ACIT, Vapi V. Vapi Weate & Effiluent Management Company Ltd, Vapi

ITA 833/AHD/2015

• Counselvise Citation: [2018] 111 COUNSELVISE.COM (IT) 1915 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 10-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRINIVAS T BIDARI
• Assessee Lawyers: MRS ANTI N SHAH
• Keywords: Business income; Depreciation; Rectification of order; Rule of consistency; Set aside
• Section: 143(3); 22

Judgement Text

PAGE 1 OF 9 INCOM TAX APPELLATE TRIBUNAL SURAT BENCH-SURAT BEFORE SHRI C .M. GARG, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER S. N O. ITA NO. A.Y APPELLANT RESPONDENT 1 833/AHD/2015 2010 - 11 ASST. COMMISSIONER OF INCOME TAX, VAPI M/S.VAPI WAST E & EFFLUENT MANAGEMENT COMPANY LTD., PLOT NO.135, VIA HOUSE, CHAR RASTA, GIDC, VAPI. PAN: AAACV8289P 2 3295/AHD/2015 2011 - 12 143(3) DY. COMMISSIONER OF INCOME TAX, VAPI - DO - 3 3293/AHD/2015 2011 - 12 154 DY. COMMISSIONER OF INCOME TAX, VAPI - DO - 4 3294/AHD/2015 2011 - 12 154 DY. COMMISSIONER OF INCOME TAX, VAPI - DO - [ /ASSESSEE BY: MRS. ANTI N.SHAH, CA /REVENUE BY: SHRI SRINIVAS. T. BIDARI, CIT(DR) / DATE OF HEARING: 06 .03.2018 /PRONOUNCEMENT DATE: 22 .03.2018 ORDER PER O. P. MEENA, ACCOUTANT MEMBER: THE APPEAL LISTED AT SERIAL NO.1 ABOVE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) VALSAD, DATED 28.01.2015 FOR PAGE 2 OF 9 THE ASSESSMENT YEAR 2010-11. AND THE APPEAL LISTED AT SERIAL NO.2 IS DIRECTED AGAINST THE ORDER OF CIT(A) DATED 16.09.2015 FOR THE ASSESSMENT YEAR 2011-12 WHEREAS THE APPEAL LISTED AT SERIAL NO.3 AND 4 ARE DIRECTED AGAINST THE ORDER OF CIT(A) VALSAD DATED 06.09.2015 AS AGAINST THE ORDER U/S.154 OF THE ACT PASSED BY THE ASSESSING OFFICER DATED 06.06.2014 AND DATED 18.02.2015 RESPECTIVELY. 2. SINCE THE ISSUE INVOLVED IN ABOVE APPEALS IS IDENTICAL, HENCE, SAME WERE HEARD TOGETHER AND BEING DISPOSED OF BY THIS COMMON ORDER. 3. REVENUE IN ITA NO.833/AHD/2015 FOR A.Y.2010-11 RAISED GROUNDS AS UNDER: I) ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN ACCEPTING THE PRINCIPLE OF MUTUALITY IN THE CASE OF COMPANY IGNORING THE FACTS THAT THE AO HAS ON FACTS AND LAW HELD THAT THE PRINCIPLE OF MUTUALITY DOES NOT APPLY TO THE ASSESSEES CASE. II) ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF DEPRECIATION AND PRIOR PERIOD INCOME AMOUNTING TO RS.2,87,94,413/- AND RS.1,30,19,265/-, RESPECTIVELY IGNORING THE FACTS THAT THE SAME ARE NOT ALLOWABLE. 4. REVENUE IN ITA NO.3295/AHD/2015 FOR A.Y.2011-12 RAISED GROUNDS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN ALLOWING THE PRINCIPLE OF MUTUALITY AND THEREBY NOT TAXING THE INCOME OF RS.3,21,87,783/- IN THE SAME GROUNDS. 