTED IN 287 ITR 22 IN THE CASE OF SARASWATI KUNJ HOUSE B UILDING SOCIETY LTD. IT WAS SUBMITTED BY THE LD. AR THAT SINCE IN THE INSTANT CASE IT CANNOT BE HELD THAT THERE IS ANY RE CEIPT WHICH IS TAINTED WITH COMMERCIALITY, THE ASSESSEE IS NOT LIA BLE TO BE ASSESSED ON THE AMOUNT RECEIVED BY IT FROM ITS MEMB ERS. 5.4 WITH RESPECT TO THE REVENUE'S RELIANCE ON TH E JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF B ANGALORE CLUB VS. CIT REPORTED IN 350 ITR 509, IT WAS SUBMIT TED WITH RESPECT THAT THE SAME IS INAPPLICABLE AS IN THE AFO RESAID CASE, THE AMOUNT ON WHICH INTEREST WAS RECEIVED WAS NOT KEPT BY THE CLUB TO DISCHARGE ANY STATUTORY OBLIGATION ON THE BEHALF OF ITS MEMBERS, WHEREAS IN THE CASE OF THE ASSESSEE, THE A MOUNT WHICH WAS KEPT WITH THE BANKS ARE IN THE NATURE OF RESERV E MAINTAINED BY THE ASSESSEE TO DISCHARGE THE STATUTORY LIABILIT Y ON BEHALF OF ITS MEMBERS TO BE PAID TO HUDA AS AND WHEN DEMANDED. HE NCE THE RATIO OF THE AFORESAID JUDGMENT IS INAPPLICABLE. ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 24 6.0 THE LD. AR SUBMITTED THAT IN GROUND NO 4, THE ASSESSEE HAS CHALLENGED THE SUSTENANCE OF THE ADDIT ION OF RS. 35,11,665/- REPRESENTING CONTRACTUAL RECEIPTS. THE AFORESAID ADDITION CONSISTED OF THE FOLLOWING SUMS: S. NO. PARTICULARS ADDITIONS (IN RS) I. ADDITION IN RESPECT OF RENTAL INCOME RECEIVED FROM NGK RETAIL PVT. LTD. AFTER ALLOWING DEDUCTION U/S 24(A) 2,00,550/ - II. INCOME RECEIVED AS CONTRACTUAL RECEIPTS 28,42,085/ - III. INCOME RECEIVED FROM ADVERTISEMENTS 4,69,030/ - TOTAL 35,11,665/ - 6.1 WITH RESPECT TO THE RENTAL INCOME RECEIVED F ROM NGK RETAIL LTD, IT WAS SUBMITTED BY THE LD. AR THAT THE ASSESSEE SOCIETY, IN ORDER TO FACILITATE ITS MEMBER S, HAS GIVEN A PORTION OF THE CLUB HOUSE TO M/S NGK RETAIL PVT. LT D FOR PROVIDING VEGETABLES AND FRUITS. THE TOTAL SUM RECE IVED ON ACCOUNT OF RENT WAS OF RS. 2,86,500/- AND AFTER ALL OWING THE DEDUCTION U/S 24(A), AN ADDITION OF RS. 2,00,550/- WAS MADE. IT WAS SUBMITTED THAT THE AO HELD THAT PRINCIPLE OF MU TUALITY IS NOT APPLICABLE IN RESPECT OF SUCH RECEIPTS AS SUCH RECEIPTS ARE ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 25 COMMERCIAL IN NATURE AND HAVE BEEN EARNED FROM NON- MEMBERS. THE LD. AR SUBMITTED THAT BEFORE THE LEARNED CIT (A ), THE ASSESSEE HAD SUBMITTED THAT THIS ISSUE IS COVERED B Y THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR THE AY 2002 -03 IN ITA NO. 1030/CHD/2007, HOWEVER HE UPHELD THE ADDITION B Y OVERLOOKING THE AFORESAID ORDER OF THE TRIBUNAL. IT WAS SUBMITTED THAT IN THE AFORESAID ORDER, THE TRIBUNAL HAD CONSI DERED THE VARIOUS RECEIPTS OF THE ASSESSEE AND HAD HELD THAT SUCH RECEIPTS ARE NOT TAXABLE ON THE PRINCIPLE OF MUTUALITY. IT W AS FURTHER SUBMITTED BY THE LD. AR THAT THE ASSESSEE WAS SHOWI NG RENTAL RECEIPTS TILL AY 2012-13 AND THAT SUCH RENTAL INCOM E HAS BEEN ACCEPTED TO BE NOT TAXABLE ON ACCOUNT OF MUTUALITY. HOWEVER, IT IS ONLY FOR THIS YEAR THAT THE REVENUE HAS PROCEEDE D TO TREAT THE RENTAL RECEIPT AS NOT COVERED BY THE PRINCIPLE OF M UTUALITY. A CHART SHOWING THE RECEIPT FROM RENT SINCE AY 2002-0 3 AND TREATMENT BY THE REVENUE IN RESPECT THEREOF WAS ALS O SUBMITTED BY THE LD. AR AND IT WAS SUBMITTED THAT THE AFORESA ID ACTION OF THE AO WAS CONTRARY TO THE PRINCIPLE OF CONSISTENCY . 6.2 WITH RESPECT TO THE INCOME RECEIVED FROM ADVERTISEMENTS, IT WAS SUBMITTED THAT THE ASSESSEE HAS BEEN ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 26 SHOWING RECEIPTS FROM ADVERTISEMENT SINCE AY 2004-0 5 AND SUCH RECEIPTS HAVE BEEN ACCEPTED TO BE NOT TAXABLE ON ACCOUNT OF THE PRINCIPLE OF MUTUALITY TILL AY 2012-13. A CH ART SHOWING THE RECEIPTS FROM ADVERTISEMENT SINCE AY 2004-05 AN D TREATMENT BY THE REVENUE IN RESPECT THEREOF WAS SUBMITTED BY THE LD. AR AND IT WAS SUBMITTED THAT THE AFORESAID ACTION OF T HE AO WAS CONTRARY TO THE PRINCIPLE OF CONSISTENCY. IT WAS AL SO SUBMITTED THAT THE AFORESAID RECEIPTS ON ACCOUNT OF ADVERTISE MENT HAVE BEEN RECEIVED FROM THE MEMBERS WHO WANTED TO