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2016 (10) TMI 523

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..... objects of the association, for the benefit of the members. On these facts, both the Commissioner (Appeals) and the Tribunal were justified in coming to the conclusion that the surplus so generated falls within the purview of the doctrine of mutuality and was not exigible to tax.”. - Decided in favour of the assessee and against the Revenue - ITA Nos.1776 & 1777/PN/2014 - - - Dated:- 19-8-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Appellant : Shri P.L. Kureel For The Respondent : Shri Raja B. Singh ORDER PER VIKAS AWASTHY, JM : These two appeals by the Department are directed against the order of the Commissioner of Income Tax (Appeals)-I, Thane dated 27-06-2014 common for the Assessment Year .....

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..... dance with law. It is in the second round of litigation that the assessment order for A.Y. 2004-05 u/s.143(3) r.w.s. 254 was passed. The AO held that the principle of mutuality does not apply in the case of assessee and made addition of ₹ 1,05,88,365/-, claimed by the assessee as deduction u/s.80IA of the Act. Against the assessment order dated 28-03-2013 for A.Y. 2004-05 the assessee preferred appeal before the CIT(A). 5. Similarly, in the A.Y. 2007-08 the AO vide order dated 28-03-2012 passed u/s.143(3) r.w.s. 147 of the Act disallowed the claim of the assessee in respect of deduction u/s.80IA on the ground that the principles of mutuality does not apply in the case of assessee society. Against the said assessment order, the asse .....

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..... cieties Act and Rules framed thereunder. Therefore, the principle of mutuality is diluted. The Ld. Departmental Representative vehemently supported the findings of the AO and prayed for setting aside the impugned order. 9. On the other hand, Sri Raja B. Singh appearing on behalf of the assessee vehemently defending the findings of the CIT(A). The Ld. Authorised Representative submitted at the outset that the AO in A.Y. 2005-06 accepted the contention of the assessee with respect to principle of mutuality . The AO followed the decision of Hon ble Bombay High Court in the case of CIT Vs. Common Effluent Treatment Plant (Thane-Belapur) Association (Supra) and allowed the claim of deduction u/s.80IA(4) of the Act vide order dated 31-08-2012 .....

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..... at the Tribunal can consider a question of law arising from the facts which are on record in the assessment proceedings. The Authorised Representative further placed reliance on the decision of Hon ble Kolkata High Court in the case of Indian Steel and Wire Products Ltd. Vs. CIT and submitted that the Tribunal is supposed to decide only issues which were the subject matter of first appeal, otherwise the Tribunal would be reduced to the first appellate authority which is against the intent of legislature to provide 2 stages of appellate authorities under the provisions of the Income Tax Act. The Authorised Representative further submitted that this is a fit case for levy of costs under the provisions of Rule 32A of the ITAT Rules, 1963 as th .....

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..... rounds were raised by the Department as grounds of appeal. Subsequently, the grounds were amended and the same were raised as additional grounds of appeal. The main contention of the Department is that the principle of mutuality does not apply on the assessee as the assessee has accepted funds from nonmembers of the society. The ground raised by the Department in the grounds/additional grounds of appeal is that the assessee is receiving drainage and treatment charges from Dombivili, MIDC who is not a member of the society. A perusal of the assessment order shows that the MIDC collects service charges/fees from the members of the society towards effluent disposal. There is no observation of the AO in either of the assessment years under appe .....

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..... Before parting with the order, we deem it appropriate to observe that the AO while finalizing the assessment for A.Y. 2005-06 had accepted that Doctrine of Mutuality applies in the case of assessee. The Hon ble Bombay High Court in the case of CIT Vs. Common Effluent Treatment Plant (Thane-Belapur) Association (Supra) has answered the question with respect to eligibility of similarly placed assessee to claim exemption from income tax on the principle of mutuality in affirmative. One of the question before the Hon ble High Court in the said case was : (A) Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the excess of income over expenditure in respect of the effluent treatment receipt .....

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