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2016 (10) TMI 523 - ITAT PUNE

2016 (10) TMI 523 - ITAT PUNE - TM - Deduction u/s.80IA eligibility - Concept of mutuality taxability of excess of income over expenditure - Held that:- The activities of the assessee are identical to the activities undertaken by Common Effluent Treatment Plant (Thane-Belapur Association [2010 (6) TMI 52 - BOMBAY HIGH COURT ] wherein held that the income of the assessee is contributed by its members. The assessee has been formed specifically with the object of providing a common effluent facil .....

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d 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 Years 2004-05 and 2007-08. Since the issues raised in both the appeals are identical and are arising from sam .....

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1961 (hereinafter referred to as the Act ). 3. The case of the assessee was selected for scrutiny and assessment order u/s.143(3) was passed by the AO on 31-05-2006 accepting the claim of deduction u/s.80IA and admitting NIL income returned by the assessee. Thereafter, the provisions of section 263 were invoked and assessment order u/s.143(3) r.w.s. 263 was passed on 29-12-2009 denying the claim of deduction u/s.80IA of the Act. 4. Aggrieved by the assessment order, the assessee preferred appea .....

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. 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 .....

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der of CIT(A) now the Department is in appeal before the Tribunal. 8. Sri P.L. Kureel representing the Department vehemently submitted that the AO had rejected the claim of the assessee in claiming deduction u/s.80IA primarily on the ground that the assessee is receiving contribution from Central/State Governments in the form of subsidy. Since the assessee is receiving contribution of funds from non members, the principle of mutuality will not apply. The Ld. Departmental Representative contended .....

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ssee nor its members have complete control over its funds and is subject to the provisions of Maharashtra Cooperative Societies 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 s .....

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able to be dismissed as the grounds raised in the appeals/additional grounds are not arising from the assessment proceedings. The Ld. Authorised Representative asserted that the revenue in the grounds of appeal/additional grounds has wrongly alleged that the assessee has received drainage and treatment charges during the A.Yrs. 2004-05, 2005-06, 2006-07 & 2007-08 from Dombivili, MIDC which is not a member of the society. The Authorised Representative of the assessee stated at the Bar that no .....

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li, MIDC does not figure. The Authorised Representative placed on record a copy of the list of members from whom collections were made during the period relevant to the A.Y. 2007-08. The Authorised Representative further submitted that the Hon ble Supreme Court of India in the case of National Thermal Power Company Ltd. Vs. CIT reported as 229 ITR 383 (SC) has held that the Tribunal can consider a question of law arising from the facts which are on record in the assessment proceedings. The Autho .....

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rther submitted that this is a fit case for levy of costs under the provisions of Rule 32A of the ITAT Rules, 1963 as the Department has filed frivolous appeals on the ground that were never raised before the authorities below nor it is emanating from the assessment proceedings. 10. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The grounds raised by the Department assailing the order of CIT(A) are as under : 1. On t .....

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; 82,73,119/- & ₹ 98,93,887/- during A.Y s 2004-05, 2005-06, 2006-07 & 2007-08 respectively from Dombivili, MIDC which is not a member of the society. 2. On the facts and in the circumstances of the case, and in law, the Ld.CIT(A)-I, Thane has erred in holding that the principle of Mutuality, which does not apply as there are receipts from entities other than members of the society and there is a clear motive of profit. In both the assessment years identical grounds have been raise .....

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tional 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 appeal that the assessee receives any amount from MIDC as subscription or towards any other service or assistance/grant. The issue relat .....

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ent proceedings. The Hon ble Apex Court in the case of NTPC Vs. CIT (Supra) has held that the Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the income-tax authority and have bearing on the taxability of the assessee. However, in the instant case, we find that no question of law has been raised by the Department which is borne out of facts on record during the assessment proceedings. The Ld. Authorised Representative of the assessee has filed a det .....

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d 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 .....

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