9911796707
TMI Blog2012 (6) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... is right in law in confirming the order of the Appellate Commissioner in deleting the disallowance of expenses to the tune of Rs. 5,56,430/- claimed by the assessee as expenses made by the Assessing Officer? [ii] Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in deleting the addition of Rs. 2 lakhs made by the Assessing Officer on account of transfer fee by transfer of plot received by the assessee?" 4. On the other hand, in Tax Appeal No. 1848 of 2010, the Revenue has raised the following question: "Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in deleting the disallowance of expenses to the tune of Rs. 7,61,826/- claimed by the assessee as expenses, made by the Assessing Officer?" 5. The facts giving rise to filing of these Appeals may be summed up thus: 5.1 The respondent filed its return on March 30, 2004 for the Assessment Year 2003-04 declaring total income of Rs. Nil along with statutory audit report. The said return of income was processed under Section 143[1] of the Act accepting the total income returned by the assessee. 5.2 The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in its return of income and consequently, all the expenses debited in its income and expenditure account cannot be said to be incurred for earning "income from other sources". The Assessing Officer was of the view that only expenses which can be considered allowable under Section 57[iii] of the Act for earning income from other sources are as follows: i Sanskrutik Kendra Repairing exp. Rs. 700 ii Sanskrutik Kendra Light exp. Rs. 167244 iii Sanskrutik Kendra Safai exp. Rs. 31830 iv Sanskrutik Kendra Borewell repairing Rs. 11475 v Pagar Kharch in absence of full details and proper bifurcation 50% of 388178 considered for Sanskrutik Kendra as against 90% claimed by the assessee Rs. 194089 vi 50% of bonus for the reasons stated above Rs. 4956 vii Depreciation on Sanskrutik Kendra Bldg. Rs. 22569 viii Depreciation on shop bldg. Rs. 3465 Total Rs. 436328 Accordingly, the Assessing Officer held that total expenses of Rs.4,36,328/- were allowable and other expenses amounting to Rs. 1318256/- [Rs.1754584 - Rs. 436328] claimed by the assessee were disallowed and added to the total income of the assessee. 5.8 The Assessing Officer also initiated penalty pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommitted error of law in not accepting the plea of the assessee that on the principle of mutuality as raised by the assessee, the assessee's income was not taxable at all and in any case, even the surplus of Rs. 4,02,182/- should not have been taxed because income of the assessee by way of interest from co-operative banks at Rs. 4,78,317/- was exempt under Section 80P[iii] of the Act. 5.15 The Tribunal, by the order impugned in these Appeals dismissed the appeal preferred by the Revenue and allowed the Cross-Objections filed by the assessee. 5.16 Being dissatisfied, these two Appeals have been preferred by the Revenue. 6. Since a Division Bench of this Court issued notice upon the respondent and as a result, Mr. S.N. Soparkar, learned Senior Counsel has entered appearance on behalf of the Revenue, we have heard out the Appeals on merits. 7. Mr. Soparkar, learned Senior Counsel appearing on behalf of the respondent, at the outset, raised a preliminary objection as regards maintainability of the Appeals on the ground that according to the Standing Instruction No. 5 of 2008 issued by the CBDT, the Revenue should not have preferred these Appeals as the tax-effect in the Tax Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept the contention of Mr. Soparkar, the learned Senior Advocate appearing on behalf of the assessee, that we should not add the tax-effect of the two Appeals but should consider the tax-effect separately for each of the appeals. 11. In this case, the Revenue has preferred the two Appeals only because of the fact that before the Tribunal, not only its appeal was dismissed but also the Cross-Objection filed by the assessee was allowed. Therefore, by virtue of the final common order passed by the Tribunal, the total tax-effect that the Revenue has suffered and which it wants to challenge in these two Appeals, is more than Rs. 4.00 Lac. In our opinion, on a plain reading of the Instruction No.5 of 2008 in its proper perspective, the intention of the CBDT was clear that if the Revenue suffered an order in the Tribunal by virtue of which the total-effect would be less than Rs. 4.00 Lac in respect of any assessment year, no appeal should be preferred before this Court against such an order. Thus, for the purpose of interpretation of the said Standing Instruction, we propose to adopt that amount as the tax-effect, which the Revenue would lose by way of tax for an Assessment year by virtue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove principle is applicable. The Supreme Court referred to section 2(24) of the Income-tax Act, 1961, which shows that the Act recognizes the principle of mutuality and has excluded all businesses involving such principle from the purview of the Act, except those mentioned in clause (vii) of that section. The three conditions, the existence of which establishes the doctrine of mutuality are (1) the identity of the contributors to the fund and the recipients from the fund, (2) the treatment of the company, though incorporated as a mere entity for the convenience of the members, in other words, as an instrument obedient to their mandate, and (3) the impossibility that contributors should derive profits from contributions made by themselves to a fund which could only be expended or returned to themselves. 14. In the said case, the assessee, a members' club, provided recreational and refreshment facilities exclusively to its members and their guests. Its facilities were not available to non-members. The club was run on "no profit no loss" basis and that the members paid for all their expenses and were not entitled to any share in the profits. Surplus, if any, was used for maintenance ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
