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TMI Blog2016 (9) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... doctrine of mutuality. Insofar as interest income and rental income are concerned, we, respectfully following the above hold that the same cannot be said to be governed by the concept of mutuality because the receipt is not from the members of the club. Accordingly, the assessment of these two incomes in the hands of the assessee is upheld. - ITA Nos.1897/Del/2016, 1898/Del/2016, 1899/Del/2016, 1900/Del/2016, And ITA Nos. 1901/Del/2016 - - - Dated:- 23-9-2016 - SHRI G.D. AGRAWAL, VICE PRESIDENT, AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER For The Appellant : Shri Ved Jain, Shri Ashish Chadha and Shri Ashish Goel, CAs. For The Respondent : Ms. Paramita Tripathy, CIT-DR. ORDER PER G.D. AGRAWAL, VP :- These appeals by the assessee for the assessment years 2006- 07, 2007-08, 2010-11, 2011-12 2012-13 are directed against the order of learned CIT(A)-I, Noida dated 31st March, 2016. ITA No.1897/Del/2016 Assessee s appeal for AY 2006-07 :- 2. In this appeal, the assessee has raised the following grounds :- 1. The reassessment framed is illegal, unlawful and is against the natural law of justice. 2. That the initiation of proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring loss of ₹ 9,54,992/- which was accepted in the order passed u/s 143(3) of the Income-tax Act, 1961. Subsequently, the case was reopened u/s 147 on the ground that the assessee being a mutual benefit organization, was not entitled for exemption u/s 11 in respect of interest income and rental income. While taking this view, the Assessing Officer relied upon the decision of Hon ble Apex Court in the case of Bangalore Club Vs. CIT [2013] 350 ITR 509. The Assessing Officer completed the assessment u/s 143(3) read with Section 147 of the Act and determined the income of the assessee at ₹ 11,17,181/-. 4. On appeal by the assessee, learned CIT(A) enhanced the income to ₹ 1,86,89,243/-. He was of the opinion that gross receipts as well as contribution to the corpus fund both are taxable. He found that during the year under consideration, there was gross receipt of ₹ 1,17,47,593/- and there was increase in the capital amounting to ₹ 69,41,650/-. He considered both these amounts as assessee s income and determined the taxable income at ₹ 1,86,89,243/- (1,17,47,593 + 69,41,650) as against the taxable income determined by the Assessing Officer at & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding of learned CIT(A) while refusing the doctrine of mutuality to the assessee is factually as well as legally incorrect. He, therefore, submitted that the enhancement made by the learned CIT(A) should be deleted. 7. With regard to taxability of interest income, the learned counsel fairly admitted that the issue is settled against the assessee by the decision of Hon ble Apex Court in the case of Bangalore Club (supra). Therefore, the same can be decided against the assessee. With regard to rental income, he stated that Hon ble Apex Court in the case of Chelmsford Club (supra) has accepted that rental income would be governed by the principles of mutuality and would be exempt. However, the learned counsel was fair enough to admit that in the said case, the rental income was received from the members of the club but in the case of the assessee, it was received from non-members also and, therefore, the ratio of the decision of Hon ble Apex Court in the case of Bangalore Club (supra) in respect of interest income would be applicable to the rental income also. 8. Thus, in effect, the learned counsel wanted the deletion of the enhancement made by the learned CIT(A). 9. Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was claimed in respect of all the receipts which was accepted by the Assessing Officer in the original order passed u/s 143(3). Even in the order passed u/s 143(3) read with Section 147, the Assessing Officer accepted that the assessee is a mutual benefit organization and all other receipts were accepted to be governed by the concept of mutuality. In respect of interest income and rental income being receipt from third parties, the Assessing Officer denied the benefit of mutuality. In view of this factual position, the finding of learned CIT(A) in paragraph 18, which we reproduce for ready reference, is contrary to the facts on record :- Coming to the next question of law whether the appellant could have claimed the benefit of the doctrine of mutuality if not claimed in the return of income at a later stage and more specifically in course of the appellate proceeding before the CIT(A) the answer is negative as an assessee which is registered as charitable institution u/s 12A cannot claim the benefit of doctrine of mutuality even otherwise even if it stakes its claim in the return of income and something which cannot be claimed in the return of income certainly c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the High Court, that the assessee s business was governed by the doctrine of mutuality. It was an admitted fact that the business of the assessee did not come within the scope of business referred to in section 2(24)(vii). It was not only the surplus from the activities of the business of the club that was excluded from the levy of income-tax, even the annual value of the club house, as contemplated in section 22 of the Act, would be outside the purview of the levy of income-tax. 15. That even in the case of Bangalore Club (supra) relied upon by the Assessing Officer for disallowance of interest, their Lordships have observed that the assessee was already allowed the benefit of doctrine of mutuality in respect of income other than interest income. Thus, the concept of mutuality was accepted even in the case of Bangalore Club (supra) by Hon ble Apex Court which is relied upon by the Revenue. In that case, the benefit of mutuality was not extended to interest income because it lacked complete identity between the contributors and participators. 16. It is undisputed that the receipt, other than the interest income and rental income, is from the members of the club ..... 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