ITO, Jaipur V. JAIPUR CLUB LTD., Jaipur

ITA 764/JPR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5509 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 14-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATEJA
• Assessee Lawyers: N S VYAS CA DHK
• Keywords: Opportunity of being heard
• Section: 244A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 764/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 . THE INCOME TAX OFFICER, WARD 2(3), JAIPUR. CUKE VS. M/S. JAIPUR CLUB LTD., JACOB ROAD, CIVIL LINES, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAAAJ 1464 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BATEJA (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI N.S. VYAS (C.A) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 16.02.2016. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 19/02/2016. VKNS'K@ ORDER PER SHRI T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE EMANATING FROM THE ORDER OF LD. CIT (A)-I, JAIPUR DATED 19.09.2014 FOR THE A.Y. 2011-12 . THE SOLE GROUND OF REVENUES APPEAL IS AGAINST APPLYING THE PRINCIPLE OF MUTUALI TY IN CASE OF CLUB. 2. THE ASSESSEE IS A CLUB, NAMEY JAIPUR CLUB LIMITE D. IT HAS FILED THE RETURN ON 09.03.2012 DECLARING NIL INCOME FOR THE A.Y. 2011-1 2. THE ASSESSEE CLUB IS REGISTERED AS NON-TRADING COMPANY. IT OPERATES AS A CLUB WHER E MEMBERS ARE ALLOWED TO ENTER ND THEY ARE SERVED FOOD, LIQUOR, REFRESHMENTS ETC. FA CILITIES FOR VARIOUS OUTDOOR AND INDOOR GAMES AND SWIMMING, GYM ETC. ARE PROVIDED TO THE ME MBERS. THE CLUB CONSIDERS ITSELF 2 ITA NO 764/JP/2014 AY 2011-12 ITO VS. JAIPUR CLUB LTD. JAIPUR. A MUTUAL ORGANIZATION AND ON THAT BASIS CONSIDERS I TS INCOME AS OUTSIDE THE PURVIEW OF TAXABILITY. THE AO GAVE REASONABLE OPPORTUNITY OF BEING HEARD WHICH WAS AVAILED BY THE ASSESSEE VIDE LETTER DATED 25.01.2014 WHICH HAS BEEN REPRODUCED BY THE AO AT PAGE 2 OF THE ASSESSMENT ORDER. THEREAFTER, HE DIS CUSSED THE PRINCIPLE OF MUTUALITY BY RELYING ON THE VARIOUS DECISIONS OF APEX COURT AND CONSIDERED THE ROOM CHARGES, GUEST CHARGES, LAWN CHARGES AND INTEREST RECEIVED BY THE CLUB UNDER SECTION 244A OF THE IT ACT. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO DISALLOWED OUT OF ROOM CHARGES, LAWN CHARGES AND ANNEXE CHARGES @ 30% AND GUEST CHARGES. THEREAFTER, HE ADDED INTEREST INCOME ON FDR AND INTEREST UNDER SEC TION 244A SEPARATELY. THUS TOTAL TAXABLE INCOME WAS CALCULATED BY THE AO AT RS. 64,8 4,617/-. 3. BEING AGGRIEVED BY THE ORDER OF AO, ASSESSEE CAR RIED THE MATTER BEFORE LD. CIT (A), WHO HAD ALLOWED THE APPEAL OF THE ASSESSEE BY FOLLOWING THE APEX COURT DECISION IN CASE OF M/S. BANGALORE CLUB, 350 ITR 509 (SC), CIT VS. TALANGANG CO-OPERATIVE GROUP HOUSING SOCIETY LTD., 44 DTR (DEL.) 54, CIT VS. BAN KIPUR CLUB LTD, 129 ITR 787 (PAT.), CIT VS. RANCHI CLUB LTD., 196 ITR 137 (PAT.) AND CI T VS. NORTHERN INDIA MOTION PICTURES ASSOCIATION, 180 ITR 160 (P&H). THE LD. CIT (A) HEL D THAT IN CASE OF ASSESSEE, PRINCIPLE OF MUTUALITY IS APPLICABLE. THEREFORE, HE ALLOWED THE APPEAL PARTLY. 