1986 (10) TMI 57 - AT - Income Tax

Summary

Issues:
1. Whether income from letting out rooms by a club is assessable as income from house property and exempt on principles of mutuality?
2. Whether income from interest on fixed deposits, N.S.C., and dividends is exempt on principles of mutuality?

Analysis:
1. The case involved an appeal regarding the assessability of income from letting out rooms by a club and the exemption on principles of mutuality. The club, a company registered under the Indian Companies Act, let out rooms to its members and claimed exemption on the grounds of mutuality. The Income Tax Officer (ITO) assessed the entire receipts as property income and denied the exemption claim. However, the CIT(Appeals) held in favor of the club based on the principles of mutuality, citing previous decisions of the Hon'ble Allahabad High Court.

2. The Department appealed to the Tribunal challenging the CIT(A) order. The Tribunal, considering the precedents set by the Hon'ble Allahabad High Court in similar cases, upheld the CIT(A) decision. The Departmental Representative argued that the matter was pending before the Hon'ble Supreme Court via a Special Leave Petition (SLP) and questioned the reliance on previous decisions. The Authorized Representative for the assessee maintained that the issue was settled by the High Court's decisions and the Tribunal's order.

3. After hearing both parties and reviewing the records, the Tribunal found that the issue was conclusively decided by the Hon'ble Allahabad High Court's judgment in the case of M/s. Cawnpore Club Ltd. The Tribunal noted the absence of any Supreme Court decision on the matter and rejected the Reference Application, as the issue was considered resolved based on existing legal precedents.

In conclusion, the Tribunal refused to refer the questions to the Hon'ble High Court, as it deemed the matter settled by the decisions of the Hon'ble Allahabad High Court and the Tribunal's previous ruling. The Reference Application was ultimately rejected based on the existing legal framework and lack of new evidence or developments in the case.