ADVERT ISE IN THE SOCIETY ABOUT THEIR COMMERCIAL ACTIVITIES AND THAT SUCH SUM WAS RECEIVED BY THE ASSESSEE FROM THE ADVERTISEMENT/S B Y MEANS OF DISPLAY BOARDS, BANNERS ETC AND THE FUNDS SO COLLEC TED BY THE ASSESSEE SOCIETY HAVE BEEN UTILIZED BY THE ASSESSEE FOR THE WELFARE OF ITS MEMBERS. IT WAS ALSO SUBMITTED THAT SINCE THE SAID SUM HAS ALREADY BEEN INCLUDED IN THE RECEIPTS OF TH E SOCIETY, AS SUCH A SEPARATE ADDITION MADE IN RESPECT THEREOF IS WHOLLY UNWARRANTED IN LAW. 6.3 WITH RESPECT TO INCOME RECEIVED AS CONTRACTU AL RECEIPTS, THE LD. AR SUBMITTED THAT THE AO HAS ALSO MADE AN ADDITION OF RS. 28,42,085/- BEING CONTRACTUAL RECEI PT ON THE ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 27 GROUND THAT SUCH RECEIPT IS NOT COVERED ON THE PRIN CIPLE OF MUTUALITY. IT WAS FURTHER SUBMITTED THAT OUT OF THE AFORESAID SUM OF RS. 28,42,085/- A SUM OF RS. 24,86,675/- WAS RECEIVED BY THE ASSESSEE FROM ITS MEMBERS AS MAINTENANCE CHA RGES AND WAS ALREADY SHOWN AS RECEIPT AND THE REMAINING SUM OF RS. 3,55,410/- WAS PART OF ADVERTISEMENT RECEIPT OF RS. 4,60,030/-. IT WAS SUBMITTED THAT THE AFORESAID SUM OF RS. 28,4 2,085/- WAS TAKEN BY THE AO FROM FORM 26AS WHEREIN SUCH SUM WAS SHOWN AS CONTRACTUAL RECEIPT WHEREAS THE FACT OF THE MATT ER IS THAT OUT OF THE AFORESAID SUM, A SUM OF RS. 24,86,675/- WAS RECEIVED BY THE ASSESSEE AS MAINTENANCE CHARGES FROM ITS MEMBER S WHO WERE CORPORATE BODIES AND HAD DEDUCTED TAX THEREON. IT WAS SUBMITTED THAT THE TOTAL MAINTENANCE CHARGES COLLEC TED BY THE ASSESSEE FROM ITS MEMBERS DURING THE YEAR WAS RS. 1,88,05,756/- AND OUT OF THE AFORESAID SUM, ON RS. 24,86,675/- TDS WAS DEDUCTED. IT WAS SUBMITTED THAT SINCE THE S UM OF RS. 24,86,675/- WAS THE ANNUAL MAINTENANCE CHARGES RECE IVED FROM ITS MEMBERS AND SAME WAS ALREADY INCLUDED IN ITS IN COME AND EXPENDITURE ACCOUNT, AS SUCH, THE SAME IS NOT TAXAB LE. ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 28 6.4 THE LD. AR SUBMITTED THAT THE REMAINING SUM OF RS. 3,55,410/- IS PART OF ADVERTISEMENT RECEIPT ON WHICH ALSO TDS WAS DEDUCTED AND IN FORM 26AS IT WAS SHOWN AS CONTRACTUAL RECEIPT. IT WAS SUBMITTED THAT SINCE TH E ADVERTISEMENT RECEIPT IS NOT TAXABLE ON THE PRINCIP LE OF MUTUALITY, AS SUCH, ADDITION MADE BY THE AO IS WHOL LY UNSUSTAINABLE IN LAW. 7.0 THE LD. AR ALSO ARGUED THAT THE AO/ LD. CIT (A) HAVE GROSSLY ERRED IN HOLDING THAT THE EXCE SS OF THE EXPENDITURE OVER THE INCOME HAS TO SET OFF FROM THE CORPUS FUNDS ACCUMULATED YEAR TO YEAR BY THE ASSESSEE. IT WAS SU BMITTED THAT SINCE THE AFORESAID RECEIPTS OF THE ASSESSEE WERE N OT TAXABLE, AS SUCH, THE ASSESSING OFFICER WAS NOT CORRECT IN LAW TO RE-COMPUTE THE INCOME OF THE ASSESSEE AT (-) RS. 1,05,49,082/- AS NEITHER THE INTEREST, NOR THE ALLEGED CONTRACTUAL RECEIPT NOR T HE INTEREST ON THE COMPENSATION IS TAXABLE. 8.0 RESPONDING TO THE ARGUMENTS RAISED BY THE LD. AR, THE LD. SR. DR SUBMITTED THAT AS FAR AS THE INTERES T EARNED FROM DEPOSITS IN THE BANK IS CONCERNED, THE SAME IS NOT COVERED BY THE MUTUALITY PRINCIPLE AS HAS BEEN HELD BY THE HON 'BLE APEX ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 29 COURT IN THE CASE OF BANGALORE CLUB VS. CIT REPOR TED IN (2013) 350 ITR 509. IT WAS SUBMITTED THAT IN THE INSTANT C ASE THE ASSESSEE ASSOCIATION HAD NOT OFFERED THE INCOME EAR NED FROM INTEREST ON DEPOSITS WITH NON-MEMBER BANKS AND HAD UTILISED THE SAID INTEREST FOR THE DAY TO DAY WORKING WITHOU T OFFERING THE SAME TO TAX. IT WAS SUBMITTED THAT THE INTEREST EAR NED CAN BE USED FOR THE DAY TO DAY ACTIVITIES BUT ONLY AFTER P AYING THE TAX DUE ON THE SAID INCOME. 