DCIT, CIR-8(2), KOLKATA, Kolkata V. M/s The Saturday Club Ltd, Kolkata

ITA 837/KOL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6333 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 09-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SANA JAVED
• Section: 143(3)

Judgement Text

1 ITA NO.837/KOL/2015 & 2377/KOL/2016-THE SATURDAY CL UB LTD A.Y.2010-11&2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A KOL KATA [BEFORE HONBLE SHRI SATBEER SINGH GODARA, JM & S HRI M.BALAGANESH, AM ] ITA NO.837 /KOL/2015 ASSESSMENT YEAR : 2010-11 D.C.I.T., CIRCLE-8(2) -VERSUS- M/S THE SATURDAY CLUB LTD. KOLKATA KOLKATA (PAN:AABCT 1662 R) (APPELLANT) (RESPONDENT) ITA NO.2377/KOL/2016 ASSESSMENT YEAR : 2011-12 M/S THE SATURDAY CLUB LTD. -VERSUS- D.C.I.T. CIRC LE-8 (2) KOLKATA KOLKATA (PAN:AABCT 1662 R) (APPELLANT) (RESPONDENT) FOR THE ASSESSEE : MS. SANA JAVED, CA FOR THE RESPONDENT : SHRI SALLONG YADEN, ADDL. CIT. DATE OF HEARING : 03.05.2018. DATE OF PRONOUNCEMENT : 09.05.2018. ORDER PER BENCH 1. THESE TWO APPEALS FOR A.YS.2010-11 & 2011-12 P ERTAIN TO A SINGLE ASSESSEE NAMELY THE SATURDAY CLUB LTD.. THE REVENUE HAS PREF ERRED ITS APPEAL ITA NO.837/KOL/2015AGAINST THE CIT(A)-3, KOLKATAS ORDE R DATED 31.03.2015 PASSED IN APPEAL NO. 100/CIT(A)-3/CIR-8(1)/14-15/(13-14/KOL, REVERSING ASSESSING OFFICERS ACTION MAKING ADDITION (S) OF RS.55,87,395/- AND RS .40,88,325/- IN RESPECT OF RENTAL INCOME AND SERVICE FEE RECEIVED FROM M/S. RELIANCE INDUSTRIES LTD THEREBY HOLDING THE SAME TO BE COVERED UNDER MUTUALITY PRINCIPLE . THE ASSESSEES APPEAL ITA NO.2377/KOL/2016 FOR A.Y.2011-12 ON THE OTHER HAND, EMANATES FROM THE CIT(A)-2, KOLKATAS ORDER DATED 08.09.2016 PASSED IN APPEAL N O.53/CIT(A)-2/16-17 UPHOLDING THE ASSESSING OFFICERS ACTION DENYING IT MUTUALITY BENEFIT QUA INTEREST 2 ITA NO.837/KOL/2015 & 2377/KOL/2016-THE SATURDAY CL UB LTD A.Y.2010-11&2011-12 INCOME ON FIXED DEPOSIT RENTAL INCOME AND SERVICE F EE (LATTER TWO RECEIPTS IN CASE OF ITS ABOVE PAYEE) INVOLVING AMOUNTS OF RS.1,47,77,24 3/- RS.57,98,259/- AND RS.43,50,052/-; RESPECTIVELY. RELEVANT PROCEEDING S IN BOTH THE CASES ARE U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. A PERUSAL OF THE ABOVE NARRATED ISSUES INVOLVED MAKES IT CLEAR THAT THESE APPEALS FILED AT THE BEHEST OF REVENUE AND ASSESSEE IN BOTH ASSESSMENT YEARS RAISE IDENTICAL SUBSTANTIVE GROUNDS QUA APPLICATION OF MU TUALITY PRINCIPLE REGARDING RENTAL INCOME AND SERVICE FEE RECEIVED FROM ITS CORPORATE MEMBER/PAYEE M/S. RELIANCE INDUSTRIES LTD. 3. THE REVENUES GRIEVANCE BEFORE US IS THAT ASSES SING OFFICER HAD RIGHTLY TREATED THE IMPUGNED