ACIT, Jaipur V. JAIPUR CLUB LTD., Jaipur

ITA 91/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5208 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 01-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N S VYAS CA DHK
• 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 HKKXPAN] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF;D LN L; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 91/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 . ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, 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 R.A. VERMA (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI N.S. VYAS (C.A) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/08/2016. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 04/08/2016. VKNS'K@ ORDER PER: LALIET KUMAR, J.M. THIS IS AN APPEAL FILED BY THE REVENUE EMANATING FR OM THE ORDER OF LD. CIT(A)-I, JAIPUR DATED 17/11/2015 FOR THE A.Y. 2 012-13. THE SOLE GROUND OF REVENUES APPEAL IS AGAINST APPLYING THE PRINCIPLE OF MUTUALITY IN CASE OF CLUB. 2. THE ASSESSEE IS A CLUB, NAMELY JAIPUR CLUB LIMITE D. IT HAS FILED THE RETURN ON 29/09/2012 DECLARING NIL INCOME. THE ASSES SEE CLUB IS 2 ITA NO. 91/JP/2016 ACIT VS. JAIPUR CLUB LTD. JAIPUR. REGISTERED AS NON-TRADING COMPANY. IT OPERATES AS A CLUB WHERE MEMBERS ARE ALLOWED TO ENTER AND THEY ARE SERVED FOOD, LIQUO R, REFRESHMENTS ETC. FACILITIES FOR VARIOUS OUTDOOR AND INDOOR GAMES AND SWIMMING, GYM ETC. ARE PROVIDED TO THE MEMBERS. THE CLUB CONSIDERS ITS ELF A MUTUAL ORGANIZATION AND ON THAT BASIS CONSIDERS ITS INCOME AS OUTSIDE THE PURVIEW OF TAXABILITY. THE AO GAVE REASONABLE OPPORTUNITY O F 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 OR DER. THEREAFTER, HE DISCUSSED THE PRINCIPLE OF MUTUALITY BY RELYING ON THE VARIOUS DECISIONS OF APEX COURT AND CONSIDERED THE ROOM CHARGES, GUEST C HARGES, LAWN CHARGES AND INTEREST RECEIVED BY THE CLUB UNDER SECTION 244 A OF THE IT ACT. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO DISAL LOWED OUT OF ROOM CHARGES, LAWN CHARGES AND ANNEXE CHARGES @ 30% AND GU EST CHARGES. THEREAFTER, HE ADDED INTEREST INCOME ON FDR AND INTE REST UNDER SECTION 244A SEPARATELY. THUS TOTAL TAXABLE INCOME WAS CALCUL ATED BY THE AO AT RS. 83,45,230/-. 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. BA NGALORE CLUB, 350 ITR 509 (SC), CIT VS. TALANGANG CO-OPERATIVE GROUP HOUSIN G SOCIETY LTD., 44 3 ITA NO. 91/JP/2016 ACIT VS. JAIPUR CLUB LTD. JAIPUR. DTR (DEL.) 54, CIT VS. BANKIPUR CLUB LTD, 129 ITR 787 (PAT.), CIT VS. RANCHI CLUB LTD., 196 ITR 137 (PAT.) AND CIT VS. NORT HERN INDIA MOTION PICTURES ASSOCIATION, 180 ITR 160 (P&H). THE LD. CIT ( A) HELD THAT IN CASE OF ASSESSEE, PRINCIPLE OF MUTUALITY IS APPLICABLE. THEREFORE, HE ALLOWED THE APPEAL PARTLY. 