1983 (12) TMI 110 - AT - Income Tax

Tribunal affirms taxability of various incomes, upholds exclusion based on mutuality doctrine.

The Tribunal upheld the taxability of income from house property, income from hiring of furniture, and interest on fixed deposits. The exclusion of guest ... Rental Income Issues Involved:1. Taxability of income from house property.2. Taxability of guest fees.3. Taxability of income from canteen and bar attributable to guests.4. Taxability of income from hiring of furniture.5. Taxability of interest on fixed deposits.Issue-wise Detailed Analysis:1. Taxability of Income from House Property:The assessee-club claimed that the income from house property was exempt on the ground of mutuality. The Income Tax Officer (ITO) disagreed, stating that the exemption on the ground of mutuality applied only to income derived from business or profession and not to income from house property. The ITO held that section 22 of the Income-tax Act, 1961 was applicable and since the assessee was the owner of the property, the income derived from letting it out to Indian Airlines Corporation was taxable. The Appellate Assistant Commissioner (AAC) upheld this view, emphasizing that the premises were let out to a third party, not to members or their guests, and the transaction was of a commercial nature. The Tribunal agreed with the AAC, stating that the club had undertaken a commercial venture by leasing the property to Indian Airlines Corporation and thus, the income was taxable.2. Taxability of Guest Fees:The ITO taxed an amount of Rs. 12,138 under the head 'guest fees'. However, the AAC agreed with the assessee that the receipt of guest fees could not be taxed since the payment for guests was made by the members themselves, and it was therefore exempt on the ground of mutuality. This decision excluded the aggregate amount of Rs. 21,498 (including income from canteen and bar attributable to guests) from the assessment.3. Taxability of Income from Canteen and Bar Attributable to Guests:The ITO brought to tax income attributable to guests from the canteen, bar, etc., taking the same at 8 percent of overall income, which came to Rs. 9,360. The AAC excluded this amount from the assessment on the ground of mutuality, as the payment for guests was made by the members themselves.4. Taxability of Income from Hiring of Furniture:The ITO brought to tax gross receipts of Rs. 14,513 from furniture hire under the head 'Income from other sources'. The AAC upheld this assessment, stating that the income from hiring of furniture was taxable. The Tribunal agreed, noting that no specific details were provided to argue that the income was not from a commercial venture.5. Taxability of Interest on Fixed Deposits:The ITO included interest on fixed deposits of Rs. 200 in the total income. This was not specifically contested by the assessee, and thus, the interest income was upheld as taxable.Conclusion:The Tribunal dismissed the appeal, upholding the taxability of income from house property, income from hiring of furniture, and interest on fixed deposits. The exclusion of guest fees and income attributable to guests from the canteen and bar was maintained on the ground of mutuality.