RENTAL INCOME AS WELL AS SERVICE FEE T O BE NOT COVERED UNDER MUTUALITY PRINCIPLE. THE ASSESSING AUTHORITY HAD QUOTED HONB LE APEX COURTS DECISION IN BANGALORE CLUB VS CIT [2013] 350 ITR 509 (SC) SETTL ING THE LAW THAT THERE ARE THREE CONDITIONS TO BE SATISFIED IN CASE AN ASSESSEE CLAI MS ITSELF TO BE COVERED UNDER MUTUALITY PRINCIPLE. THEY ARE (I) THERE HAS TO BE COMPLETE IDENTITY BETWEEN THE CONTRIBUTORS AND THE PARTICIPANTS (II) THEIR ACTION (S) MUST BE IN FURTHERANCE OF MUTUAL MANDATE AND ALSO THAT THERE SHOULD NOT BE ANY SCOPE OF PROFITEERING BY THE CONTRIBUTOR FROM A FUND MADE BY THEM WHICH CAN BE EXPENDED OR R ETURNED TO THEMSELVES; RESPECTIVELY. 4. IT TRANSPIRES IN FORMER ASSESSMENT YEAR 2010-11 THAT CIT(A)FOLLOWS HIS ORDER DATED 20.06.2014 FOR A.Y.2007-08 WHILE DELETING THE TWO ADDITIONS OF RENTAL INCOME AND SERVICE FEE RECEIVED FROM CORPORATE MEMBER M/S. RELIANCE INDUSTRIES LTD. THE CIT(A) RELIES UPON HONOURABLE JURISDICTIONAL DECISI ON IN CIT VS BANKIPUR CLUB LTD 226 ITR 97 AND DARJEELING CLUB LTD 153 ITR 676 IN H OLDING THE IMPUGNED SUMS TO BE COVERED UNDER MUTUAL PRINCIPLE. IT EMERGES FROM PER USAL OF THE CASE FILE IN THE FORMER ASSESSMENT YEAR THAT CIT(A)S ORDER IN THE SAID PRE CEDING ASSESSMENT YEAR 2007-08 FOLLOWS IDENTICAL FINDING IN A.Y.2004-05 AND 2008-0 9. THE REVENUES APPEAL ITA NO.748/KOL/2014 FOR A.Y.2007-08 WAS ALSO FIXED ALON G WITH THE INSTANT CASES. IT STANDS ADJOURNED TO 19.06.2018 AS PER ASSESSEES R EQUEST AS WELL AS IN VIEW OF THE FACT 3 ITA NO.837/KOL/2015 & 2377/KOL/2016-THE SATURDAY CL UB LTD A.Y.2010-11&2011-12 THAT NOT ALL ISSUES RAISED IN THESE CASES TAKEN TOG ETHER ARE IDENTICAL. WE THUS TAKE UP THE INSTANT TWO APPEALS FOR DISPOSAL. 5. WE ADVERT THE MERITS OF THE ISSUE NOW. THE CIT(A ) IN FORMER A.Y.2010-11 ADMITTEDLY FOLLOWS HIS FINDING IN PRECEDING ASSESSM ENT YEARS WHILE DELETING THE TWO IMPUGNED DISALLOWANCES/ADDITIONS IN RESPECT OF RENT AL INCOME AND SERVICE FEE. CASE FILE SHOWS THAT THE COORDINATE BENCH IN ITA NO.1340 /KOL/2012 FOR A.Y.2008-09 (SUPRA) DECIDED ON 02.12.2016 DENIES THE VERY MUTUA L BENEFIT TO THE ASSESSEE ITSELF ON THE GROUND THAT THE PAYEE/CORPORATE MEMBER CONCERNE D; ALTHOUGH A MEMBER, DISPLAYED ITS ADVERTISEMENT FOR THE PURPOSE OF ITS BUSINESS. LEARNED COORDINATE BENCH THUS CONCLUDES THAT ASSESSEES IDENTICAL INCOME RECEIVED FROM THE SAID PAYEE IS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY THAN THAT CO VERED UNDER MUTUALITY PRINCIPLE. NO DISTINCTION OF FACTS OR LAW IS FORTHC OMING IN CASE RECORDS. WE ACCEPT REVENUES ARGUMENTS AS WELL AS ITS FORMER SUBSTANTI VE GROUND SEEKING TO REVIVE THE IMPUGNED ADDITION OF RENTAL INCOME TO THE TUNE OF R S.55,87,395/-. 