8.1 WITH REFERENCE TO THE ENHANCED COMPENSATION RECEIVED DURING THE YEAR AND SHOWN UNDER CAPITAL RE SERVE BY THE ASSESSEE, THE LD. SR. DR SUBMITTED THAT THE LAND IN QUESTION WAS A CAPITAL ASSET. IT WAS SUBMITTED THAT EVEN FROM TH E COPY OF ORDER OF THE LD. ADDL. DISTT. JUDGE, GURGAON IT IS EVIDENT THAT THE LAND WAS RESIDENTIAL AND JOINTLY SHARED BY THE 373 APARTMENTS OWNERS. IT WAS SUBMITTED THAT, THEREFORE, THE COMPE NSATION RECEIVED WAS ON ACCOUNT OF ACQUISITION OF A CAPITAL ASSET WHICH WAS A PIECE OF LAND SITUATED IN THE HEART OF COMMER CIAL AND RESIDENTIAL HUB OF GURGAON CITY NEAR TO MG ROAD AND , THEREFORE, THE COMPENSATION RECEIVED WAS LIABLE TO BE TAXED. I T WAS ALSO SUBMITTED THAT IN THE CASE OF CAPITAL GAIN EARNED, THE CONCEPT OF MUTUALITY IS NOT ATTRACTED AS THE CAPITAL GAIN IS N OT PART OF THE ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 30 NORMAL COURSE OF ACTIVITIES DONE BY THE ASSOCIATION AND IS ALSO NOT EARNED FROM ITS MEMBERS. 8.2 LIKEWISE, FOR THE ISSUE RELATING TO INTEREST ON ENHANCED COMPENSATION, THE LD SR. DR SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 145A (B) OF THE ACT, ANY INTEREST RECEIVED BY THE ASSESSEE ON COMPENSATION OR ENHANCE D COMPENSATION IS DEEMED TO BE THE INCOME OF THE YEAR IN WHICH IT WAS RECEIVED. IT WAS FURTHER SUBMITTED THAT, FURTHE R, AS PER THE PROVISIONS OF SECTION 56(2)(VIII), INCOME BY WAY OF INTEREST RECEIVED ON COMPENSATION IS TO BE TAXABLE UNDER THE HEAD OF INCOME FROM OTHER SOURCES AND THE PRINCIPLE OF MUTU ALITY IS AGAIN NOT ATTRACTED. 8.3 WITH RESPECT TO OTHER ADDITIONS PERTAINING T O ADDITION ON ACCOUNT OF ADVERTISEMENT, RENT AND CONT RACTUAL RECEIPTS, THE LD. SR. DR SUBMITTED THAT ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT IT WAS SEEN THAT THE ASSESSEE ASSO CIATION HAS DERIVED INCOME FROM ADVERTISEMENT AMOUNTING TO RS. 4,69,030/- AND ON FURTHER PERUSAL OF FORM 26AS, IT WAS NOTICED THAT THE ASSESSEE HAD DERIVED INCOME FROM RENT AND CONTRACTU AL RECEIPTS AMOUNTING TO RS. 31,28,585/- FROM VARIOUS COMPANIES WHICH WERE NOT THE MEMBERS OF THE ASSOCIATION. THE LD. SR . DR ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 31 SUBMITTED THAT THESE RECEIPTS WERE PURELY OF COMMER CIAL NATURE AND WERE DERIVED BY THE ASSESSEE FROM PROFIT EARNIN G ACTIVITIES AND EARNED FROM NON-MEMBERS AND, THEREFORE, THE SAM E WERE NOT EXEMPT UNDER THE PRINCIPLE OF MUTUALITY. THE LD . SR. DR ALSO PLACED RELIANCE ON THE FINDINGS OF THE LD. CIT (A) ON THESE ISSUES AND SUBMITTED THAT THE FINDINGS OF THE LD. C IT (A) HAD BEEN ARRIVED AT AFTER DUE CONSIDERATION OF THE ARGU MENTS OF THE ASSESSEE BEFORE HIM. THE LD. SR. DR PRAYED THAT THE ORDER OF THE LD. CIT (A) BE UPHELD. 9.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. GROUND NO. 1 I S GENERAL IN NATURE AND REQUIRES NO SPECIFIC ADJUDICATION. 9.1 AS FAR AS GROUND NO. 2 IS CONCERNED, IT CHALLENGES THE ACTION OF THE LD. CIT (A) IN CONFIRM ING THE ADDITION OF RS. 1,67,15,029/- UNDER THE HEAD CAPIT AL GAINS. AS PER THE RECORDS, THIS AMOUNT REPRESENTS AMOUNT OF COMPENSATION GRANTED BY THE LAND ACQUISITION COLLEC TOR (LAC) UNDER THE AWARD DATED 11.9.2007 AND ADDITIONAL COM PENSATION GRANTED BY AN ORDER OF LD. ADDITIONAL DISTT. JUDGE DATED 31.8.2008. BOTH THESE AWARDS PERTAIN TO THE LAND SI TUATED IN THE AREA DEVELOPED BY M/S. GULMOHAR ESTATE INDIA PVT. L TD. ON ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 32 WHICH FLATS WERE DEVELOPED AND HAD BEEN ACQUIRED BY THE VARIOUS FLAT OWNERS WHICH WERE 373 IN NUMBER. THIS AMOUNT OF RS. 1,67,15,029/- WAS RECEIVED DURING THE YEAR UNDE R CONSIDERATION. IT IS THE ASSESSEES CONTENTION THAT AS FAR AS THE ASSESSEE SOCIETY IS CONCERNED, IT IS NOT THE OWNER OF THE LAND BUT ONLY AN ASSOCIATION WHEREAS THE ALLOTTEES WERE THE REAL OWNERS. IT HAS BEEN SUBMITTED THAT THE ASSESSEE SOCIETY HAS RE CEIVED THE AMOUNT ONLY AS A REPRESENTATIVE OF THE FLAT OWNERS AND THAT THIS AMOUNT WAS TO BE UTILISED ONLY FOR THE PURPOSE OF M AKING PAYMENTS TO THE STATE OF HARYANA TOWARDS EXTERNAL D EVELOPMENT CHARGES AND ALSO FOR THE BETTERMENT OF THE SOCIETY SINCE THE FLAT OWNERS WERE THE OWNERS OF THE LAND. THE LD. AR HAS ALSO PLACED RELIANCE ON THE PROVISIONS OF HARYANA APARTMENT OWN ERSHIP ACT, 1983 AND HAS SUBMITTED THAT IN THIS ACT IT HAS BEEN DEFINED THAT THE LAND BENEATH THE STRUCTURE AND ADJACENT LAND WO ULD BELONG TO THE FLAT OWNERS IN THE PROPORTION TO THE AREA OW NED AND HELD BY THEM. IT IS UNDISPUTED THAT THE ASSESSEE IS A RE GISTERED ASSOCIATION COMPRISING OF THE RESIDENTS OF THE RESI DENTIAL COLONY CALLED GARDEN ESTATE SITUATED IN GURGAON. AS PER TH E RECORDS, THE LAND IS CLAIMED TO BE OWNED BY M/S. GULMOHAR ES TATES LTD. A PERUSAL OF THE ORDER OF THE ENHANCEMENT DATED 31. 