4. NOW THE REVENUE IS BEFORE US. 5. THE LD. D/R VEHEMENTLY SUPPORTED THE ORDER OF AO. 6. AT THE OUTSET, THE LD. A/R OF THE ASSESSEE AGAIN REITERATED THE ARGUMENTS MADE BEFORE LD. CIT (A) AND REFERRED THE V ARIOUS DECISIONS OF APEX COURT ON MUTUALITY. HE FURTHER ARGUED THAT THI S BENCH HAS ALREADY CONSIDERED THIS ISSUE IN ITA NOS. 592 & 418/JP/2013 VIDE ITS ORDER DATED 01.01.2016 AND HELD THAT PRINCIPLE OF MUTUALITY IN CASE OF ASSESSEE IS APPLICABLE. THEREFORE, HE REQUESTED TO UPHOLD THE OR DER OF LD. CIT (A). 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE COORDINATE BENCH OF THE TRIBUNAL IN A SSESSEES OWN CASE IN ITA NOS. 592 & 418/JP/2013 FOR A.Y. 2007-08 AND 200 8-09 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. TH E ASSESSEE HAS NOT ISSUED ANY BILL IN THE NAME OF OUT SIDER. 4 ITA NO. 91/JP/2016 ACIT VS. JAIPUR CLUB LTD. JAIPUR. IF ANY SERVICE HAS BEEN PROVIDED TO THE GUEST BY TH E CLUB, THE BILLS HAS BEEN ISSUED IN THE NAME OF MEMBERS ON LY. THE LD ASSESSING OFFICER HAD NOT SPECIFICALLY POINTE D OUT THE RECEIPTS RECEIVED FROM NON MEMBERS. HE SIMPLY M ADE DISALLOWANCE ON ESTIMATE BASIS. THE ASSESSEE HAS PRODUCED COMPLETE BOOKS OF ACCOUNT DURING THE ASSESSMENT PROCEEDINGS. THEREFORE, PRINCIPLE LAID DO WN BY THE HON'BLE SUPREME COURT IN THE CASE OF BANKIPU R CLUB LIMITED (SUPRA) IS SQUARELY APPLICABLE ON PRIN CIPLE OF MUTUALITY WHEREIN IT HAS BEEN HELD THAT IN ANY MUT UAL ORGANIZATION, THERE IS AN ELEMENT OF ALTRUISM, SINC E THE BENEFIT AVAILED BY A MEMBER MAY NOT ALWAYS BE COMMENSURATE WITH HIS CONTRIBUTION. IT WAS FOR THIS REASON THAT EVEN WHERE THERE IS NO RETURN ON THE CONTRIBUTION, AS IN THE CASE OF AN ASSOCIATION FORM ED FOR THE PURPOSE OF GENERAL PUBLIC UTILITY, MUTUALITY MA Y NOT BE LOST. THE FULL BENCH OF THE HONBLE PATNA HIGH COURT IN THE CASE OF CIT VS. RANCHI CLUB LTD. (SUPRA) HAS ALSO HELD THAT MERELY BECAUSE THE ASSESSEE COMPANY HAD ENTERED INTO TRANSACTIONS WITH NON MEMBERS AND EARNE D PROFITS OUT OF TRANSACTIONS HELD WITH THEM ITS RIGHT TO CLAIM EXEMPTION ON THE PRINCIPLE OF MUTUALITY IN RE SPECT OF TRANSACTIONS HELD BY IT WITH ITS MEMBERS WAS NOT L OST. THE ASSESSEE WAS A MUTUAL CONCERN, THE INCOME DERIVED BY IT FROM ITS HOUSE PROPERTY LET TO ITS MEMBERS AN D THEIR GUESTS AND FROM THE SALE OF LIQUOR ETC. TO ITS MEMB ERS 5 ITA NO. 91/JP/2016 ACIT VS. JAIPUR CLUB LTD. JAIPUR. AND THEIR GUESTS WAS NOT TAXABLE IN ITS HANDS. THE ABOVE PRINCIPLE IS SQUARELY APPLICABLE IN THE CASE OF ASS ESSEE, THEREFORE, WE UPHOLD THE ORDER OF THE LD CIT(A) FOR B OTH THE ASSESSMENT YEARS. BY RESPECTFULLY FOLLOWING THE DECISION ON SIMILAR FA CTS, WE UPHOLD THE ORDER OF LD. CIT(A). 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/08/2016. SD/- SD/- HKKXPAN YFYR DQEKJ (BHAGCHAND) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04/08/2016. *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT CIRCLE-1, 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. 91/JP/2016) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR