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2018 (3) TMI 1983 - AT - Income TaxPrinciple of mutuality - activities of the assessee company for treatment of appellant and disposal of waste - HELD THAT:- The basic object of the company is to give treatment of effluent in the form of liquid and solid to prevent the pollution in Vapi Industrial area on the suggestion of the Hon'ble Gujarat High Court. The company is limited by guarantee. There is no share capital of the members. Only subscription is made on the basis of wastage delivered by their plants. No dividend has been distributed by the company so far. The object mentioned in the main and ancillary object are as per the line of the company act but it is not for profit earning. The Board of Director has to pass resolution to allow the outsider to get the services of the company. No director is outside from the members of Vapi Industrial Association. On the basis of decision of Sports Club of Gujarat [1987 (10) TMI 21 - GUJARAT HIGH COURT] the assessee also has declared the interest income in return as taxable on fixed deposit with bank however, it was admitted that no outsider had provided the services of the company but the AO is directed to verify the claim of the assessee whether any outsider is getting services or not from non-members, has to be taxed accordingly after giving full opportunity to the assessee. The assessee is also directed to cooperate with the A.O. and give all the evidences as required by the A.O. for his satisfaction. The revenue appeal on allowance of depreciation by the CIT(A) has no bearing as the principle of mutuality has been accepted by this Court. In the light of findings given by the Tribunal in the appellants’ own case [2012 (4) TMI 813 - ITAT AHMEDABAD] we find that the issue is covered against the Revenue and we have no reason to deviate from the said finding recorded by the co-ordinate bench of the Tribunal. Accordingly, following the same, we hold that the principle of mutuality has accepted by the Tribunal on earlier years is also hold good in the assessment under consideration. Therefore, the same is allowed. However, the Assessing Officer is directed to verify the claim of assessee whether any outsider is getting services or not from non-members which has to be taxed accordingly after giving full opportunity to the assessee. So far allowances of depreciation and prior period expenses are concern, as we have held the principle of mutuality in the case of assessee, therefore, the allowances of depreciation and prior period expenses by Assessing Officer has no bearing as the principle of mutuality has been accepted by the Tribunal. In the result, appeal of the assessee is set aside and disposed of for statistical purposes. Charging of interest on enhanced income computed for charging interest u/s.234B - HELD THAT:- Interest u/s.234B of the Act charged on enhanced computation of income is no longer survived. Hence, the CIT(A) was rightly deleted the charge of interest u/s.234B of the Act. Therefore, we do not find infirmity in the order of the CIT(A), hence this ground of appeal is dismissed. However, the Assessing Officer will charge consequential interest u/s.234B of the Act after considering the income of the assessee to give effect to the appellate order - Accordingly, this ground is disposed of in the terms as indicated above.
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