TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 58
X X X X Extracts X X X X
X X X X Extracts X X X X
....missioner of Income Tax (Appeals) was correct in holding that the activities of the Society were governed by the principle of mutuality, as such it was a mutual concern and its profits in question are not income as defined u/s 2(24) of the Income Tax Act, 1961 without appreciating that the Society itself declared its taxable income on account of bank interest voluntarily in its return of income filed by it ? 2. Whether in law it is still an open question that the compensation and/or enhanced compensation would be taxable only when it attained finality irrespective of the remedial provisions introduced in the Act from 1-4-2004 by insertion of sub clause (c) of sub-section (5) of section 45 read with sub-section (16) of section 155 and there is no more doubt that if the compensation and/or enhanced compensation is subsequently reduced, it would be assessed accordingly under these provisions?" 3. The brief facts of the case is that the assessee is a cooperative housing society. It did not file any return of income u/s 139 of the Act and later on the case of the assessee was reopened u/s 148 of the Act by issue of notice dated 17.03.2006. The assessee submitted its return of incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t chargeable to tax in the hands of the assessee and further the activity of the assessee is governed by the principles of mutuality and hence it is even otherwise not chargeable to tax. The ld CIT (A) held that the assessee is governed by the Principles of mutuality and it is a mutual concern hence, the income defined u/s 2(24) of the Act is not chargeable to tax. With respect to the compensation he relying upon the decision of Jurisdictional High Court in case of CIT Vs. Prem Singh dated 17.01.2007 held that the amount of interest on late payment enhanced compensation is not taxable in the present year as the compensation itself is disputed as evident from the appeal filed by the Govt. of Haryana pending before the Hon'ble Punjab and Haryana High Court. Thereby, he held that a sum of Rs. 12863000/- for Assessment Year2002-03 is not chargeable to tax. The revenue aggrieved with the order of the ld CIT(A) has preferred appeal before us. 5. Ld. Department representative vehemently relied on the Ld. assessing officer and submitted that income of the assessee cannot fall within the definition of mutuality because it is interest income received. He further stated that the issue is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....directed to verify the exact amount of interest and compensation received . Therefore, ground No. 2 of the appeal of the revenue is allowed. 10. Accordingly, the appeal of the revenue is allowed. ITA No. 2218/Del/2008 Assessment Year 2003-04 11. The appeal of the revenue for Assessment Year 2003-04 also involves the similar grounds, which were decided in appeal of the revenue for Assessment Year 2002-03. We have already given our reasons for deciding the above appeal and for similar reasons we allow ground Nos. 1 and 2 of the appeal of the revenue. However for the purposes of quantification the ld AO is directed to verify the exact amount of interest and compensation received . 12. Accordingly appeal of the revenue is allowed. 13. Accordingly, we allow appeal of the revenue for Assessment Year 2003- 04. ITA No. 3413/Del/2009 Assessment Year 2003-04 14. In ITA No. 3413/Del/2009 filed by the revenue the only contention raised is that direction of the ld CIT (A) has directed ld AO to give credit and refund of Rs. 4444333/- paid u/s 140A and TDS of Rs. 190535/- is incorrect. Vide ground No. 2 the revenue has challenged the direction of the ld CIT(A) to grant credit of Rs. 98....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n governed by the principles of mutuality and thus any profit earned by which during the year under consideration cannot be subjected to tax within even though the ingredients of mutuality are missing in this case. 2. "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 32,71,799/- made by the Assessing Officer on account of interest income earned by the Society on FDRs and saving accounts disregarding the fact that interest on deposits with bank not exempt on the principle of mutuality as principle of mutuality could be applied only if the interest is earned for advances/facilities of loan given to the members of society. 3. "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 5,80,308/- made by the Assessing Officer on account of expenditure debited to Profit & Loss account disregarding the fact that the said expenditure was not laid out for the purpose of earning interest income." 19. In the ground No. 1 the claim of the revenue is that the interest received of Rs. 580308/- on account of interest on Fixed deposits receipt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....8223;ble Apex Court in the case of CIT vs Ghanshyam (HUF) (2009) 315 ITR 1 (SC)." 2. On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred both on facts and in law, in ignoring the TDS certificate issued by the LAO, annexed with the return of income and treasury challan slip filed by the assessee wherein it is clearly mentioned that the payment of Rs. 1,70,99,779/- represents „interest on enhanced compensation‟ [which is part of enhanced compensation in view of judgment of the Hon‟ble Apex Court in the case of CIT vs Ghanshyam (HUF) (2009) 315 ITR 1 (SC)] on which the LAO has deducted the tax and the balance payment of Rs. 2,86,57,418/- represents „enhanced compensation‟ on which no tax was deducted by the LAO because of nature of payment was other than interest on enhanced compensation." 3. "On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred both on facts and in law in admitting the 'additional evidence‟ based on a perverse observation that „there are no new facts (during appellate proceedings) as far as the payments receive....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng banks account amounting to Rs. 5961442/- cannot be covered under the Principles of mutuality. 25. The assessee also received similar interest from HUDA of Rs. 17099779/- which the ld AO holding that this interest is also not covered by the principles of mutuality also added to the total income of the assessee. Accordingly, total income of the assessee was assessed u/s 143(3) of the Act vide order dated 15.11.2010. The assessee challenged the order before the ld CIT (A), who deleted the addition of Rs. 28657418/- of enhanced compensation received and Rs. 17099190/- on account of interest holding that they are not chargeable to tax. Therefore, against this revenue is in appeal before us stating that by the order of the Hon'ble Supreme Court in Cit Vs. Ghanshyam (HUF ) 315 ITR 1 it is chargeable to tax in the year in which it is received. 26. The assessee is aggrieved by the order of the ld CIT (A), wherein, he held that bank interest of Rs. 5961442/- is taxable in the hands of the assessee. Therefore, both the parties are in appeal before us. 27. As we take up the appeal of the assessee the ground No. 1 of the appeal is not pressed before us therefore, same is dismissed. 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lculated on the reducing balance by considering the payment made towards enhanced compensation first. Therefore, there was no additional evidence in view of this ground No. 3 of the appeal of the revenue is dismissed. 34. Ground No. 4 & 5 is against the order of the ld CIT (A) for not granting any opportunity. In view our decision in ground No. 1 and 2 the above ground does not deserve adjudication and hence dismissed. 35. Ground No. 6 is also related to ground No. 4 of the appeal for identical reasons is dismissed. 36. As per ground No. 7 revenue is also aggrieved by the order of the ld CIT (A) in deleting the addition of Rs. 501804/- made by the ld AO on account of inadmissible expenditure. 37. The brief facts of the case is that the ld AO disallowed the above expenditure holding that they are not meant for earning of interest income and capital gain. The ld CIT (A) allowed the claim of the assessee holding that it these expenses are on account of legal expenses as well as accounting charges etc. He held that these expenditure are liable for maintenance of the establishment. 38. The ld DR relied upon the order of the ld AO and the ld AR relied upon the order of the ld CIT(A)....