8.2008 ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 33 PASSED BY THE LD. ADDL. DISTT. JUDGE ALSO RECORDS T HAT THE LAND CONTINUES TO BE RESIDENTIAL AND IS JOINTLY SHARED B Y THE 373 APARTMENT OWNERS. IT IS CLAIMED BY THE ASSESSEE THA T THE AMOUNT RECEIVED IN COMPENSATION IS THE AMOUNT WHICH HAS BE EN RECEIVED IS TO BE PAID TO THE STATE OF HARYANA SINCE THEY WE RE CLAIMING EXTERNAL DEVELOPMENT CHARGES FROM THE OWNER OF THE LAND I.E. M/S. GULMOHAR ESTATES LTD AND THAT, THUS, FOR ALL P RACTICAL PURPOSES, THE ASSESSEE ASSOCIATION HAS RECEIVED THE AMOUNT ON BEHALF OF THE RESIDENTS OF THE GARDEN ESTATES AND I T CANNOT BE INFERRED THAT THIS IS IN THE NATURE OF CAPITAL GAIN S TAXABLE IN THE HANDS OF THE ASSESSEE SOCIETY. HOWEVER, THIS ASPECT HAS NOT BEEN EXAMINED IN THE PROPER PERSPECTIVE BY THE LOWER AUT HORITIES. THERE IS NO FINDING OF FACT RECORDED IN THIS REGARD . IT IS ALSO THE CLAIM OF THE ASSESSEE THAT THE COMPENSATION CAME TO BE RECEIVED BY THE ASSESSEE ONLY IN PLACE OF M/S. GULMOHAR ESTA TES LTD., (WHICH HAD PURCHASED THE LAND AND HAD LEASED THE SA ME OUT TO ONE SHRI DINESH KUMAR AND THE PLOT HOLDERS OF THE A SSESSEE ASSOCIATION). HOWEVER, SINCE THE LEASE WAS CANCELLE D, THE LD. ADDL. DISTRICT JUDGE HELD THAT THE ASSESSEE ASSOCIA TION WAS ENTITLED TO THE SAID COMPENSATION. THIS ASPECT OF T HE ASSESSEE'S CLAIM NEEDS TO BE VERIFIED. THEREFORE, GIVEN THE L ACK OF CLEAR ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 34 FINDING BY THE LOWER AUTHORITIES ON THE ASPECT OF T HE ASSESSEE'S RIGHT OVER THE COMPENSATION, THE VERACITY OF ASSESS EE'S CLAIM REGARDING PAYMENT TO BE MADE TO HUDA AND THE ACTUAL OWNERSHIP OF THE LAND IN QUESTION, WE DEEM IT FIT T O RESTORE THIS ISSUE TO THE FILE OF THE AO FOR THE PURPOSE OF DECI DING THIS ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER DULY EXAMINING AND RECORDING A FINDING WITH RESPECT TO THE ACTUAL OWNE RSHIP OF THE LAND, THE ASSESSEE'S CLAIM OF OVER-RIDING TITLE AND THE ACTUAL RIGHT OVER THE SAID COMPENSATION. THE AO WILL GIVE REASON ABLE OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE BEF ORE PROCEEDING WITH THE ADJUDICATION. 9.2 GROUND NOS. 4 AND 5 (III) CHALLENGE THE ACTI ON OF THE LD. CIT (A) IN BRINGING TO TAX AN AMOUNT OF RS. 45,78,771/- BEING INTEREST ON ENHANCED COMPENSATION AS INCOME O F THE ASSESSEE. FOR REASONS AS MENTIONED IN PARA 9.1 ABOV E, WE RESTORE THIS ISSUE ALSO TO THE FILE OF THE AO FOR F RESH ADJUDICATION IN ACCORDANCE WITH LAW AFTER GIVING PROPER OPPORTUN ITY TO THE ASSESSEE. 9.3.0 IN GROUND NO. 5(I), THE ASSESSEE HAS CHALLE NGED THE CONFIRMATION OF ADDITION OF RS. 18,09,368/- BEI NG INTEREST FROM BANK. THIS ADDITION HAS BEEN MADE ON THE GROUN D THAT ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 35 INTEREST HAS BEEN RECEIVED FROM BANKS WHICH ARE NOT MEMBERS OF THE ASSESSEE SOCIETY AND, THEREFORE, IN ACCORDANCE WITH THE JUDGMENT OF THE HONBLE APEX COURT IN BANGALORE CLU B VS. CIT (SUPRA) THIS AMOUNT WAS TAXABLE IN THE HANDS OF THE ASSESSEE ASSOCIATION AS INCOME FROM OTHER SOURCES. IT IS SE EN THAT THE ASSESSEE HAS BEEN RECEIVING INTEREST ON THE BANK DE POSITS SINCE ASSESSMENT YEAR 2002-03 AND THE AO HAD MADE A SIMIL AR ADDITION IN THAT YEAR WHICH WAS HOWEVER DELETED BY THE ITAT BY HOLDING THAT THIS AMOUNT WAS NOT CHARGEABLE TO TAX ON THE BASIS OF PRINCIPLE OF MUTUALITY. SIMILARLY, IN ASSESSMENT YEAR 2003-04, A SIMILAR ADDITION WAS DELETED BY THE ITAT. THEREAF TER, FROM ASSESSMENT YEARS 2004-05 TILL 2012-13, THIS INTERES T INCOME WAS ACCEPTED AS NOT TAXABLE ON ACCOUNT OF PRINCIPLE OF MUTUALITY. HOWEVER, THE HONBLE APEX COURT IN THE CASE OF BANG ALORE CLUB VS. CIT REPORTED IN (2013) 5 SCC 209, VIDE JUDGMENT DATED 15/01/2013 HAS HELD THAT INTEREST ON