TaxTMI 
TaxTMI 
2016 (9) TMI 1330
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.... framed u/s 143(3) of Income Tax Act, 1961. 3. That apart from para-2 the date given by the learned CIT(Appeal) for its approval on 28/03/2013 from CIT is contrary to the factual, thus, the assessment framed deserves to be null and void. 4. The learned CIT(Appeal) had failed to appreciate the written submission as well as the verbal submission given before him and twisted in his own manner to go against the humble appellant. 5. The learned CIT(Appeal) was not justified in taking the entire receipts of Rs. 1,17,47,593/- as "taxable income". Such action is illegal, unlawful and against the natural law of justice and seems to be undue privilege of the proviso 251(1A) of Income Tax Act, 1961. 6. The learned CIT(Appeal) was unjustified in making an addition of Rs. 69,41,650/- related to corpus fund. The contention given by him is contrary to the factual and seems to be held in discretionary manner. 7. That without prejudice to Para-6 an addition of Rs. 69,41,650/- is illegal and unlawful as the learned CIT(Appeal) has not complied with the lawful obligation in service of notice u/s 251(1A) of Income Tax Act, 1961 in this respect. The notice u/s 251(1A) of learned CIT(A....
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....und that it was not claimed in the return of income and, therefore, it cannot be claimed at a later stage. On merits also, he stated that the assessee is not entitled to benefit of mutuality. He stated that the CIT(A) was factually incorrect in observing that the assessee has not claimed the benefit of mutuality before the Assessing Officer. He referred to page 1 of the assessment order and pointed out that not only the assessee claimed the benefit of mutuality before the Assessing Officer but the same was also accepted by the Assessing Officer. The Assessing Officer himself has noted that "The assessee being a mutual benefit of organization was not entitled for exemption u/s 11 and interest income and rental income being 3rd party receipts were taxable in the hands of the assessee". Thus, it is evident that the benefit of mutuality was claimed before the Assessing Officer and it was accepted by him in all other receipts except the receipt from interest income and rental income because it was received from third parties. 6. He further stated that it is a settled law that the clubs are entitled to benefit of mutuality. In this regard, he relied upon the decision of Hon'ble Apex Cou....
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.... the sides and have perused the material placed before us. The facts as discussed by the Assessing Officer in page 1 of the assessment order read as under:- "The return was filed on 30-10-2006 declaring in loss of Rs. 9,54,990/- in the status of AOP(T). The return was processed u/s 143(1) granting refund of Rs. 1,24,850/-. The assessee is registered u/s 12A(a) vide ld. CIT order dated 31-07-2003. Assessee has shown gross receipts of Rs. 1,17,47,593/- and after claiming Revenue Expenditure at Rs. 1,27,02,485/- the deficit of Rs. 9,54,992/- has been shown as returned income. Further the assessee furnished audit report u/s 12A(b) in which application of income applied to charitable or religious purposes has been shown at Rs. 1,80,51,502/- which includes i) Revenue expenditure at Rs. 94,06,793/- and capital expenditure at Rs. 86,44,709/-. Gross receipts includes rental income of Rs. 6,30,991/- and interest income of Rs. 7,19,656/- which have also been claimed exempt u/s 11 of the Act. The assessment was completed u/s 143(3) of the Act, at returned loss of Rs. 9,54,990/-. The assessee being a mutual benefit of organization was not entitled for exemption u/s 11 and interest income and ....
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....fore the Assessing Officer, it was accepted also in the order passed u/s 143(3) as well as order of reassessment u/s 147. Moreover, we find that Hon'ble Apex Court in the case of Bankipur Club Ltd. (supra) explained the concept of mutuality in the following terms :- "Under the Income-tax Act, what is taxed is, the "income, profits or gains" earned or "arising", "accruing" to a "person". Where a number of persons combine together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to those persons cannot be regarded in any sense as profit. There must be complete identity between the contributors and the participators. If these requirements are fulfilled, it is immaterial what particular form the association takes. Trading between persons associating together in this way does not give rise to profits which are chargeable to tax. Where the trade or activity is mutual, the fact that, as regards certain activities, certain members only of the association take advantage of the facilities which it offers does not affect the mutuality of the enterprise." 13. Their ....