2. B) ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN ALLOWING DEPRECIATION OF RS.5,74,20,367/- IGNORING THE FACT THAT THE COST CONTRIBUTED BY THE MEMBERS IS TO BE REDUCED BEFORE ALLOWING DEPRECIATION. 3. C) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT THE ORDER OF THE AO BE RESTORED. THE DEPARTMENT HAS FILED APPEAL BEFORE THE HIGH COURT FOR AY 2002-03, 2006-07, 2007-08 & 2008-09 ON BOTH THESE ISSUES I.E. GROUND NO.1&2. PAGE 3 OF 9 5. REVENUE IN ITA NO.3293/AHD/2015 FOR A.Y.2011-12 RAISED GROUNDS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN HOLDING THAT THE ORDER UNDER CONSIDERATION IS CONSEQUENTIAL TO HIS ORDER NO. CIT(A)/VLS/112/14-15 DATED 16.09.2015 IGNORING THE FACT THAT THE SAID ORDER HAS NOT BEEN ACCEPTED AND FURTHER APPEAL HAS BEEN FILED. 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN ALLOWING THE ASSESSEES APPEAL IGNORING THE FACT THAT THERE IS NO MISTAKE APPARENT FROM RECORDS. THE DEPARTMENT HAS FILED APPEAL BEFORE ITAT IN THE PRESENT CASE AGAINST THE QUANTUM APPEAL. 6. REVENUE IN ITA NO.3294/AHD/2015 FOR A.Y.2011-12 RAISED GROUNDS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN HOLDING THAT THE ORDER UNDER CONSIDERATION IS CONSEQUENTIAL TO HIS ORDER NO.CIT(A)/VLS/112/14-15 DATED 16.09.2015 IGNORING THE FACT THAT THE SAID ORDER HAS NOT BEEN ACCEPTED AND FURTHER APPEAL HAS BEEN FILED. 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN ALLOWING THE ASSESSEES APPEAL IGNORING THE FACT THAT THE MISTAKE APPARENT FROM RECORDS HAS BEEN RECTIFIED BY THE AO. THE DEPARTMENT HAS FILED APPEAL BEFORE ITAT THE PRESENT CASE AGAINST THE QUANTUM APPEAL. ITA NO.833/AHD/2015 FOR A.Y. 2010-11 (BY REVENUE): 7. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY LTD., BY GUARANTEED, INCORPORATED U/S.26 OF THE COMPANIES ACT 1956. THE ASSESSEE COMPANY WAS INCORPORATED TO COMPLY WITH THE DIRECTION OF HONBLE GUJARAT HIGH COURT TO VAPI INDUSTRIES ASSOCIATION TO TAKE EFFECT STEPS FOR TREATMENT OF APPELLANT AND DISPOSAL OF HAZARDOUS WASTES. THEREFORE, IT WAS CLAIMED THAT ACTIVITIES OF THE ASSESSEE COMPANY FOR TREATMENT OF APPELLANT AND DISPOSAL OF WASTE DO NOT COST TO BUSINESS WITHIN THE MEANING OF SECTION 2(13) OF THE ACT. HENCE, ITS INCOME WAS NOT TAXABLE EXCEPT INTEREST RECEIVED FROM BANK ON THE EXCESS FUNDS. THIS CONTENTION OF THE ASSESSEE WAS ACCEPTED BY THE ITAT, PAGE 4 OF 9 AHMEDABAD BENCH IN ITA NO.1687/AHD/2000 FOR A.Y. 1998-99 AS DISCUSSED IN PARA 9 OF THE ORDER. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE PLEA OF THE ASSESSEE FOR THE REASONS DISCUSSED IN THE ASSESSMENT YEAR AND WAS OF THE VIEW THAT THE PRINCIPLE INGREDIENT OF CONCEPT OF MUTUALITY IS NOT SATISFIED. FURTHER, THE ASSESSEE COMPANY UNDERTOOK CERTAIN PROJECTS WHICH HAS NO RELEVANT OR NO DIRECT ACCESS WITH THE CONTRIBUTION OF THE MEMBERS WHICH INDICATES THAT THERE IS NO CONCEPT OF MUTUALITY. THEREFORE, THE CLAIM OF EXEMPTION IN REGARD TO PROFIT/SURPLUS EARNED FROM RECEIPTS FROM THE MEMBERS AS WELL AS OTHER RECEIPTS, IS NOT COVERED BY EXEMPTION AND ACCORDINGLY, THE SAME WAS TAXED. 8. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE CIT(A). THE CIT(A) OBSERVED THAT THE APPEAL IN ASSESSEES CASE IS COVERED BY DECISION OF CITS (APPEAL) IN APPELLANTS OWN CASE FOR A.Y. 2009-10 AND ALSO BY THE DECISION OF TRIBUNAL WHICH HAS BEEN FOLLOWED BY THE CIT(A) IN A.Y. 2009-10. ACCORDINGLY, THE CIT(A) HAS DECIDED TO ISSUE BY OBSERVING AS UNDER: IN REGARD TO GROUND NO 1 I.E. THE FINDING OF THE ASSESSING OFFICER THAT THE APPELLANT COMPANY IS CARRYING BUSINESS ACTIVITIES AND NOT A MUTUAL ASSOCIATION, MY PREDECESSOR GAVE DECISION ON THIS ISSUE UNDER PARA 5.1 OF HIS ORDER DATED 31-03-2013 IN APPEAL NO.VLS/50/12-13 AS UNDER: I HAVE CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSIONS. I HAVE ALSO GONE THROUGH THE APPELLATE ORDER PASSED BY THE HONBLE ITAT, AHMEDABAD VIDE THEIR ORDERS IN ITA NOS. 1310/AHD/2010(A.Y. 2006-07), 1776/AHD/2010(A.Y. 2006-07, 3308/AHD/2010(A.Y.2002-03), 3443/AHD/2010(A.Y. 2002-03, 2778/AHD/2011(A.Y. 2008-09), 2835/AHD/2011(A.Y. 2008-09), 344/AHD/2010(A.Y. 2007-08) AND 3309/AHD/2010(A.Y. 2007-08) DATED 30-3- 2012 IN WHICH, THE HONBLE ITAT HAS ACCEPTED THE PRINCIPLE OF MUTUALITY IN THE CASE OF THE APPELLANT. RESPECTFULLY FOLLOWING THE SAID ORDER OF THE HONBLE ITAT, THE CONCEPT OF MUTUALITY IS ALLOWED TO THE APPELLANT. THUS, THIS GROUND OF APPEAL IS ALLOWED. IN REGARD TO THE NEXT GROUND WHERE THE ASSESSING OFFICER HAS GIVEN THE FINDING THAT THE INCOME OF RS.27839859/- OF THE APPELLANT IS ASSESSABLE AS BUSINESS INCOME AND DISALLOWING DEPRECIATION CLAIMED AS PER BOOKS OF ACCOUNTS AT RS.28794413/-, THE CIT(A) IN THE SAME VERY ORDER AS MENTIONED SUPRA GIVEN THE FINDING UNDER PARA 6.3 OF THE ORDER WHICH IS AS UNDER: PAGE 5 OF 9 I HAVE CONSIDERED THE OBSERVATION MADE BY THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTION RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. THE APPEALS FOR THE A.Y. 2006-07, 2007-08 AND 2008-09 WERE DECIDED BY ME IN FAVOUR OF THE APPELLANT VIDE APPELLATE ORDERS IN APPEAL NOS. (I) CIT(A)/VLS/437/2008-09 DATED 26- 3-2010, (II) CIT(A)/VLS/487/2009-10 DATED 29-9-2010 AND (III) CIT(A)/VLS/290/2010-11 DATED 24-8-2011 RESPECTIVELY. SINCE THE MATTER IS IDENTICAL, FOLLOWING THE EARLIER YEARS ORDERS, THIS APPEAL IS ALSO DECIDED IN FAVOUR OF THE APPELLANT. THUS THIS GROUND OF APPEAL IS ALLOWED. KEEPING IN VIEW THE ABOVE AND THE PRINCIPLE OF CONSISTENCY I ALSO AGREE WITH THE FINDINGS GIVEN BY MY PREDECESSOR ON THE ISSUES INVOLVED IN THE GROUNDS OF APPEAL TAKEN BY THE APPELLANT IN THE PRESENT CASE. THEREFORE THIS APPEAL IS DECIDED IN FAVOUR OF THE APPELLANT. 