AMOUNTS DEPOS ITED WITH BANKS IS NOT COVERED BY THE PRINCIPLE OF MUTUALITY. THE RELEVANT OBSERVATIONS OF THE HONBLE APEX COURT ARE CONTAINE D IN PARA 25 TO 33 AND THE SAME ARE BEING REPRODUCED HERE IN UND ER FOR A READY REFERENCE: ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 36 25. THIS BRINGS US TO THE FACTS OF THE PRESENT CAS E. AS AFORESAID, THE ASSESSEE IS AN AOP. THE CONCERNED BANKS ARE ALL CORPORATE MEMBERS OF THE CLUB. THE INTEREST EARNED FROM FIXED DEPOSITS KEPT WITH NON- MEMBER BANKS WAS OFFERED FOR TAXATION AND THE TAX DUE WAS PAID. THEREFORE, WE ARE REQUIRED TO EXAMINE THE CASE OF THE ASSESSEE, IN RELATION TO THE INTEREST EARNED ON FIX ED DEPOSITS WITH THE MEMBER BANKS, ON THE TOUCHSTONE OF THE THREE CU MULATIVE CONDITIONS, ENUMERATED ABOVE. 26. FIRSTLY, THE ARRANGEMENT LACKS A COMPLETE IDENT ITY BETWEEN THE CONTRIBUTORS AND PARTICIPATORS. TILL THE STAGE OF G ENERATION OF SURPLUS FUNDS, THE SETUP RESEMBLED THAT OF A MUTUAL ITY; THE FLOW OF MONEY, TO AND FRO, WAS MAINTAINED WITHIN THE CLOSED CIRCUIT FORMED BY THE BANKS AND THE CLUB, AND TO THAT EXTENT, NOBO DY WHO WAS NOT PRIVY TO THIS MUTUALITY, BENEFITED FROM THE ARR ANGEMENT. HOWEVER, AS SOON AS THESE FUNDS WERE PLACED IN FIXE D DEPOSITS WITH BANKS, THE CLOSED FLOW OF FUNDS BETWEEN THE BA NKS AND THE CLUB SUFFERED FROM DEFLECTIONS DUE TO EXPOSURE TO C OMMERCIAL BANKING OPERATIONS. DURING THE COURSE OF THEIR BANK ING BUSINESS, THE MEMBER BANKS USED SUCH DEPOSITS TO ADVANCE LOAN S TO THEIR CLIENTS. HENCE, IN THE PRESENT CASE, WITH THE FUNDS OF THE MUTUALITY, MEMBER BANKS ENGAGED IN COMMERCIAL OPERATIONS WITH THIRD PARTIES OUTSIDE OF THE MUTUALITY, RUPTURING THE PR IVITY OF MUTUALITY, AND CONSEQUENTLY, VIOLATING THE ONE TO ONE IDENTITY BETWEEN THE CONTRIBUTORS AND PARTICIPATORS AS MANDATED BY THE F IRST CONDITION. THUS, IN THE CASE BEFORE US THE FIRST CONDITION FOR A CLAIM OF MUTUALITY IS NOT SATISFIED. 27. AS AFORESAID, THE SECOND CONDITION DEMANDS THAT TO CLAIM AN EXEMPTION FROM TAX ON THE PRINCIPLE OF MUTUALITY, T REATMENT OF THE EXCESS FUNDS MUST BE IN FURTHERANCE OF THE OBJECT O F THE CLUB, WHICH IS NOT THE CASE HERE. IN THE INSTANT CASE, THE SURP LUS FUNDS WERE NOT USED FOR ANY SPECIFIC SERVICE, INFRASTRUCTURE, MAINTENANCE OR FOR ANY OTHER DIRECT BENEFIT FOR THE MEMBER OF THE CLUB . THESE WERE TAKEN OUT OF MUTUALITY WHEN THE MEMBER BANKS PLACED THE SAME AT THE DISPOSAL OF THIRD PARTIES, THUS, INITIATING AN INDEPENDENT CONTRACT BETWEEN THE BANK AND THE CLIENTS OF THE BA NK, A THIRD PARTY, NOT PRIVY TO THE MUTUALITY. THIS CONTRACT LA CKED THE DEGREE OF PROXIMITY BETWEEN THE CLUB AND ITS MEMBER, WHICH MA Y IN A DISTANT AND INDIRECT WAY BENEFIT THE CLUB, NONETHEL ESS, IT CANNOT BE CATEGORIZED AS AN ACTIVITY OF THE CLUB IN PURSUIT O F ITS OBJECTIVES. IT ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 37 NEEDS LITTLE EMPHASIS THAT THE SECOND CONDITION POS TULATES A DIRECT STEP WITH DIRECT BENEFITS TO THE FUNCTIONING OF THE CLUB. FOR THE SAKE OF ARGUMENT, ONE MAY DRAW REMOTE CONNECTIONS WITH T HE MOST BRAZEN COMMERCIAL ACTIVITIES TO A CLUBS FUNCTIONIN G. HOWEVER, SUCH IS NOT THE DESIGN OF THE SECOND CONDITION. THEREFOR E, IT STANDS VIOLATED. 28. THE FACTS AT HAND ALSO FAIL TO SATISFY THE THIR D CONDITION OF THE MUTUALITY PRINCIPLE I.E. THE IMPOSSIBILITY THAT CON TRIBUTORS SHOULD DERIVE PROFITS FROM CONTRIBUTIONS MADE BY THEMSELVE S TO A FUND WHICH COULD ONLY BE EXPENDED OR RETURNED TO THEMSEL VES. THIS PRINCIPLE REQUIRES THAT THE FUNDS MUST BE RETURNED TO THE CONTRIBUTORS AS WELL AS EXPENDED SOLELY ON THE CONT RIBUTORS. TRUE, THAT IN THE PRESENT CASE, THE FUNDS DO RETURN TO TH E CLUB. HOWEVER, BEFORE THAT, THEY ARE EXPENDED ON NON- MEMBERS I.E. THE CLIENTS OF THE BANK. BANKS GENERATE REVENUE BY PAYING A LOWER RATE OF INTEREST TO CLUB-ASSESSEE, THAT MAKES DEPOSITS WITH THEM, AND THEN LOAN OUT THE DEPOSITED AMOUNTS AT A HIGHER RATE OF INTEREST TO THIRD PARTIES. THIS LOANING OUT OF FUNDS OF THE CLUB BY B ANKS TO OUTSIDERS FOR COMMERCIAL REASONS, IN OUR OPINION, SNAPS THE L INK OF MUTUALITY AND THUS, BREACHES THE THIRD CONDITION. 