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India Habitat Centre Versus Commissioner of Income tax (exemptions)

2016 (6) TMI 370 - ITAT DELHI

Revision u/s 263 - as per CIT(E) AO gave the benefit of mutuality to the assessee and charged only interest income instead of taxing the whole excess of income over expenditure, which resulted the mistake in the assessment of income of ₹ 2,32,45,608/- Held that:- After thoroughly examined the aforesaid documentary evidences, produced by the assessee in the shape of Paper Book and the case law cited in assessee’s own case for the assessment year 2009-10, before us, we are of the considered .....

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in the applicability of ‘principle of mutuality’ which we have seen at the assessment proceedings thereby the issue of ‘principle of mutuality’ has been discussed and detailed enquiry has been done at the level of the AO and assessee also filed its details before the AO in the assessment proceedings with regard to the applicability of ‘principle of mutuality’. After perusing the assessment order dated 07.3.2013 passed u/s. 143(3) of the I.T. Act, we have seen that AO has rightly considered the a .....

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of Income Tax (Exemptions), New Delhi dated 27.3.2015 passed u/s. 263 of the I.T. Act pertaining to assessment year 2010-11 on the following grounds:- 1. The order passed U/S 263 of the Act is without jurisdiction. 2. The revisional order holding that the order dated 07.3.2013 passed u/s 143(3) of the Act is erroneous in as much as it is prejudicial to the interest of the Revenue, is perverse and opposed to evidences on record. 3. The Assessing Officer in the regular assessment having thoroughl .....

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of mutuality has been given by the AO after due application of mind is not acceptable as the AO has not even brought on record the basic fact w.r.t. allotment of land to the assessee , is opposed to evidences on record. 6. It is contended that the entire income of the appellant is exempt on account of Principle of Mutuality. Your appellant craves leave to add, alter, amend or withdraw any of the grounds of appeal at the time of hearing. 2. The facts in brief are that the assessee filed its retu .....

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produced the aims and objects of the assessee-society in his assessment order dated 07.3.2013. AO in para 7 at page 12 of the assessment order has mentioned that the assessee has claimed the exemption under the charitable clause of the Income Tax Act vide letter dated 26.12.2012 and 8.1.2013 that the activities of the assessee society are within the purview of the principle of mutuality. The AO considered the provisions of law alongwith the evidences filed by the assessee on this issue and has h .....

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e receipts of income, which are attributable to outstanding or third parties, are not allowable to the assessee, under the same principle. He further observed that certain amounts, as reflected in the income-expenditure account, have accured to the assessee from third parties being in the nature of bank interest at an amount of ₹ 75,73,939/- and therefore, this amount, not being covered under the principle of mutuality, requires to be subjected to tax under the normal provisions of the I.T .....

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377; 23,53,388/-. The former assets do not belong to the India Habitat Centre. These belong to various corporate members in proportion of their respective contribution towards cost of acquisition of land and cost of construction of building. These assets are shown in the balance sheet of their respective owners who claim depreciation thereon in their respective books of accounts. Even surplus arising in the Income & Expenditure Account of the Centre is taken to the IHC Building Complex and o .....

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d to it and the assets created thereon will be transferred to an institution having similar aims and objects with the prior approval of the government and failing which, to the Govt., on payment of compensation determined by lesser in its absolute discretion. Thus, the assessee does not have the control of the assets of the society in the case of its dissolution. Such society cannot be treated as Mutual society. 3.1 Ld. CIT(E) has observed that the AO gave the benefit of mutuality to the assesse .....

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e ground that the assessment u/s. 143(3) is not liable to be cancelled u/s. 263 because the same has been framed by the AO after due application of mind and also that no prejudice has been caused to the revenue. After considering the reply filed by the Assessee- Society, the Ld. Commissioner of Income Tax(E) has passed the impugned order u/s. 263 of the I.T. Act dated 27.3.2015 by holding the assessment order dated 7.3.2013 passed u/s. 143(3) of the Act is erroneous and prejudicial to the intere .....

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the assessee draw our attention towards the Paper Book containing pages 1 to 203 in which he has attached various types of documentary evidences. He further draw our attention towards the Show Cause Notice dated 27.1.2015 issued u/s. 263 of the I.T. Act by the Ld. CIT(E) which is at Page No. 53-54 of the PB. He draw our attention towards page no. 16 to 19 which are the income tax returns. He stated that the assessee has disclosed about the mutuality and notice has been issued because of change o .....

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86 to 89 of the PB, favouring the assessee s case. He further stated that the AO has discussed the claim of mutuality vide para no. 7 in his order at page no. 12 to 16 and observed that assessee seems to be covered by the principal of mutuality and therefore, is entitled to exemption only in respect of income accruing from the members in terms of the principles of mutuality. Ld. Counsel of the assessee stated that it cannot be said that the AO has not applied his mind. Even on merits the case of .....

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ve, he stated that keeping in view of the written submissions as well as the documentary evidence filed by him and the precedent, the impugned order may be cancelled and the Appeal filed by the Assesee may be allowed. 7. On the contrary, Ld. CIT(DR) relied upon the impugned order of the Ld. Commissioner of Income Tax (Exemptions) dated 27.3.2015 and stated that there are various points which has been considered by the ITAT in its order, relevant for the assessment year 2009-10. Therefore, the im .....

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hi High Court in the case of Duggal & Co. 220 ITR 456 (Delhi); Order of the Hon ble Supreme Court of India in the case of Malabar Industries Co. Ltd. 243 ITR 83 (SC) and the order of the ACIT(E), Circle 1(1), New Delhi u/s. 143(3)/263 dated 30.3.2016. She requested that the impugned order of the Ld. CIT(E) may be upheld and Appeal of the Assessee may be dismissed accordingly. 8. We have heard both the parties and perused the records available with us, especially the order passed by the Reven .....

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he assessment order as well as the detailed submissions filed by the Assessee during the assessment proceedings with regard to applicability of principle of mutuality which is placed at pages 55-72 of the Paper Book. After thoroughly examined the aforesaid documentary evidences, produced by the assessee in the shape of Paper Book and the case law cited in assessee s own case for the assessment year 2009-10, before us, we are of the considered view that the arguments advanced by the Ld. Counsel o .....

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ave seen at the assessment proceedings thereby the issue of principle of mutuality has been discussed and detailed enquiry has been done at the level of the AO and assessee also filed its details before the AO in the assessment proceedings with regard to the applicability of principle of mutuality . After perusing the assessment order dated 07.3.2013 passed u/s. 143(3) of the I.T. Act, we have seen that AO has rightly considered the applicability of principle of mutuality in the assessment order .....

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ritten submissions as well as the documentary evidence and the case law cited by the Ld. Counsel of the Assessee, the impugned order may be cancelled and the Appeal filed by the Assesee may be allowed. 8.2 Keeping in view of the aforesaid discussions alongwith the documentary evidences filed by the assessee as discussed above in the arguments of the Ld. Counsel for the assessee and the assessment order alongwith the impugned order, we are of the view that the AO has made the detailed enquiries o .....

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ssed by the AO should not be interfered with only because another view is possible. An order would be erroneous only when the AO makes no enquiries during the course of assessment proceedings. This principle was noticed by the Delhi High Court in Geevee Enterprises vs. Addl. CIT 99 ITR 375 (Del.). In arriving at this decision, the Delhi High Court drew strength from the principles laid down by the Supreme Court in Rampyari Devi Sarogi vs. CIT 67 ITR 84 (SC) and Tara Devi Agarwal vs. CIT, 88 ITR .....

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