TMI Blog2023 (9) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... ative Society and is claiming exempt amount on the ground of principle of Mutuality amount which it has collected from its members for various charges has been disallowed without examining whether it is exempt under the Principle of Mutuality which even though Ld. CIT(A) held to be essential question of fact did not bother to examine the same on the ruse that impugned order before him was an order of CPC u/s 154 of the Act. Be that as it may, for the ends of justice and fair play, we restore this issue back to the file of AO to examine on facts whether the claim of assessee is allowable on the Principle of Mutuality in the light of plethora of decisions the subject and as per the decision of Bombay Oil Seeds Oil Exchange Ltd. [ 1993 (1) TMI 41 - BOMBAY HIGH COURT] and ITO vs Venkatesh Premises Co-operative Society Ltd [ 2018 (3) TMI 675 - SUPREME COURT] - Appeal of the assessee is allowed for statistical purposes. - SHRI ABY T. VARKEY, JM AND SHRI AMARJIT SINGH, AM For the Appellant : Shri. N.R. Agarwal For the Respondent : Shri. Krishna Kumar, (Sr. AR) ORDER PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellant society by way of rectification is beyond the scope of corrections entertained by way of 'Return data correction', CPC, Bengaluru disregarded the data correction made in the schedule, consequently not rectified order passed u/s 143(1). 4. The Ld. AR of the assessee assailing the action of the Ld. CIT(A) brought to our notice that assessee has claimed exemption of Rs. 93,20,286/- being Maintenance charges received from members in the original return of income (ROI). However, while the return was processed u/s 143(1) of the Act, the CPC taking note that there was some mistake in filing up of certain columns of the return of income disallowed the claim. The assessee taking note of the action of CPC disallowing the claim filed rectified data correction , however, the same was not rectified. So, the assessee challenged the action of CPC before the Ld. CIT(A), who dismissed it. Assailing the action of Ld CIT(A), the Ld AR submitted that the impugned action of Ld CIT(A) is erroneous because he passed the order without appreciating that (i) no new claim was made in rectification return. Whereas, in the original return, claim was made though in wrong columns. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal has jurisdiction to examine the same? The Hon'ble Supreme Court while answering the said question observed that under section 254 of the Act, the power of the Tribunal in dealing with the appeals is expressed in the widest possible terms; the power of the Tribunal under section 254 is not restricted only to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals); that both the assessee as well as the department have a right to file an appeal/cross objection before the Tribunal and the Tribunal is not prevented from considering questions of law arising in assessment proceedings although not raised earlier. While answering the question in affirmative, the Hon'ble Supreme Court concluded that the Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee. The Ld. AR also cited the full bench decson of the Hon'ble Bombay High Court in the cases of Ahmedabad Electricity Company Ltd. vs. CIT and Godavari Sugar Mills Ltd. vs. CIT 199 ITR 351 wherein it has been observed that the basic purpose of an appeal procedure in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s account which is exempt the assessee had shown and amount of Rs. 93,20,686/-. And thereafter he drew our attention to page no. 81 schedule EI i.e. Details of Exempt Income (Income not to be included in Total income or not chargeable to tax) assessee has shown as item 4 other exempt income as maintenance and other charges collected to the tune of Rs. 93,20,286/- and other exempt income to Rs. 2,400/- thus total amount of Rs. 93,20,686/-. The Ld. AR also drew our attention to profit and loss account (refer page no 194 of appeal set) wherein surplus for the year is shown as Rs. 32,42,544/-; and drew our attention to page no 198 (income and expenditure appropriate account) wherein it is noted that Rs. 16,37,544/- has been transferred to the balance sheet. Thus, assessee brought to our notice that surplus is to the tune of Rs. 32,42,544/- which was transferred to balance-sheet. According to the Ld. AR, it can be seen that even in the original return of income the claim was made though under wrong heading/columns. 8. According to the Ld. AR, even if mistake are made while filling up the columns in ROI, then also the AO/CIT(A) have to consider only the correct facts and bring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents. Therefore, he declined to adjudicate the ground of Mutuality. Aggrieved, by the action of the Ld. CIT(A) of the assessee is before us. 12. We note that the Ld. CIT(A) has correctly noted that assessee society in the return of income at schedule BP ( computation of income from business and profession at columns A5 ) shown as income credited to profit and loss account which is exempt shown of Rs. 93,20,286/-. However, in the schedule EI it mentioned maintenance charges received from members which are exempt from tax as zero . Therefore, the CPC after noticing that assessee failed to give explanation in respect of the variation had treated amount of Rs. 93,20,286/- as taxable business income of the assessee, since, it was not shown as exempt in the schedule EI. We note that the assessee is premises society named as Gayatri Commercial Premises Co-Op Society Ltd. And while uploading the return of income it made certain mistakes in the columns to be filed by it viz, it wrongly filed up details in Exemption Schedule i.e. Schedule EI of return of income . Taking note of this discrepancy (i.e. exemption claimed in profit and loss account is higher than total exempt incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual usage of funds etc. Hon'ble Bombay High court in case of CIT Vs Bombay oil seeds oil exchange Ltd. 202 ITR 198 held as under: - The cardinal principle to apply the test of mutuality is that all the contributors to the common fund must be entitled to participate in the surplus and that all the participators in the surplus must be contributors to the common fund. In other words, there must be complete identity between the contributors and the participators. The question whether all the members were contributors or not is a question of fact, which has to be decided in each case by the authorities concerned. In the facts of that case, the Tribunal was held justified in holding that the test of mutuality was satisfied with regard to legal receipts and the said receipts did not constitute income of the assessee Hence examination of applicability Mutuality concept in case of a society is a question of fact which is beyond scope of 154. Hence Ground 2 of appellant is also dismissed. 14. We do not countenance the impugned action of Ld. CIT(A) because the assessee s plea regarding the amount in question being disallowed i.e. Rs. 93,20,286/- as not taxable has not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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