29. THERE IS NOTHING ON RECORD WHICH SHOWS THAT THE BANKS MADE SEPARATE AND SPECIAL PROVISIONS FOR THE FUNDS THAT CAME FROM THE CLUB, OR THAT THEY DID NOT LOAN THEM OUT. THEREFORE , CLEARLY, THE CLUB DID NOT GIVE, OR GET, THE TREATMENT A CLUB GETS FRO M ITS MEMBERS; THE INTERACTION BETWEEN THEM CLEARLY REFLECTED ONE BETW EEN A BANK AND ITS CLIENT. THIS DIRECTLY CONTRAVENES THE THIRD CON DITION AS ELUCIDATED IN STYLES AND KUMBAKONAM MUTUAL BENEFIT FUND LTD. CASES (SUPRA). ROWLATT J., IN OUR OPINION, CORRECTL Y POINTS OUT THAT IF PROFITS ARE DISTRIBUTED TO SHAREHOLDERS AS SHAREHOL DERS, THE PRINCIPLE OF MUTUALITY IS NOT SATISFIED. IN THOMAS VS. RICHARD EVANS & CO. (SUPRA), AT PP. 822-823, HE OBSERVED TH US: 'BUT A COMPANY CAN MAKE A PROFIT OUT OF ITS MEMBERS AS CUSTOMERS, ALTHOUGH ITS RANGE OF CUSTOMERS IS LIMIT ED TO ITS SHAREHOLDERS. IF A RAILWAY COMPANY MAKES A PROFIT B Y CARRYING ITS SHAREHOLDERS, OR IF A TRADING COMPANY, BY TRADING WITH THE SHAREHOLDERS - EVEN IF IT LIMITED TO TRADI NG WITH THEM - MAKES A PROFIT, THAT PROFIT BELONGS TO THE SHAREH OLDERS, IN A SENSE, BUT IT BELONGS TO THEM QUA SHAREHOLDERS. IT DOES NOT ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 38 COME BACK TO THEM AS PURCHASERS OR CUSTOMERS. IT CO MES BACK TO THEM AS SHAREHOLDERS, UPON THEIR SHARES. WHERE A LL THAT A COMPANY DOES IS TO COLLECT MONEY FROM A CERTAIN NUM BER OF PEOPLE - IT DOES NOT MATTER WHETHER THEY ARE CALLED MEMBERS OF THE COMPANY, OR PARTICIPATING POLICY HOLDERS - A ND APPLY IT FOR THE BENEFIT OF THOSE SAME PEOPLE, NOT AS SHAREH OLDERS IN THE COMPANY, BUT AS THE PEOPLE WHO SUBSCRIBED IT, T HEN, AS I UNDERSTAND THE NEW YORK CASE, THERE IS NO PROFIT. I F THE PEOPLE WERE TO DO THE THING FOR THEMSELVES, THERE W OULD BE NO PROFIT, AND THE FACT THAT THEY INCORPORATE A LEGAL ENTITY TO DO IT FOR THEM MAKES NO DIFFERENCE, THERE IS STILL NO PRO FIT. THIS IS NOT BECAUSE THE ENTITY OF THE COMPANY IS TO BE DISR EGARDED, IT IS BECAUSE THERE IS NO PROFIT, THE MONEY BEING SIMP LY COLLECTED FROM THOSE PEOPLE AND HANDED BACK TO THEM, NOT IN T HE CHARACTER OF SHAREHOLDERS, BUT IN THE CHARACTER OF THOSE WHO HAVE PAID IT. THAT, AS I UNDERSTAND IT, IS THE EFFE CT OF THE DECISION IN THE NEW YORK CASE.' (EMPHASIS SUPPLIED) IN THE PRESENT CASE, THE INTERE ST ACCRUES ON THE SURPLUS DEPOSITED BY THE CLUB LIKE IN THE CASE OF ANY OTHER DEPOSIT MADE BY AN ACCOUNT HOLDER WITH THE BANK. 30. AN ALMOST SIMILAR ISSUE AROSE IN KUMBAKONAM MUT UAL BENEFIT FUND LTD. CASE (SUPRA). THE FACTS IN THAT CASE WERE THAT THE ASSESSEE, NAMELY, KUMBAKONAM MUTUAL BENEFIT FUND L TD., WAS AN INCORPORATED COMPANY LIMITED BY SHARES. SINCE 19 38, THE NOMINAL CAPITAL OF THE ASSESSEE WAS RS.33,00,000/- DIVIDED INTO SHARES OF RS.1/- EACH. IT CARRIED ON BANKING BUSINE SS RESTRICTED TO ITS SHAREHOLDERS, I.E., THE SHAREHOLDERS WERE ENTIT LED TO PARTICIPATE IN ITS VARIOUS RECURRING DEPOSIT SCHEMES OR OBTAIN LOANS ON SECURITY. RECURRING DEPOSITS WERE OBTAINED FROM MEM BERS FOR FIXED AMOUNTS TO BE CONTRIBUTED MONTHLY BY THEM FOR A FIX ED NUMBER OF MONTHS AS STIPULATED AT THE END OF WHICH A FIXED AM OUNT WAS RETURNED TO THEM ACCORDING TO PUBLISHED TABLES. THE AMOUNT SO RETURNED, COVERED THE COMPOUND INTEREST OF THE PERI OD. THESE RECURRING DEPOSITS CONSTITUTED THE MAIN SOURCE OF F UNDS OF THE ASSESSEE FOR ADVANCING LOANS. SUCH LOANS WERE RESTR ICTED ONLY TO MEMBERS WHO HAD, HOWEVER, TO OFFER SUBSTANTIAL SECU RITY THEREFOR, BY WAY OF EITHER THE PAID UP VALUE OF THEIR RECURRI NG DEPOSITS, IF ANY, OR IMMOVABLE PROPERTIES WITHIN A PARTICULAR DI STRICT. OUT OF THE INTEREST REALISED BY THE ASSESSEE ON THE LOANS WHIC H CONSTITUTED ITS MAIN INCOME, INTEREST ON THE RECURRING DEPOSITS AFO RESAID WAS PAID ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 39 AS ALSO ALL THE OTHER OUTGOINGS AND EXPENSES OF MAN AGEMENT AND THE BALANCE AMOUNT WAS DIVIDED AMONG THE MEMBERS PR O RATA ACCORDING TO THEIR SHARE-HOLDINGS AFTER MAKING PROV ISION FOR RESERVES, ETC., AS REQUIRED BY THE MEMORANDUM OR AR TICLES AFORESAID. IT WAS NOT NECESSARY FOR THE SHAREHOLDER S, WHO WERE ENTITLED TO PARTICIPATE IN THE PROFITS TO EITHER TA KE LOANS OR MAKE RECURRING DEPOSITS. 