9. BEING AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LD.CIT-DR RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND SUBMITTED THAT THE DECISION OF CIT(A) AND ITAT IN EARLIER YEARS HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND AN APPEAL HAS FILED BEFORE THE HONBLE HIGH COURT. 10. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE UNDER APPEAL IS COVERED BY THE DECISION OF HONBLE TRIBUNAL IN THE APPELLANTS OWN CASE IN ITA NO.1310/AHD/2010 FOR THE A.Y. 2006-07 DATED 20.04.2012. 11. WE HAVE CONSIDERED FACTS AND PERUSED MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE FACTS OF THE PRESENT APPEAL ARE IDENTICAL FOR THE EARLIER YEARS AND SAME IS COVERED AGAINST THE REVENUE BY THE DECISION OF ITAT IN ITA NO.1310/AHD/2010 FOR THE A.Y. 2006-07 DATED 20.04.2012. THE FINDINGS RECORDED BY THE ITAT IN PARA 17, 18 AND 19 ARE REPRODUCED AS UNDER: 17. BEING AGGRIEVED FORM THE ORDER OF CIT(A) THE ASSESSEE IS BEFORE US. THE A.R. OF THE ASSESSEE COMPANY CONTENDED THAT THE COMPANY FALL U/S 25 OF THE COMPANIES ACT. IT IS COMPANY BY GUARANTEE OF SHARE. THE MAIN OBJECT OF THE COMPANY WAS NOT TO EARN ANY PROFIT. IT IS FOR TREATMENT OF EFFLUENT IN THE VAPI INDUSTRIAL AREA ON THE SUGGESTION OF HON'BLE GUJARAT HIGH COURT AND CONTRIBUTION IS MADE BY THE MEMBERS ONLY. THE SURPLUS OF THE COMPANY HAS NEVER DISTRIBUTED AMONG THE MEMBERS. IT IS SET UP ON THE PRINCIPLE OF MUTUALITY TO TRADE THE WASTAGE OF CHEMICAL/WATER FROM THE VARIOUS INDUSTRIAL UNITS. THE CHARGES AND CONTRIBUTION BOTH PAGE 6 OF 9 THE FIXED ON THE BASIS OF DEPOSITION OF SOLID WASTE AND IT IS NON-PROFIT COMPANY. THE A.R. SUBMITTED THE COPY OF RETURN FOR A.Y. 2007-08, COPY OF DECISION OF HON'BLE GUJARAT HIGH COURT, COPY OF MEMORANDUM OF ASSOCIATION AND ARTICLE OF ASSOCIATION, LIST OF THE CETP AND CSWP AS ON 31.03.2007 WITH ADDRESS, COPY OF THE WRITTEN SUBMISSION MADE BEFORE THE CIT(A), COPY OF THE ANNUAL REPORT FOR A.Y. 2002-03, 2006-07, 2007-08 AND 2008-09. 18. 18. THE LEARNED A.R. FURTHER RELIED ON BOMBAY HIGH COURT DECISION IN THE CASE OF CIT VS. COMMON EFFLUENT TREATMENT PLANT (THANE-BELAPUR) ASSOCIATION REPORTED IN [2010] 328 ITR 362 (BOM) WHERE HON'BLE BOMBAY HIGH COURT HAS ACCEPTED THE PRINCIPLE OF MUTUALITY AND SURPLUS INCOME OVER EXPENDITURE ON PRINCIPLE OF MUTUALITY IS NOT CHARGEABLE TO TAX. INTEREST INCOME RECEIVED ON FIXED DEPOSIT WITH THE BANK IS NOT INCOME RECEIVED FROM MEMBERS OF ASSESSEE BUT FROM 3 RD PARTY. INVESTING EXCESS FUND WITH BANK IN FIXED DEPOSIT A PRUDENT COMMERCIAL DECISION AND PRINCIPLE OF MUTUALITY DOES NOT APPLY. HE FURTHER RELIED ON THE DECISION OF SPORTS CLUB OF GUJARAT LTD. VS. C.I.T. REPORTED