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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 ..... wrong. 4. The finding of the Commissioner of Income-tax that "It is clear that in view of letter of Ministry of Urban Development, the assesee does not have control over the assets of the Society", is perverse and is opposed to evidences on record. 5. The finding of Commissioner that "The benefit of mutuality has been given by the AO after due application of mind is not acceptable as the AO has not even brought on record the basic fact w.r.t. allotment of land to the assessee", is opposed to evidences on record. 6. It is contended that the entire income of the appellant is exempt on account of Principle of Mutuality. Your appellant craves leave to add, alter, amend or withdraw any of the grounds of appeal at the time of hearing." 2. The facts in brief are that the assessee filed its return of income as NIL on 11.10.2019. The case of the assesee was selected for scrutiny, notice u/s. 143(2)/142(1) were issued on 14.9.2011. In response to the same Authorised Representatives of the assessee appeared and filed the details of record as required by the AO from time to time. In the assessment order dated 07.3.2013 passed u/s. 143(3) of the I.T. Act, the AO has stated that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owners who claim depreciation thereon in their respective books of accounts. Even surplus arising in the Income & Expenditure Account of the Centre is taken to the IHC Building Complex and other assets head. Therefore, it is very clear that less than one percent of fixed assets are possessed by the Centre and, mutuality if any is to be claimed by the assessee in respect of income of the Society, it should have been claimed only w.r.t. ratio of asset actually owned by it which is less than 1% of the total assets. Further it was noticed by the Ld. CIT(E) that as per the land allotment letter of Ministry of Urban Development, in the event of dissolution of the Centre, the land allotted to it and the assets created thereon will be transferred to an institution having similar aims and objects with the prior approval of the government and failing which, to the Govt., on payment of compensation determined by lesser in its absolute discretion. Thus, the assessee does not have the control of the assets of the society in the case of its dissolution. Such society cannot be treated as Mutual society. 3.1 Ld. CIT(E) has observed that the AO gave the benefit of mutuality to the assessee and cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of India decision in the case of Bankipur Club Ltd. 226 ITR 97 (SC), which are at pages 86 to 89 of the PB, favouring the assessee's case. He further stated that the AO has discussed the claim of mutuality vide para no. 7 in his order at page no. 12 to 16 and observed that assessee seems to be covered by the principal of mutuality and therefore, is entitled to exemption only in respect of income accruing from the members in terms of the principles of mutuality. Ld. Counsel of the assessee stated that it cannot be said that the AO has not applied his mind. Even on merits the case of the assessee is also in favour of the assessee as per the submissions made at Page No. 57 to 72 of the Paper Book in which each and every aspect on the principle of mutuality has been explained. Lastly, Ld. Counsel of the Assessee stated that exactly the similar issue has been adjudicated and decided by the ITAT, 'C' Bench in assessee's own case for the assessment year 2009-10 passed in ITA No. 3017/Del/2014 (AY 2009-10), copy thereof is attached at Page No. 39 to 52 of the PB. In view of the above, he stated that keeping in view of the written submissions as well as the documentary evidence filed by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is very much plausible and convincing, because the claim of the assessee regarding the applicability of 'principle of mutuality' in its return of income has been filed by the assessee alongwith the return of statement of account, meaning thereby the assessee has claimed the applicability of 'principle of mutuality' in its return of income. The AO during the course of assessment proceedings has also directed the assessee to explain the applicability of 'principle of mutuality' which we have seen at the assessment proceedings 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. 8.1 We also find force in the Ld. Counsel of the Assessee's submissions that exactly the similar issue has been adjudicated and decided by the ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the AO cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income Tax Officer, adopted one of the courses permissible in law and it has resulted in loss of Revenue; or where two views are possible in law and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income Tax Officer is unsustainable in law." 8.5 We also find that the case laws cited by the Ld. CIT(DR) does not support the case of the Revenue. 8.6 In the background of the aforesaid discussions and respectfully following the aforesaid precedents, we are of the considered view that the assessment order dated 07.3.2013 passed u/s.143(3) is not erroneous and prejudicial to the interest of revenue at all and the Ld. CIT(E) has passed the impugned order dated 27.3.2015, is contrary to the law and facts on record, which is not sustainable in the eyes of law. Hence, we cancel the impugned order dated 27.3.2015 passed by the Ld. CIT(E) u/s. 263 of the I.T. Act by accepting the appeal filed by the assessee and upheld the assessment order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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