2021 (7) TMI 250 - AT - Income Tax

Income of the assessee not chargeable to tax because of principles of mutuality - HELD THAT - This issue has already been decided by the Hon ble Supreme Court in assessee s own case reported 2020 (4) TMI 827 - SUPREME COURT . The Hon ble Supreme Court dismissed the appeal of the assessee. Thus, the income of the assessee is chargeable to tax and principle of mutuality does not apply. Income of the assessee not chargeable to tax on the principle of diversion of income by over-riding title - HELD THAT - This issue is also covered against the assessee in assessee s case by decision of ITAT for assessment years 2001-02 onwards in some of the years vide order dated 9th September, 2019 2019 (9) TMI 551 - ITAT DELHI wherein held that there is no applicability of doctrine of diversion of income by over-riding title in this case. Also we direct the AO that when this income is held to be chargeable to tax , assessee is principally entitle for benefit of set off of any carry forward losses of earlier years, if determined in accordance with law. The assessee is directed to produce the relevant details before the ld. Assessing Officer.

Summary

Issues:
1. Applicability of the principle of mutuality for tax exemption.
2. Whether income is chargeable to tax due to principles of mutuality.
3. Applicability of diversion of income by overriding title.
4. Claim for carry forward of losses.
5. Change in facts of the case during the year.
6. Non-appreciation of the business model.
7. Applicability of interest under Section 234-B of the Act.

Analysis:

1. The appeal was filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals) for assessment year 2012-13. The primary contention was that the income of the assessee should not be chargeable to tax due to the principle of mutuality. The assessee argued that there was complete identity between the contributories and beneficiaries, thus invoking the principle of mutuality. However, the Tribunal held that the Hon'ble Supreme Court had already dismissed the appeal of the assessee on this matter, establishing that the income was chargeable to tax and the principle of mutuality did not apply. Consequently, grounds related to the principle of mutuality were dismissed.

2. Regarding the issue of diversion of income by overriding title, the assessee claimed that the income was diverted for specific purposes and should not be subject to tax. However, the Tribunal noted that previous decisions by the ITAT and the co-ordinate bench had ruled against the assessee on this issue. The Tribunal found no applicability of the doctrine of diversion of income by overriding title in this case, leading to the dismissal of the grounds related to this issue.

3. The Tribunal dismissed the grounds related to the change in facts during the year and non-appreciation of the business model as no arguments were advanced on these points. Additionally, the claim for the applicability of interest under Section 234-B of the Act was deemed consequential in nature and was also dismissed.

4. The Tribunal directed the Assessing Officer to allow the assessee the benefit of setting off any carry forward losses against the income held to be chargeable to tax. The assessee was instructed to provide relevant details for the examination and consideration of the claim by the Assessing Officer in accordance with the law.

5. In conclusion, the appeal filed by the assessee was dismissed by the Tribunal, and the order was pronounced on 05/07/2021.