TMI Blog2011 (6) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. CIT(A) was not justified in allowing the rental income of ₹ 2,41,414/- from rest house as business income instead of income from house property. Whereas the assessee has filed the Cross Objection raising following grounds :- (1) The CIT(A) erred in upholding the addition of ₹ 38,200/- out of the overall income of ₹ 2,41,414/- arising from rest house. (2) The CIT(A) erred in not allowing the expenditure incurred for maintenance of rest house, the income from which was exempt under mutuality and as has been so allowed by the CIT(A). (3) The CIT(A) erred in taxing the rental income from property given on rent instead of considering it to be exempt income under the concept of mutuality as the moneys to con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to be distributed among the members. However, on 11th March, 2011 in the Annual General Body Meeting the Federation passed a resolution as under :- Resolution No.6 Modification in bye-laws of the Federation: In case of liquidation of the Federation, after clearance of outstanding dues/liabilities by the Liquidator, remaining property/assets can be distributed amongst Institutional Members i.e. member sugar factories, there is no provision in by-laws of the Federation. The Executive Body meeting of this Federation which was held on 22.06.2010 vide Resolution No.12 proposed to General Body and hence it has been unanimously decided to make provision in by-laws of this Federation as indicated below: 9(A) In case of liquidation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were not before the AO for consideration. Therefore, the learned Counsel for the assessee rightly contended that the matter may be restored to the file of the AO on both the grounds for reconsideration in accordance with the above new development by modifying the byelaws of the federation. The learned DR has no objection for restoring the matter to the file of the AO on both the grounds of appeal. Accordingly, the orders of the authorities are set aside and both the grounds are restored to the file of the AO for reconsideration in the light of the documents now placed on record by the learned Counsel for the assessee above. The AO shall pass reasoned order by giving reasonable sufficient opportunity of being heard to the assessee. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity of the concern specifies test of mutuality. Therefore, he submitted that each activity has to be examined independently for coming to the conclusion that profit arising therefrom is exempt. He also referred to the judgment of Hon. Karnataka High Court in the case of CIT vs. Bangalore Club (2006) 287 ITR 263 (Kar) wherein it is held that income from deposits in bank from mutual concerns is taxable as income. 8. We have heard the rival parties. Since the issue of mutuality is primarily restored to the file of AOfor Asst. Years 2003-04 to 2005-06 then following the same the issues arising in Asst. Year 2006-07 are required to be restored to the file of AO for deciding afresh after considering the amendment in the constitution, whet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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