6. COMING TO THE REVENUES NEXT GROUND SEEKING TO R ESTORE SERVICE FEE ADDITION OF RS.40,88,325/- RECEIVED FROM THE VERY PAYEE, WE SOU GHT TO KNOW THE EXACT NATURE OF SERVICES PROVIDED BY THE TAX PAYER. IT EMERGES FROM THE CIT(A)S ORDER IN PARA-5.2 THAT THE SERVICE CHARGES IN QUESTION HAVE BEEN RECEIVED IN RESPECT OF THE VERY LET OUT PREMISES. WE THUS ARE OF THE VIEW THAT THE ASSESSEE IS NOT ENTITLED FOR THE ABOVE MUTUALITY BENEFIT QUA INSTANT SERVICE FEE RECEIVED AS WELL. THE REVENUES LATTER SUBSTANTIVE GROUND AS WELL AS THE IMPUGNED APPEAL I TA NO.837/KOL/2015 IS ACCEPTED ACCORDINGLY. 7. THIS LEAVES US WITH ASSESSEES APPEAL ITA.2377/K OL/2016 . ITS FIRST SUBSTANTIVE GROUND IS THAT BOTH THE LOWER AUTHORITIES HAVE ERRE D IN FACTS AND ON FACTS IN DISALLOWING ITS INTEREST INCOME OF RS.1,47,77,243/- CONSIDERING ON THAT TERM INVESTMENT, FIXED DEPOSIT AND OTHER HEAD; RESPECTIVELY. WE NOTICE H EREIN AS WELL THAT THE ABOVE COORDINATE BENCH IN A.Y.2008-09 AND 2009-10 (SUPRA) IN ITS ORDER DATED 02.12.2016 HAS HELD SIMILAR INTEREST INCOME TO BE UNDER THE HE AD INCOME FROM OTHER SOURCES AS PER THE HONBLE APEX COURTS DECISION IN BANGALORE CLUB (SUPRA). THE ASSESSES INSTANT FIRST SUBSTANTIVE GROUND IS DECLINED. 4 ITA NO.837/KOL/2015 & 2377/KOL/2016-THE SATURDAY CL UB LTD A.Y.2010-11&2011-12 8. THE ASSESSEES NEXT TWO SUBSTANTIVE GROUNDS SEEK TO DELETE ADDITIONS OF RS.57,98,259/- AND RS.43,50,052/- IN RESPECT OF REN TAL INCOME AND SERVICE FEE; RESPECTIVELY RECEIVED FROM THE ABOVE STATED PAYEE M /.S. RELIANCE INDUSTRIES LTD. SUFFICE TO SAY, WE HAVE ALREADY ACCEPTED REVENUES CORRESPONDING GROUNDS IN PRECEDING ASSESSMENT YEAR IN THE FOREGOING DISCUSSI ON. BOTH PARTIES ARE VERY FAIR IN NOT DRAWING ON DISTINCTION OF FACTS IN THE IMPUGNED ASS ESSMENT YEAR. WE THUS CONFIRM CIT(A)S FINDINGS QUA ALL THESE THREE ISSUES RAISED IN THE INSTANT APPEAL. THUS ASSESSEES APPEAL ITA NO.2377/KOL/2016 FAILS ACCORD INGLY. 9. THE REVENUES APPEAL ITA NO.837/KOL/2015 FOR A.Y .2010-11 IS ALLOWED WHEREAS ASSESSEES APPEAL ITA NO2377/KOL/2016 FOR A .Y.2011-12 IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 09.05.2018. SD/- SD/- [M.BALAGANESH] [ S.S. GODARA ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 09.05.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.THE SATURDAY CLUB LIMITED, 7, WOOD STREET, KOLKAT A-700016. 2. D.C.I.T., CIRCLE-8 (2), KOLKATA 3. C.I.T.(A)- 3, KOLKATA 4. C.I.T.-2, KOLK ATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHES 5 ITA NO.837/KOL/2015 & 2377/KOL/2016-THE SATURDAY CL UB LTD A.Y.2010-11&2011-12