31. ON THESE FACTS, AS ALREADY NOTED, THE COURT DIS TINGUISHED STYLES CASE (SUPRA) AND OPINED THAT THE POSITION OF THE ASSESSEE WAS NO DIFFERENT FROM AN ORDINARY BANK EXCEPT THAT IT LENT MONEY AND RECEIVED DEPOSITS FROM ITS SHAREHOLDERS. THIS D ID NOT BY ITSELF MAKE ITS INCOME ANY LESS INCOME FROM BUSINESS. IN O UR OPINION, THE RATIO OF THE SAID DECISION IS ON ALL FOURS TO THE F ACTS AT HAND. THE INTEREST EARNED BY THE ASSESSEE EVEN FROM THE MEMBE R BANKS ON THE SURPLUS FUNDS DEPOSITED WITH THEM HAD THE TAINT OF COMMERCIALITY, FATAL TO THE PRINCIPLE OF MUTUALITY. 32. WE MAY ADD THAT THE ASSESSEE IS ALREADY AVAILIN G THE BENEFIT OF THE DOCTRINE OF MUTUALITY IN RESPECT OF THE SURP LUS AMOUNT RECEIVED AS CONTRIBUTIONS OR PRICE FOR SOME OF THE FACILITIES AVAILED BY ITS MEMBERS, BEFORE IT IS DEPOSITED WITH THE BAN K. THIS SURPLUS AMOUNT WAS NOT TREATED AS INCOME; SINCE IT WAS THE RESIDUE OF THE COLLECTIONS LEFT BEHIND WITH THE CLUB. A FAADE OF A CLUB CANNOT BE CONSTRUCTED OVER COMMERCIAL TRANSACTIONS TO AVOID L IABILITY TO TAX. SUCH SETUPS CANNOT BE PERMITTED TO CLAIM DOUBLE BEN EFIT OF MUTUALITY. WE FEEL THAT THE PRESENT CASE IS A CLEAR INSTANCE OF WHAT THIS COURT HAD CAUTIONED AGAINST IN BANKIPUR CLUB ( SUPRA), WHEN IT SAID: IF THE OBJECT OF THE ASSESSEE COMPANY CLAIMING T O BE A 'MUTUAL CONCERN' OR 'CLUB', IS TO CARRY ON A PARTIC ULAR BUSINESS AND MONEY IS REALISED BOTH FROM THE MEMBERS AND FRO M NON- MEMBERS, FOR THE SAME CONSIDERATION BY GIVING THE S AME OR SIMILAR FACILITIES TO ALL ALIKE IN RESPECT OF THE O NE AND THE SAME BUSINESS CARRIED ON BY IT, THE DEALINGS AS A WHOLE DISCLOSE THE SAME PROFIT EARNING MOTIVE AND ARE ALIKE TAINTE D WITH COMMERCIALITY. IN OTHER WORDS, THE ACTIVITY CARRIED ON BY THE ASSESSEE IN SUCH CASES, CLAIMING TO BE A 'MUTUAL CO NCERN' OR MEMBERS' CLUB' IS A TRADE OR AN ADVENTURE IN THE NA TURE OF TRADE AND THE TRANSACTIONS ENTERED INTO WITH THE ME MBERS OR ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 40 NON- MEMBERS ALIKE IS A TRADE/BUSINESS/TRANSACTION AND THE RESULTANT SURPLUS IS CERTAINLY PROFIT - INCOME LIAB LE TO TAX. WE SHOULD ALSO STATE, THAT 'AT WHAT POINT, DOES THE RE LATIONSHIP OF MUTUALITY END AND THAT OF TRADING BEGIN' IS A DIFFI CULT AND VEXED QUESTION. A HOST OF FACTORS MAY HAVE TO BE CO NSIDERED TO ARRIVE AT A CONCLUSION. 'WHETHER OR NOT THE PERS ONS DEALING WITH EACH OTHER, IS A 'MUTUAL CLUB' OR CARRYING ON A TRADING ACTIVITY OR AN ADVENTURE IN THE NATURE OF TRADE' IS LARGELY A QUESTION OF FACT [WILCOCK'S CASE - 9 TAX CASES 111, (132) C.A. (1925) (1) KB 30 AT 44 AND 45]. (EMPHASIS SUP PLIED) 33. IN OUR OPINION, UNLIKE THE AFORESAID SURPLUS AM OUNT ITSELF, WHICH IS EXEMPT FROM TAX UNDER THE DOCTRINE OF MUTU ALITY, THE AMOUNT OF INTEREST EARNED BY THE ASSESSEE FROM THE AFORE-NOTED FOUR BANKS WILL NOT FALL WITHIN THE AMBIT OF THE MU TUALITY PRINCIPLE AND WILL THEREFORE, BE EXIGIBLE TO INCOME-TAX IN TH E HANDS OF THE ASSESSEE-CLUB. 9.3.1 THEREFORE, IN VIEW OF THE DEFINITIVE LAW HA VING BEEN LAID DOWN BY THE HONBLE APEX COURT AS AFORESA ID ON PRINCIPLE OF MUTUALITY VIS A VIS INTEREST ON BANK D EPOSITS, WE HOLD THAT THE IMPUGNED INTEREST IS CHARGEABLE TO TAX AND IS NOT COVERED BY THE PRINCIPLE OF MUTUALITY. ACCORDINGLY, WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT (A) ON T HE ISSUE AND DISMISS GROUND NO. 5(I). 9.4.0 IN GROUND NO. 4, THE ASSESSEE HAS CHALLENGE D THE SUSTAINING OF ADDITION OF RS. 35,11,665/- REPRESENT ING CONTRACTUAL RECEIPTS WHICH COMPRISED OF ADDITION IN RESPECT OF RENTAL INCOME AMOUNTING TO RS. 2,00,500/-, INCOME F ROM ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 41 ADVERTISEMENT AMOUNTING TO RS. 4,69,030/- AND CONTR ACTUAL RECEIPTS AMOUNTING TO RS. 28,42,085/-. 