IN 1987 VOL.171 ITR 504 (GUJ.) WHERE HON'BLE GUJARAT HIGH COURT HAS HELD THAT THE SPORTS CLUB IS MUTUAL CONCERN AND PROFIT AND GAIN IS NOT ASSESSABLE AS BUSINESS INCOME. INTEREST ON INVESTMENT IS ASSESSABLE. THE ASSESSEE IS NOT ENTITLED TO BENEFIT OF SECTION 44 A OF THE I.T. ACT. THE HON'BLE GUJARAT HIGH COURT IN THIS CASE HAS HELD THAT ONE OF THE ESSENTIAL OF MUTUALITY IS THAT THE CONTRIBUTORS TO THE COMMON FUND ARE ENTITLED TO PARTICIPATE IN THE SURPLUS, THERE BY CREATING AN IDENTITY BETWEEN THE PARTICIPANTS AND THE CONTRIBUTORS, ONCE SUCH IDENTITY IS ESTABLISHED, THE SURPLUS INCOME WOULD NOT BE EXIGIBLE TO TAX ON THE PRINCIPLE THAT NO MAN CAN MAKE A PROFIT OUT OF HIMSELF. THE PRINCIPLE OF MUTUALITY IS NOT EXTRACTED BY THE PRESENCE OF TRANSACTIONS WHICH ARE NOT MUTUAL IN CHARACTER. THE PRINCIPLE OF MUTUALITY CAN, IN SUCH CASE, BE CONFINED TO TRANSACTIONS WITH MEMBERS. THE TWO ACTIVITIES CAN, IN APPROPRIATE CASES BE SEPARATED AND THE PROFIT DERIVED FROM NON-MEMBERS CAN BE BROUGHT TO TAX. THE AUTHORIZED REPRESENTATIVE PLEADED THAT THE SURPLUS OF THE COMPANY IS NOT TAXABLE. THE RECEIPTS FROM THE OUTSIDER HAVE BEEN OFFERED FOR TAXATION INCLUDING INTEREST ON FIXED DEPOSIT WITH BANK. THE ID. CIT DR VEHEMENTLY RELIED UPON THE ORDER OF THE ID. A.O. AND CIT (A) AND HAS DRAWN THE ATTENTION ON THE CLAUSE OF MEMORANDUM OF ARTICLES AND ASSOCIATION OF ARTICLE BY WHICH HE EMPHASIZED THAT NO CONCEPT OF MUTUALITY HAS BEEN FOLLOWED BY THE ASSESSEE. THE MAIN OBJECTS AND ANCILLARY OBJECTS ARE FOR RUNNING THE BUSINESS TO EARN THE PROFIT. HE FURTHER ARGUED THAT OUTSIDERS ALSO ARE MEMBER NAMELY, UMARGAON INDUSTRY ASSOCIATION, S.S.I. ASSOCIATION, VALSAD AND MEMBERS OF SOLID WASTE. THERE ARE FEW NON- MEMBERS WHO ARE MEMBERS OF CETP BUT NOT OF SOLID WASTE. THE A.R. ACCEPTED THAT TILL THEY BECOME MEMBER AND CLEARED BY GUJARAT POLLUTION CONTROL BOARD, THEY ARE CHARGED AT NORMAL RATE. THEREFORE, HE ARGUED THAT RECEIPTS FROM THE OUTSIDER IS TO BE TAXED ON THE BASIS OF JUDGMENT DELIVERED IN CASE OF SPORTS CLUB OF GUJARAT (SUPRA). 19. WE HAVE PERUSED THE ASSESSMENT ORDER, ORDER OF THE CIT(A), SUBMISSION OF THE AUTHORIZED REPRESENTATIVE AND HEARD THE ARGUMENT FROM BOTH SIDES. THE BASIC OBJECT OF THE COMPANY IS TO GIVE TREATMENT OF EFFLUENT IN THE FORM OF LIQUID AND SOLID TO PREVENT THE POLLUTION IN VAPI INDUSTRIAL AREA ON THE SUGGESTION OF THE HON'BLE GUJARAT HIGH COURT. THE COMPANY IS LIMITED BY GUARANTEE. THERE IS NO SHARE CAPITAL OF THE MEMBERS. ONLY SUBSCRIPTION IS MADE ON THE BASIS OF WASTAGE DELIVERED BY THEIR PLANTS. NO DIVIDEND HAS BEEN DISTRIBUTED BY THE COMPANY SO FAR. THE OBJECT MENTIONED IN THE MAIN AND ANCILLARY OBJECT ARE AS PER THE LINE OF THE COMPANY ACT BUT IT IS NOT FOR