TaxTMI 
TaxTMI 
2018 (7) TMI 2396
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....panies act. 1956 prohibiting any distribution of income amongst the members and complies with all the requirements of section 2(15) of the Income tax Act hence whole of the income of the appellant is entitled for exemption u/s. 11. 2. The Ld. Commissioner of Income Tax (Appeals) erred in denying exemption u/s. 11 to the appellant without considering the fact that dominant object of the appellant is charitable, appellant being trade association, acting for the purpose of development of power loom industry and its export. 3. The Ld. Commissioner of Income Tax (Appeals) erred in holding that in view of the CBDT Circular No. 11 of 2008 as part of the income of the appellant is exempt under the principle of mutuality, interest income not being covered under principle of mutuality is taxable in the hands of the appellant without considering the fact and law that appellant being a charitable trust is entitled for exemption under the provisions of section 11 even if part of the income is exempt on the principle of mutuality. 4 The Ld. Commissioner of Income Tax (Appeals) erred in not considering the fact that even if certain part of income is exempt on the princi....
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....e trust, it was observed by the A.O that its activities being in the nature of "advancement of any other objects of general public utility" were admittedly restricted to catering to the needs of its members only. In the backdrop of his aforesaid observations, the A.O concluded that the principle of mutuality applied to the case of the assessee. On the basis of his aforesaid deliberations, the A.O relying on the judgment of the Hon'ble Supreme Court in the case of Bangalore Club Vs. CIT (2013) 350 ITR 509 (SC) observed that the interest income earned by the assessee fell beyond the scope and gamut of the income that would be covered by the principle of mutuality. The A.O on the basis of his aforesaid observations concluded that the interest income of Rs. 83,44,789/- earned by the assessee by parking its surplus funds by way of deposits with the banks, being clearly in the nature of interest income earned from third parties would thus not be covered by the principle of mutuality. In the backdrop of the aforesaid facts the A.O subjected the interest income earned by the assessee on the fixed deposits with the banks to tax and assessed its total income at Rs. 83,44,789/-. 3. Aggriev....
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....was held in the case of Surat Tenis Club vs. CIT (2000) 75 ITD (Ahd.). This argument of the appellant has therefore no force. iii. Appellant contended that it has been granted exemption u/s. 11 in all earlier years and since there is not change in circumstances in the current year, exemption u/s. 11 should have been allowed by the assessing officer. In this regard it is mentioned that the principle of resjudicata does not apply to income tax proceedings. Thus leal position is settled and clear that "Rule of Consistency"/ re-judicata is not applicable and each assessment year is a separate proceedings, as also affirmed in the decision of the Apex court in Bharat Sanchar Nigam Ltd. Vs. Union of India (S.C) 282 ITR. In another case of CIT Vs. Seshasayee Industries Ltd. (Mad) 242 ITR 691, it was further held that the fact that its claim was not questioned in earlier year does not entitle the assessee to contend that the law should not be applied during the current A.Y. and in the case of Ace Investments (P) Ltd. Vs. CIT (Mad) 244 ITR 166 it was held that facts can be reconsidered in later year and record different finding for earlier year not conclusive. The legal position is ....
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.... cannot be said to have been received from its members. Accordingly, same is not covered by the principles of mutuality. Precisely, this is what has been held in the judgments of Hon'ble Supreme Court in the case of Bangalore Club and of Hon'ble Bombay High Court in Common Affluent Treatment Plant (supra) referred to by the assessing officer, Thus, it is held that the interest income has rightly been taxed by the AO as income of the appellant during the year under consideration. Further, since exemption u/s. 11 has been denied, the consequential grounds raised by the appellant cannot be allowed. Ground No. 1 of appeal is therefore, dismissed." On the basis of his aforesaid deliberations, the CIT(A) observing that the facts involved in the case of the assessee for the year under consideration were in absolute parity with those for A.Y. 2011-12, thus followed his earlier order and dismissed the appeal. 4. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The Learned Authorized Representative (for short "A.R") for the assessee submitted that the assessee was registered under the provisions of Sec. 25 of the Companies Act, 1956 ....
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....ted by the Ld. D.R that the CIT(A) after observing that the facts involved in the case of the assessee remained the same as were there before him in its case for A.Y. 2011-12, had thus followed the view taken by him in the said year and dismissed the appeal of the assessee. 5. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that on a perusal of the orders of the lower authorities, it emerges that by characterizing the activities of the assessee as not being charitable as per the first proviso of Sec. 2(15) of the Act, the assessee has been held as ineligible for claim of exemption under Sec. 11. We find that involving identical set of facts the assessee was divested of its entitlement as regards claim of exemption under Sec. 11 in the assessment framed in its case for A.Y. 2011-12. It further emerges from the record that the A.O while framing the assessment for A.Y. 2011-12 had observed that as the assessee was catering to the needs of its members only, thus it was a mutual association and the principle of mutuality would be applicable in its case. However, the A.O relyin....