9.4.1 IT IS SEEN THAT THE ISSUE OF RENTAL INCOME IS COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2002-03 WHEREIN THE ITAT HAS CONSID ERED THE VARIOUS RECEIPTS OF THE ASSESSEE AND HAS HELD THAT SUCH RECEIPTS WERE NOT TAXABLE ON THE PRINCIPLE OF MUTUALITY. IT IS ALSO SEEN THAT IN EARLIER YEARS RENTAL RECEIPTS HAVE BEEN ACCEPTED TO BE NOT TAXABLE BY THE DEPARTMENT ON THE BASIS OF PRINCIPLE OF MUTUALITY AND IT IS ONLY IN THIS YEAR THAT THE REVENUE HAS TR EATED THE SAME AS AN INCOME. THE ASSESSEE HAS FILED A CHART DEPICT ING THE RENT EARNED BY THE ASSESSEE FROM ASSESSMENT YEAR 2002-03 TO ASSESSMENT YEAR 2015-16 AND IT SHOWS THAT THE SAME HAS BEEN ACCEPTED AS EXEMPT BY THE DEPARTMENT. 9.4.2 SIMILARLY, RECEIPTS FROM ADVERTISEMENT HAVE BEEN ACCEPTED FROM ASSESSMENT YEAR 2004-05 ONWARDS AS NO T TAXABLE TILL ASSESSMENT YEAR 2012-13 ON THE PRINCIPLE OF MU TUALITY. A CHART FILED BY THE ASSESSEE IN THIS REGARD CORROBOR ATES THE CLAIM OF THE ASSESSEE. THEREFORE, WE ARE OF THE CONSIDERE D OPINION THAT ONCE THE REVENUE HAS ACCEPTED THE POSITION FOR A PA RTICULAR ITEM, THE REVENUE CANNOT BE PERMITTED TO FLIP-FLOP ON THE ISSUE AND ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 42 HAVING ACCEPTED THE ORDER OF THE TRIBUNAL IN A PREC EDING ASSESSMENT YEAR, IT CANNOT BE PERMITTED TO TAKE A C ONTRARY VIEW IN THE SUBSEQUENT YEAR. FOR THIS WE PLACE RELIANCE ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF C OMMISSIONER OF INCOME-TAX V. EXCEL INDUSTRIES LTD [2013] 358 ITR 295 (SC) WHEREIN IT HAS BEEN LAID DOWN BY THE HONBLE APEX C OURT CLAIMS ONCE ALLOWED IN ANY ASSESSMENT YEAR MUST BE ALLOWED IN SUCCEEDING YEARS ALSO BY FOLLOWING THE RULE OF CONS ISTENCY UNLESS AND UNTIL THERE IS A CHANGE IN THE POSITION OF LAW OR CHANGE IN THE FACTS OF THE CASE. IN THE PRESENT CASE THERE IS NE ITHER A CHANGE IN THE FACTS NOR ANY CHANGE IN POSITION OF LAW AND, TH EREFORE, WE ARE UNABLE TO AGREE WITH THE ADJUDICATION OF THE LD. CI T (A) ON THE ISSUE AND, ACCORDINGLY, WE SET ASIDE THE ORDER OF T HE LD. CIT (A) ON THE ISSUES OF RENTAL RECEIPTS AND ADVERTISEMENT RECEIPTS AND DIRECT THE AO TO DELETE THE ADDITION. 9.4.3 AS FAR AS THE INCOME FROM CONTRACTUAL RECEI PTS IS CONCERNED, IT IS SEEN THAT OUT OF THE IMPUGNED SUM OF RS. 28,42,085/- A SUM OF RS. 24,86,675/- WAS RECEIVED B Y THE ASSESSEE FROM ITS MEMBERS AS MAINTENANCE CHARGES. T HIS AMOUNT WAS PICKED UP FROM FORM NO. 26AS BY THE AO ON WHICH TAX HAD BEEN DEDUCTED AT SOURCE BY THE CORPORATES WHO HAD G IVEN ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 43 MAINTENANCE CHARGES. THE TOTAL MAINTENANCE CHARGES COLLECTED BY THE ASSESSEE DURING THE YEAR WAS RS. 1,88,05,756/- AND THIS INCLUDES THE AMOUNT OF RS.24,86,675/-. IT IS SEEN T HAT THIS AMOUNT IS ALREADY INCLUDED IN THE GROSS AMOUNT WHIC H IS SHOWN IN THE INCOME AND EXPENDITURE ACCOUNT AND IT IS NOT TO BE CONSIDERED SEPARATELY. THE REMAINING BALANCE OF RS. 3,55,410/- RECEIVED ON ACCOUNT OF ADVERTISEMENT RECEIPTS IS AG AIN PICKED UP FROM FORM 26AS ON WHICH TAX HAS BEEN DEDUCTED AND T HIS RECEIPT IS ALSO A PART OF GROSS RECEIPTS AND IS NOT INCLUDI BLE SEPARATELY. SINCE MAINTENANCE CHARGES RECEIVED ARE NOT TAXABLE ON THE PRINCIPLE OF MUTUALITY AND SINCE THERE CAN BE NO DO UBLE TAXATION OF THE SAME AMOUNT, THE SAME IS DIRECTED TO BE DELE TED. FOR SIMILAR REASONING, THE REMAINING AMOUNT OF RS. 3,55 ,410/-, BEING PART OF ADVERTISEMENT RECEIPT, IS ALSO DIRECTED TO BE DELETED. 9.5 GROUND NOS. 6 AND 7 ARE RELATED TO GROUND NO. 2 ON WHICH WE HAVE ALREADY GIVEN OUR ADJUDICATION IN THE PRECEDING PARAGRAPHS. 9.6 GROUND NO. 8 IS CONSEQUENTIAL. 9.7 GROUND NO. 9 IS GENERAL IN NATURE AND DOES NO T CALL FOR ANY SEPARATE ADJUDICATION. ITA NO. 5990/DEL/2016 GARDEN ESTATES RESIDENTS WELFARE ASSOCIATION VS. ITO 44 10. ACCORDINGLY, IN THE FINAL RESULT, THE ASSESSE ES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED ON 22/06/ 2020. SD/- SD/- (O.P. KANT) (SUDHAN SHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22/06/2020 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI