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TMI Blog2014 (4) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxable income. 2. The C.I.T.(Appeals) erred in granting only part relief as far as rest house expenses is incurred though in principle he agreed that the income from rest house would be exempt under the principle of mutuality. 3. The C.I.T.(Appeals) erred in not allowing the depreciation on rest house as well as depreciation on rest house dead stock items. 4. The C.I.T.(Appeals) further erred in adding rental income as property income and held it as taxable. The C.I.T.(Appeals) also did not grant depreciation on Gandhinagar building. 5. The C.I.T.(Appeals) grossly erred in not allowing deduction of Rs.5,68,000/- being part of the research and development expenses which was disallowed in the earlier year as the same was not paid in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities and restore the matter back to the file of the Assessing Officer for adjudication of the issues afresh in the light of the directions given by the Tribunal in Assessment Year 2006-07. 6. The Tribunal in the Assessment Year 2006-07 in ITA No. 3427/Ahd/2009 alongwith CO No. 15/Ahd/2010 held as under: "This is an appeal filed by the Revenue raising following grounds:- (1) The ld. CIT(A) was not justified in allowing the assessee as eligible for exemption on the basis of 'principle of mutuality'. (2) The ld. CIT(A) was not justified in allowing the interest income of Rs.7,75,813/- as business income instead of income from other sources. (3) The ld. CIT(A) was not justified in allowing the rental income of Rs.2,41,414/- from rest h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the addition of Rs.38,200/- out of total addition made by the AO of Rs.2,41,414/- arising from the guest house which is covered under the second issue raised by the Revenue. 4. The assessee has claimed that it is a mutual association and its members are co-operative societies of the State of Gujarat. Initially an objection was raised by the AO in Asst. Year 2003-04 that the surplus, in the event of dissolution of the Federation, was not returnable to the members. The claim of the assessee was that the surplus is covered by section 115 of the Gujarat Co-operative Societies Act and is not required to be distributed among the members. However, on 11th March, 2011 in the Annual General Body Meeting the Federation passed a resolution as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration of the issues afresh. The main reason for rejecting the claim of the assessee was that the assessee has not fulfilled the condition regarding distribution of surplus assets only amongst the members of the association on its dissolution. In the absence of clear cut provisions for distribution of surplus, claim of the assessee on both the grounds of appeal was rejected. The assessee has however, modified the bye-laws by adding clause 9 (A) referred to above which was accorded sanction by Director of Sugar, Gandhinagar and accordingly it was put in form No.4 also. These papers were not before the AO for consideration. Therefore, the learned Counsel for the assessee rightly contended that the matter may be restored to the file of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it could be applied only prospectively. He referred to the decision of Hon. Madras High Court in the case of Wankaner Jain Social Welfare Society vs. CIT 260 ITR 241 (Mad) wherein amendment in the constitution of the society was not held retrospective. 7. He further referred to the decision of Hon. Bombay High Court in the case of CIT vs. Common Effluent Treatment Plant, Thane, Belapur Association (2010) 5 Taxman .com 110 (Bom) for the proposition that mutuality in respect of receipts of contribution from its members does not necessarily lead to the conclusion that every activity of the concern specifies test of mutuality. Therefore, he submitted that each activity has to be examined independently for coming to the conclusion that profit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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