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TMI Blog2018 (3) TMI 1983X X X X Extracts X X X X X X X X Extracts X X X X ..... ank however, it was admitted that no outsider had provided the services of the company but the AO is directed to verify the claim of the assessee whether any outsider is getting services or not from non-members, has to be taxed accordingly after giving full opportunity to the assessee. The assessee is also directed to cooperate with the A.O. and give all the evidences as required by the A.O. for his satisfaction. The revenue appeal on allowance of depreciation by the CIT(A) has no bearing as the principle of mutuality has been accepted by this Court. In the light of findings given by the Tribunal in the appellants own case [ 2012 (4) TMI 813 - ITAT AHMEDABAD] we find that the issue is covered against the Revenue and we have no reason to deviate from the said finding recorded by the co-ordinate bench of the Tribunal. Accordingly, following the same, we hold that the principle of mutuality has accepted by the Tribunal on earlier years is also hold good in the assessment under consideration. Therefore, the same is allowed. However, the Assessing Officer is directed to verify the claim of assessee whether any outsider is getting services or not from non-members which has to be tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of mutuality does not apply to the assessee s case. ii) On the facts and in the circumstance of the case and in law, the ld. CIT(A) has erred in allowing the claim of depreciation and prior period income amounting to Rs.2,87,94,413/- and Rs.1,30,19,265/-, respectively ignoring the facts that the same are not allowable. 4. Revenue in ITA No.3295/Ahd/2015 for A.Y.2011-12 raised grounds as under: 1. On the facts and in the circumstance of the case and in law, the CIT(A) has erred in allowing the principle of mutuality and thereby not taxing the income of Rs.3,21,87,783/- in the same grounds. 2. b) On the facts and in the circumstance of the case and in law, the CIT(A) has erred in allowing depreciation of Rs.5,74,20,367/- ignoring the fact that the cost contributed by the Members is to be reduced before allowing depreciation. 3. c) It is, therefore, prayed that the order of the ld. CIT(A) be set aside and that the order of the AO be restored. The Department has filed appeal before the High Court for AY 2002-03, 2006-07, 2007-08 2008-09 on both these issues i.e. ground no.1 2. 5. Revenue in ITA No.3293/Ahd/2015 for A.Y.2011-12 raised grounds as under: 1. On t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... access with the contribution of the members which indicates that there is no concept of mutuality. Therefore, the claim of exemption in regard to profit/surplus earned from receipts from the members as well as other receipts, is not covered by exemption and accordingly, the same was taxed. 8. Being aggrieved, the assessee filed appeal before CIT(A). The CIT(A) observed that the appeal in assessees case is covered by decision of CIT s (Appeal) in appellants own case for A.Y. 2009-10 and also by the decision of Tribunal which has been followed by the CIT(A) in A.Y. 2009-10. Accordingly, the CIT(A) has decided to issue by observing as under: In regard to ground No 1 i.e. the finding of the Assessing Officer that the appellant company is carrying business activities and not a mutual association, my predecessor gave decision on this issue under para 5.1 of his order dated 31-03-2013 in Appeal No.VLS/50/12-13 as under: I have considered the observation of the AO in the assessment order as well as the contentions raised by the AR of the appellant in the written submissions. I have also gone through the appellate order passed by the Hon ble ITAT, Ahmedabad vide their orders i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent appeal are identical for the earlier years and same is covered against the Revenue by the decision of ITAT in ITA No.1310/Ahd/2010 for the A.Y. 2006-07 dated 20.04.2012. The findings recorded by the ITAT in para 17, 18 and 19 are reproduced as under: 17. Being aggrieved form the order of CIT(A) the assessee is before us. The A.R. of the assessee company contended that the company fall u/s 25 of the Companies Act. It is company by guarantee of share. The main object of the company was not to earn any profit. It is for treatment of effluent in the Vapi Industrial Area on the suggestion of Hon'ble Gujarat High Court and contribution is made by the members only. The surplus of the company has never distributed among the members. It is set up on the principle of mutuality to trade the wastage of chemical/water from the various industrial units. The charges and contribution both the fixed on the basis of deposition of solid waste and it is non-profit company. The A.R. submitted the copy of return for A.Y. 2007-08, copy of decision of Hon'ble Gujarat High Court, copy of memorandum of association and article of association, list of the CETP and CSWP as on 31.03.2007 with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t outsiders also are member namely, Umargaon Industry Association, S.S.I. Association, Valsad and Members of Solid Waste. There are few nonmembers who are members of CETP but not of solid waste. The A.R. accepted that till they become member and cleared by Gujarat Pollution Control Board, they are charged at normal rate. Therefore, he argued that receipts from the outsider is to be taxed on the basis of judgment delivered in case of Sports Club of Gujarat (supra). 19. We have perused the assessment order, order of the CIT(A), submission of the Authorized Representative and heard the argument from both sides. The basic object of the company is to give treatment of effluent in the form of liquid and solid to prevent the pollution in Vapi Industrial area on the suggestion of the Hon'ble Gujarat High Court. The company is limited by guarantee. There is no share capital of the members. Only subscription is made on the basis of wastage delivered by their plants. No dividend has been distributed by the company so far. The object mentioned in the main and ancillary object are as per the line of the company act but it is not for profit earning. The Board of Director has to pass resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in above para for A.Y.2010-11 to the mutatis mutandis apply. Accordingly, this appeal is set aside and allowed for statistical purposes in the terms indicated above for the assessment year 2010-11. ITA No.3293/Ahd/2015 for A.Y.2011-12 u/s.154 of the Act, by Revenue: 14. The grounds of appeal taken for this year are against the rectification of mistake enhancing income due to computation of mistake in the original assessment. Since we have allowed the appeal of the assessee as per the terms indicated for assessment year 2010-11 in above paras. Therefore, these orders become consequential in nature, hence, are treated as allowed for statistical purposes in the terms as indicated above. ITA No.3294/Ahd/2015 for A.Y.2011-12 u/s.154 of the Act, by Revenue: 15. The revenue has taken grounds appeal for charging of interest on enhanced income computed vide order u/s.154 dated 10.12.2014 for charging interest u/s.234B of the Act. 16. The CIT(A) has allowed the plea of the assessee by stating that the order u/s.154 of the Act has been passed by the Assessing Officer has a consequent to the quantum addition made in the case of appellant for same year and since the ..... 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