4. NOW THE REVENUE IS BEFORE US. 4.1. THE LD. D/R VEHEMENTLY SUPPORTED THE ORDER OF AO. 4.2. AT THE OUTSET, THE LD. A/R OF THE ASSESSEE AGA IN REITERATED THE ARGUMENTS MADE BEFORE LD. CIT (A) AND REFERRED THE VARIOUS DECISIO NS OF APEX COURT ON MUTUALITY. HE FURTHER ARGUED THAT THIS BENCH HAS ALREADY CONSIDER ED THIS ISSUE IN ITA NOS. 592 & 3 ITA NO 764/JP/2014 AY 2011-12 ITO VS. JAIPUR CLUB LTD. JAIPUR. 418/JP/2013 VIDE ITS ORDER DATED 01.01.2016 AND HEL D THAT PRINCIPLE OF MUTUALITY IN CASE OF ASSESSEE IS APPLICABLE. THEREFORE, HE REQUESTED TO UPHELD THE ORDER OF LD. CIT (A). 4.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 592 & 418/JP/2013 FOR A.Y. 2007-08 AND 2008-09 VIDE ORDER DATED 01.01.2016 HAS HELD AS UNDER :- 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE A SSESSEE HAS NOT ISSUED ANY BILL IN THE NAME OF OUTSIDER. IF ANY SERVICE HA S BEEN PROVIDED TO THE GUEST BY THE CLUB, THE BILLS HAS BEEN ISSUED IN THE NAME OF MEMBERS ONLY. THE LD ASSESSING OFFICER HAD NOT SPECIFICALLY POINT ED OUT THE RECEIPTS RECEIVED FROM NON MEMBERS. HE SIMPLY MADE DISALLOWA NCE ON ESTIMATE BASIS. THE ASSESSEE HAS PRODUCED COMPLETE BOOKS OF ACCOUNT DURING THE ASSESSMENT PROCEEDINGS. THEREFORE, PRINCIPLE LAID D OWN BY THE HON'BLE SUPREME COURT IN THE CASE OF BANKIPUR CLUB LIMITED (SUPRA) IS SQUARELY APPLICABLE ON PRINCIPLE OF MUTUALITY WHEREIN IT HAS BEEN HELD THAT IN ANY MUTUAL ORGANIZATION, THERE IS AN ELEMENT OF ALTRUIS M, SINCE THE BENEFIT AVAILED BY A MEMBER MAY NOT ALWAYS BE COMMENSURATE WITH HIS CONTRIBUTION. IT WAS FOR THIS REASON THAT EVEN WHER E THERE IS NO RETURN ON THE CONTRIBUTION, AS IN THE CASE OF AN ASSOCIATION FORMED FOR THE PURPOSE OF GENERAL PUBLIC UTILITY, MUTUALITY MAY NOT BE LOS T. THE FULL BENCH OF THE HONBLE PATNA HIGH COURT IN THE CASE OF CIT VS. RAN CHI CLUB LTD. (SUPRA) HAS ALSO HELD THAT MERELY BECAUSE THE ASSESSEE COMPANY HAD ENTERED INTO TRANSACTIONS WITH NON MEMBERS AND EARNED PROFI TS OUT OF TRANSACTIONS HELD WITH THEM ITS RIGHT TO CLAIM EXEMPTION ON THE PRINCIPLE OF MUTUALITY IN RESPECT OF TRANSACTIONS HELD BY IT WITH ITS MEMBERS WAS NOT LOST. THE ASSESSEE WAS A MUTUAL CONCERN, THE INCOME DERIVED B Y IT FROM ITS HOUSE 4 ITA NO 764/JP/2014 AY 2011-12 ITO VS. JAIPUR CLUB LTD. JAIPUR. PROPERTY LET TO ITS MEMBERS AND THEIR GUESTS AND FR OM THE SALE OF LIQUOR ETC. TO ITS MEMBERS AND THEIR GUESTS WAS NOT TAXABL E IN ITS HANDS. THE ABOVE PRINCIPLE IS SQUARELY APPLICABLE IN THE CASE OF ASSESSEE, THEREFORE, WE UPHOLD THE ORDER OF THE LD CIT(A) FOR BOTH THE A SSESSMENT YEARS. RESPECTFULLY FOLLOWING THE DECISION ON SIMILAR FACT S, WE UPHOLD THE ORDER OF LD. CIT (A). 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.02.2016. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 19/02/2016. DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ITO WARD 2(3), JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT-M/S. JAIPUR CLUB LTD., JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 764/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR