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TMI Blog2021 (2) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... ber (J) These six assessee's appeals arise from the CIT(A)-7, Hyderabad's separate orders dated 12-10-2016 for AYs. 2009-10 to 2012-13, dated 29-11-2016 for A.Y. 2013-14 dated 13-11-2017 for A.Y. 2014-15 passed in case Nos. 909/CIT(A)-7/2014-15, 910/CIT(A)-7/2014-15, 912/CIT(A)-7/2014-15, 913/CIT(A)-7/2014-15, 261/CIT(A)-7/2015-16, 0163/CIT(A)-7/2016-17; respectively, in proceedings u/s. 143(3) of the Income Tax Act, 1961 [in short, 'the Act']. Heard both the parties. Case files perused. 2. At the outset, we notice that assessee's appeal for A.Y. 2014-15 ITA 648/Hyd/2018 suffers from delay of 78 days. For the reasons stated in the assessee's condonation petition/affidavit filed on 04-04-2018 attributing delay of 78 days to compilation of necessary records and other factors, we hold the impugned delay is neither intentional nor willful but for the circumstances beyond the assessee's control. The delay stands condoned. 3. The assessee's identical twin substantive grounds raised in all the instant six appeals challenge correctness of both the lower authorities' action(s) disallowance/adding interest on investments made in nationalised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only the facts of the case but also the judgment of Hon'ble Bombay High Court which is squarely applicable. His order is as under: 5.3 Perused the submissions of the appellant and the observations of the Assessing Officer. As could be seen from the facts of the case, the appellant society was collecting the transfer fee from the outgoing members on transferring the property located in the colony maintained by it, as per the bye-laws and such amount was shown to have been utilized for the common purposes such as maintenance of property, roads, and other facilities, etc. As per the Assessing Officer, the transfer fee charged by Co-operative Society on the members, who transfer their plots was not voluntary and there exists no mutuality, since there is no identity between the contributors and the participators, with the contributors going out and the participators coming into the club. However, the judicial decisions in this regard held that the amounts collected/paid voluntarily or not would not make any difference to the principle of mutuality, as long as the same is governed by the bye-laws of the society, and the arrangements made under the bye-laws constitute a contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of ₹ 16,35,690/- for A.Y. 2007-08 and ₹ 9,25,475/- for A.Y. 2008-09, are held to be unsustainable. This ground of appeal for both the years, treated as allowed . 3. Since the CIT(A) has followed the Hon'ble Bombay High Court's order and co-ordinate bench is also following the same principle in various cases, we do not see any reason to interfere with the order of CIT(A). Accordingly, the grounds raised by Revenue on this issue are rejected and both the appeals of Revenue in ITA Nos. 80 81/Hyd/2015 are accordingly dismissed. 4. The AO while completing the assessment has also noticed that the appellant-society has earned interest from deposits made with the banks and interest on bank balances as exemption from tax on the 'Principles of mutuality'. Such amounts were quantified at ₹ 19,02,097/- for A.Y. 2007-08 and ₹ 19,85,909/- for A.Y. 2008-09. AO relying on the decision of jurisdictional High Court in the case of Secunderabad Club [340 ITR 121] did not allow assessee's claim. Assessee tried to distinguish the status and activities of the said club from that of a housing society and argued that the decision of Secunderabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Essence of the decision of Hon'ble High Court of Andhra Pradesh, on the issue, in the case of Secunderabad Club runs as under:- 34. Reading the above observations, it is not possible to accept the contention of the counsel for the assessee that interest earned even from third parties would be exempt from the charge of income-tax, in all types of transactions. The ratio therein is that, if an incorporated entity is engaged in trade, the profit from it, even if they are transactions with members, would be taxable and the principle of mutuality would have no application. 35. The decision of this court was long prior to Bankipur Club Ltd. (1997) 226 ITR 97 (SC) and Chelmsford Club (2000) 243 ITR 89 (SC), and no reference was made therein to Royal Western India Turf Club. (1953) 24 ITR 551 (SC). As we have considered these cases in the light of the law laid down by the Supreme Court in these three judgments, we do not feel compelled to apply the ratio in Natraj Finance Corporation (1988) 169 ITR 732 (ap). We, however, hasten to add that, if an association of person receives contribution from its own members and earns interest income by lending the money to them from out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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