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TMI Blog2020 (1) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the decision in the case of Mumbai Mazdoor Sabha vs. Assistant Commissioner of Income Tax [ 2016 (11) TMI 537 - ITAT MUMBAI] We are in complete agreement with the aforesaid observations of the Tribunal. - The only reason for the Tribunal in not following the dictum of the said order of the Tribunal is that the amount credited into the Bank Account of the State Bank of India, Chikhli Branch was not shown in the audited books of account and balance-sheet as on 31st March, 2009. According to the Appellate Tribunal, as the assessee failed to show the receipts in its audited books of account, the dictum of law as laid in Mumbai Mazdoor Sabha would not be applicable. We are afraid, we are not in agreement with such finding recorded by the Appellate Tribunal. In fact, in the entire impugned order passed by the Appellate Tribunal, there is no worthy discussion of Section 10(24) of the Act. In the overall view of the matter, we are convinced that the Appellate Tribunal committed an error in dismissing the appeal preferred by the assessee. - Decided in favour of assessee. - R/TAX APPEAL NO. 1064 of 2018 - - - Dated:- 7-1-2020 - HONOURABLE MR.JUSTICE J.B.PARDIWALA And H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der; DATE AMOUNT 22.05.2008 ₹ 4,88,66/- 15.09.2008 ₹ 24,63,400/- 26.11.2008 ₹ 3,50,442/- 12/12/08 ₹ 27,94,315/- Total ₹ 60,96,818/- 2.4 It appears that, thereafter, notice under Section 148 of the Act for the A.Y. 2009-10 came to be issued for the reopening of assessment of the assessee-Union based on some information received from the Investigating Wing. The basis for reopening of the assessment was the receipt of ₹ 60,96,818/- by the Union, as referred to above. The Assessing Officer, in the assessment order, observed in paras- 3,4 and 5 as under; 3. I have carefully gone through the reply filed by the assessee. The assessee AOP accept that sum of ₹ 60,96,818/- has been received by them however, the facts remained that(as it is discussed in the show cause notice) an amount lying with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal No.1. The AR of the appellant contended that the reopening was bad in law as no income escaped assessment and it was further contended that the A.O. did not properly dispose of the specific objections raised at the time of re-assessment proceedings. From the copy of order dated 21.11.2016 disposing of the objections against reopening by the A.O., I find that the A.O. has passed a speaking order against the objections raised by the appellant. In the said order, the A.O has mentioned that the receipts of ₹ 60,96,818/- was not disclosed in the books of account of the appellant union. Considering these facts, it is apparent that the reopening of the current case is fully in accordance with the provisions of the Act and therefore ground of appeal No.1 challenging the reopening is hereby dismissed. Vide ground of appeal No.2, the appellant has contended that the addition of ₹ 60,96,818/- is not justified on the ground that the payment of 20% of the employees dues as union contribution cannot be taxed as the amount received by the union had direct nexus and settlement arrived at between the parties. The contribution from the employer received is incidenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said case, the Hon ble Bench had found that the union had incurred expense for welfare of member workers as well as expenses for pursuing the legal disputes in the courts and other forums. The Hon ble Bench also found that after incurrence of various expenses on behalf of the member workers pertaining to disputes, the remaining voluntary contributions received from employer were payable to the member workers. In the current case, there is no such incurrence of expenses shown by the appellant union even the receipts were duly accounted in the books of account of the union. Thus, the decision of Hon ble ITAT Mumbai in the case of Mumbai Mazdoor Sabha is not applicable to the facts of the current case. Therefore, the addition of ₹ 60,96,818/- as taxable receipts/income of the appellant union is hereby confirmed. Ground of appeal No. 2, is thus dismissed. 2.7 The assessee, being dissatisfied with the order passed by the Commissioner of Income Tax (Appeals), carried the matter further by preferring an appeal before the Income Tax Appellate Tribunal, Surat. The Income Tax Appellate Tribunal, vide order dated 21st March, 2018, dismissed the appeal. While dismissing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. Hence, the decision relied in the CIT vs. Bus Operators Association (supra) and CIT vs. Standing Conference of Public Enterprises of the case are not applicable to present facts of the case. In the light of these facts and considering the finding of the lower authorities, we do not find any infirmity in the order of ld. ClT (A). Accordingly, no inference is called for. Therefore, the ground No. II(1) to (4) is devoid of merit, hence, therefore dismissed. 2.8 Being dissatisfied with the order passed by the Tribunal, the assessee is here before this Court with the present appeal. 3. This tax appeal came to be admitted on the following substantial question of law; Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the receipt of ₹ 60,96,818/- is taxable income in the hands of the assessee? Submissions on behalf of the assessee 4. Mr. Manish Shah, the learned counsel appearing for the assessee vehemently submitted that the Income Tax Appellate Tribunal committed a serious error in dismissing the appeal thereby affirming the two orders passed by the Lower Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y affirming the two orders passed by the subordinate authorities. 8. Ms. Raval very fairly submitted that it is not in dispute that the amount has been disbursed amongst the employees. According to Ms. Raval, the factum of settlement is also not in dispute. However, the only issue in dispute is with regard to the distribution of the amount amongst the employees. In such circumstances, referred to above, Ms. Raval prays that there being no merit in this appeal, the same be dismissed. ANALYSIS 9. Section 2(24) of the Act defines the term income . Section 2(24) of the Act reads thus; 2(24) income includes- (i) profits and gains; (ii) dividend; (iia) voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes or by an association or institution referred to in clause (21) or clause (23), or by a fund or trust or institution referred to in subclause (iv) or sub- clause (v) of clause (23C) of section 10]. Explanation.- For the purposes of this sub- clause, trust includes any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany or by a cooperative society, computed in accordance with section 44 or any surplus taken to be such profits and gains by virtue of provisions contained in the First Schedule; (viii) Omitted by the Finance Act, 1988 , with effect from April, 1988 . It was inserted by the Finance Act, 1964 , w. e. f 1- 4- 1964 .] (ix) any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever;] (x) any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees' State Insurance Act, 1948 (34 of 1948 ), or any other fund for the welfare of such employees;] interest in the company or a relative of the director or the other person. 4 The word' income' is of the widest amplitude and it must be given its natural and grammatical meaning. The definition of income in section 2 (24) is inclusive. The purpose of the definition is not to limit the meaning of' income' but to widen its net and the several clauses therei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the workers for settlement of disputes between the worker and the employers is limited only in respect of the disputes between the member workers and employers. Therefore, the activity of the assessee cannot be generalized in the nature of professional service or occupational service open to general public but it is, otherwise, permitted under the by-laws and constitution of the assessee as well as Trade Union Act. Though the contribution from employer is received as per the tripartite agreement, however, it is only incidental to the activity of services of the assessee in resolving the disputes between the member workers and the employers with the intention of advancement of welfare of members. The negotiation and settlement of disputes between the workers and employers is a composite activity and the contribution received from the employer cannot be taken as a separate activity of the assessee but it is a part and parcel of activity of achieving the object as per the constitution/by-laws of the assessee. Therefore, when the predominant object of the activity of the assessee is to arrive at a settlement of disputes between the workers and the management in the interest and welf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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