PROFIT EARNING. THE BOARD OF DIRECTOR HAS TO PASS RESOLUTION TO ALLOW THE OUTSIDER TO GET THE SERVICES OF THE COMPANY. NO DIRECTOR IS OUTSIDE FROM THE MEMBERS OF VAPI INDUSTRIAL ASSOCIATION. ON THE BASIS OF DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF SPORTS CLUB OF GUJARAT (SUPRA) THE ASSESSEE ALSO HAS DECLARED THE INTEREST INCOME IN RETURN AS TAXABLE ON FIXED DEPOSIT WITH BANK HOWEVER, IT WAS ADMITTED THAT NO OUTSIDER HAD PROVIDED THE SERVICES OF THE COMPANY BUT THE AO IS DIRECTED TO VERIFY THE CLAIM OF THE ASSESSEE WHETHER ANY OUTSIDER IS GETTING SERVICES OR NOT FROM NON-MEMBERS, HAS TO BE TAXED ACCORDINGLY AFTER GIVING FULL OPPORTUNITY TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO COOPERATE WITH THE A.O. AND GIVE ALL THE EVIDENCES AS REQUIRED BY THE A.O. FOR HIS SATISFACTION. THE REVENUE APPEAL ON ALLOWANCE OF DEPRECIATION BY THE CIT(A) HAS NO BEARING AS THE PRINCIPLE OF MUTUALITY HAS BEEN ACCEPTED BY THIS COURT. THE OTHER GROUNDS OF APPEAL OF THE ASSESSEE LIKE DEDUCTION U/S 80 IA, DISALLOWANCE PAGE 7 OF 9 UNDER HEAD OPERATING EXPENSES AND CARRY FORWARD LOSS OF EARLIER YEAR HAS NO MEANING WHEN PRINCIPLE OF MUTUALITY HAS BEEN HELD IN FAVOUR OF THE APPELLANT. 12. IN THE LIGHT OF FINDINGS GIVEN BY THE TRIBUNAL IN THE APPELLANTS OWN CASE, WE FIND THAT THE ISSUE IS COVERED AGAINST THE REVENUE AND WE HAVE NO REASON TO DEVIATE FROM THE SAID FINDING RECORDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL. ACCORDINGLY, FOLLOWING THE SAME, WE HOLD THAT THE PRINCIPLE OF MUTUALITY HAS ACCEPTED BY THE TRIBUNAL ON EARLIER YEARS IS ALSO HOLD GOOD IN THE ASSESSMENT UNDER CONSIDERATION. THEREFORE, THE SAME IS ALLOWED. HOWEVER, THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE CLAIM OF ASSESSEE WHETHER ANY OUTSIDER IS GETTING SERVICES OR NOT FROM NON-MEMBERS WHICH HAS TO BE TAXED ACCORDINGLY AFTER GIVING FULL OPPORTUNITY TO THE ASSESSEE. SO FAR ALLOWANCES OF DEPRECIATION AND PRIOR PERIOD EXPENSES ARE CONCERN, AS WE HAVE HELD THE PRINCIPLE OF MUTUALITY IN THE CASE OF ASSESSEE, THEREFORE, THE ALLOWANCES OF DEPRECIATION AND PRIOR PERIOD EXPENSES BY ASSESSING OFFICER HAS NO BEARING AS THE PRINCIPLE OF MUTUALITY HAS BEEN ACCEPTED BY THE TRIBUNAL. IN THE RESULT, APPEAL OF THE ASSESSEE IS SET ASIDE AND DISPOSED OF FOR STATISTICAL PURPOSES. ITA NO.3295/AHD/2015 FOR A.Y.2011-12 (BY REVENUE) 13. THE GROUNDS OF APPEAL FOR ASSESSMENT YEAR 2011-12 ARE IDENTICAL AS THAT OF GROUNDS OF APPEAL OF 2010-11. HENCE, THE FINDINGS RECORDED IN ABOVE PARA FOR A.Y.2010-11 TO THE MUTATIS MUTANDIS APPLY. ACCORDINGLY, THIS APPEAL IS SET ASIDE AND ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE FOR THE ASSESSMENT YEAR 2010-11. ITA NO.3293/AHD/2015 FOR A.Y.2011-12 U/S.154 OF THE