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TMI Blog2016 (6) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings thereby the issue of ‘principle of mutuality’ has been discussed and detailed enquiry has been done at the level of the AO and assessee also filed its details before the AO in the assessment proceedings with regard to the applicability of ‘principle of mutuality’. After perusing the assessment order dated 07.3.2013 passed u/s. 143(3) of the I.T. Act, we have seen that AO has rightly considered the applicability of ‘principle of mutuality’ in the assessment order especially the para 7 of the assessment order. Revision order od CIT(A) cancelled - Decided in favour of assessee. - ITA No. 2390/DEL/2015 - - - Dated:- 18-5-2016 - Shri H. S. Sidhu, Judicial Member And Shri O. P. Kant, Accountant Member For the Assessee : Sh. Suresh Ananthraman, CA For the Department : Ms . Sulekha Verma, CIT(DR) ORDER Per H. S. Sidhu, JM This appeal by the Assesse is directed against the Order of the Ld. Commissioner of Income Tax (Exemptions), New Delhi dated 27.3.2015 passed u/s. 263 of the I.T. Act pertaining to assessment year 2010-11 on the following grounds:- 1. The order passed U/S 263 of the Act is without jurisdiction. 2. The revisional order holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to due scrutiny of the accounts from year to year. The AO rejected the claim of section 11 12 of the I.T. Act and applied the provisions of Income Tax Act and has held that the assessee seems to be covered by the principle of mutuality and is entitled for exemption only in respect of income accruing from the members in the terms of the principles of mutuality. However, those receipts of income, which are attributable to outstanding or third parties, are not allowable to the assessee, under the same principle. He further observed that certain amounts, as reflected in the income-expenditure account, have accured to the assessee from third parties being in the nature of bank interest at an amount of ₹ 75,73,939/- and therefore, this amount, not being covered under the principle of mutuality, requires to be subjected to tax under the normal provisions of the I.T. Act. Thus, he completed the assessment in this case u/s. 143(3) of the I.T. Act on 07.3.2011 at an income of ₹ 75,73,939/-. 3. After perusing the assessment order dated 07.3.2013 particularly the balance sheet filed by the assessee, the Ld. CIT(E) noticed that fixed deposits have been classified under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. After considering the reply filed by the Assessee- Society, the Ld. Commissioner of Income Tax(E) has passed the impugned order u/s. 263 of the I.T. Act dated 27.3.2015 by holding the assessment order dated 7.3.2013 passed u/s. 143(3) of the Act is erroneous and prejudicial to the interest of revenue by citing the decision of the Hon ble Karnataka High Court in the case of Infosys Technologies Ltd. reported in 341 ITR 293 (Kar.). Thereafter, Ld. CIT(E) set aside the assessment with the directions to the AO to examine the issue in details in view of the Memorandum of Association and Dissolution clause. 4. Against the above order of the Ld. CIT(E) dated 27.3.2015 passed u/s. 263 of the I.T. Act, the assessee appealed before the Tribunal. 5. At the time of hearing, Ld. Counsel of the assessee draw our attention towards the Paper Book containing pages 1 to 203 in which he has attached various types of documentary evidences. He further draw our attention towards the Show Cause Notice dated 27.1.2015 issued u/s. 263 of the I.T. Act by the Ld. CIT(E) which is at Page No. 53-54 of the PB. He draw our attention towards page no. 16 to 19 which are the income tax returns. He stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention, she filed a small Paper Book containing 1 to 20 having the copy of the order of the Hon ble Delhi High Court in the case of Gee Vee Enterprises 99 ITR 375 (Del); Copy of order of the Hon ble Delhi High Court in the case of Duggal Co. 220 ITR 456 (Delhi); Order of the Hon ble Supreme Court of India in the case of Malabar Industries Co. Ltd. 243 ITR 83 (SC) and the order of the ACIT(E), Circle 1(1), New Delhi u/s. 143(3)/263 dated 30.3.2016. She requested that the impugned order of the Ld. CIT(E) may be upheld and Appeal of the Assessee may be dismissed accordingly. 8. We have heard both the parties and perused the records available with us, especially the order passed by the Revenue Authority alongwith the documentary evidence and the case law filed by the assessee s counsel as well as the provisions of law referred by the Revenue Authority and the Ld. Counsel of the assessee. He stated that the order passed by the AO is not erroneous at all, because the AO has considered the applicability of principle of mutuality in his order dated 07.3.2013 passed under section 143(3) of the I.T. Act. We have also perused the Pages 12 to 16 of the Paper Book especially the para 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and the assessment order alongwith the impugned order, we are of the view that the AO has made the detailed enquiries on the issue of principle of mutuality and passed the order dated 07.3.2013 u/s. 143(3) of the I.T. Act as per law. 8.3 We find that the Hon ble Supreme Court in the case of CIT vs. Green World Corporation 314 ITR 81 (SC) has held as under:- The jurisdiction u/s. 263 can be exercised only when both the following conditions are satisfied: i) The order of the AO should be erroneous; and ii) It should be prejudicial to the Revenue interest. These conditions are conjunctive. An order of assessment passed by the AO should not be interfered with only because another view is possible. An order would be erroneous only when the AO makes no enquiries during the course of assessment proceedings. This principle was noticed by the Delhi High Court in Geevee Enterprises vs. Addl. CIT 99 ITR 375 (Del.). In arriving at this decision, the Delhi High Court drew strength from the principles laid down by the Supreme Court in Rampyari Devi Sarogi vs. CIT 67 ITR 84 (SC) and Tara Devi Agarwal vs. CIT, 88 ITR 324 (SC). The underlying principle which emer ..... 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