ACT, BY REVENUE: PAGE 8 OF 9 14. THE GROUNDS OF APPEAL TAKEN FOR THIS YEAR ARE AGAINST THE RECTIFICATION OF MISTAKE ENHANCING INCOME DUE TO COMPUTATION OF MISTAKE IN THE ORIGINAL ASSESSMENT. SINCE WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE AS PER THE TERMS INDICATED FOR ASSESSMENT YEAR 2010-11 IN ABOVE PARAS. THEREFORE, THESE ORDERS BECOME CONSEQUENTIAL IN NATURE, HENCE, ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS AS INDICATED ABOVE. ITA NO.3294/AHD/2015 FOR A.Y.2011-12 U/S.154 OF THE ACT, BY REVENUE: 15. THE REVENUE HAS TAKEN GROUNDS APPEAL FOR CHARGING OF INTEREST ON ENHANCED INCOME COMPUTED VIDE ORDER U/S.154 DATED 10.12.2014 FOR CHARGING INTEREST U/S.234B OF THE ACT. 16. THE CIT(A) HAS ALLOWED THE PLEA OF THE ASSESSEE BY STATING THAT THE ORDER U/S.154 OF THE ACT HAS BEEN PASSED BY THE ASSESSING OFFICER HAS A CONSEQUENT TO THE QUANTUM ADDITION MADE IN THE CASE OF APPELLANT FOR SAME YEAR AND SINCE THE QUANTUM ADDITION HAS BEEN DELETED IN THE APPEAL, THE PRESENT ORDER U/S.154 OF THE ACT CONSEQUENTIAL EFFECT DOES NOT SURVIVE AND THE ADDITION MADE IS DELETED. THE REVENUES PLEA THAT THE REVISION OF RECTIFICATION ORDER DATED 10.12.2014 HAS BEEN MADE DUE TO MISTAKE IN CHARGING INTEREST U/S.234B OF THE ACT AND THE DELETION OF QUANTUM ADDITION IS NO ACCEPTED BY THE REVENUE. HENCE, RESULTANT ENHANCEMENT OF INTEREST U/S.234B WHICH HAS ALSO RESULTED IN INCREASING THE DEMAND IS NOT ACCEPTABLE. PAGE 9 OF 9 17. WE HAVE CONSIDERED THE FACTS AND FIND THAT THE ADDITION MADE BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT HAS BEEN DELETED BY THE CIT(A) WHICH HAS BEEN ALSO CONFIRMED BY THE ITAT IN THE ABOVE PARAS. THEREFORE, INTEREST U/S.234B OF THE ACT CHARGED ON ENHANCED COMPUTATION OF INCOME IS NO LONGER SURVIVED. HENCE, THE CIT(A) WAS RIGHTLY DELETED THE CHARGE OF INTEREST U/S.234B OF THE ACT. THEREFORE, WE DO NOT FIND INFIRMITY IN THE ORDER OF THE CIT(A), HENCE THIS GROUND OF APPEAL IS DISMISSED. HOWEVER, THE ASSESSING OFFICER WILL CHARGE CONSEQUENTIAL INTEREST U/S.234B OF THE ACT AFTER CONSIDERING THE INCOME OF THE ASSESSEE TO GIVE EFFECT TO THE APPELLATE ORDER OF ITAT IN ITA NO.3294/AHD/2015. ACCORDINGLY, THIS GROUND IS DISPOSED OF IN THE TERMS AS INDICATED ABOVE. 18. TO SUM UP, APPEAL FILED BY REVENUE IN ITA NOS.833/AHD/2015, 3295/AHD/2015, 3293/AHD/2015 ARE DISMISSED AND SET ASIDE FOR STATISTICAL PURPOSES IN THE TERMS AS INDICATED ABOVE. AND IN ITA NO.3294/AHD/2015 FILED BY THE REVENUE IS DISMISSED IN TERMS AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 22-03-2018. SD/- SD/- (C.M. GARG) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT: DATED: 22 ND MARCH, 2018 S.GANGADHARA RAO COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT