M/S. SPORTS & CULTURAL CLUB,NOIDA vs. ACIT, NOIDA

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ITA 6902/DEL/2014Status: DisposedITAT Delhi28 September 2016AY 2008-094 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, relying on the Supreme Court's ruling in Bangaluru Club vs. CIT. It was held that the principle of mutuality does not extend to interest earned on FDRs/savings accounts and rental income, making them taxable.

What were the facts?

The assessee, a Sports & Cultural Club, appealed against the CIT(A)'s order confirming additions made by the ACIT. The additions pertained to interest earned on FDRs and savings bank accounts, and rental income received from a bank.

What were the issues?

Whether interest earned on FDRs/savings accounts and rental income received by a club are taxable despite the principle of mutuality.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-3’, NEW DELHI

O R D E R Both these appeals are filed by the assessee directed against the order of the Ld.CIT(A), Noida dated 24.9.2014 pertaining to the Assessment Year (A.Y.) 2008-09. 1.1. None appeared on behalf of the assessee despite issual of notice through R.P.A.D. There is no application for adjournment either. Under these circumstances I dispose of the case ex parte qua the assessee on merits after hearing the Ld.Sr.D.R. 1.2. Heard Shri Amrit Lal, Ld.Sr.D.R. on behalf of the Revenue.

2. The grounds of appeal in ITA 6902/Del/14 read as follows.

1.

“1. That having regard to the facts and circumstances of the case, Ld.CIT(A) has erred in law and on facts in not deleting the addition of Rs.16,99,730/- as levied by Ld.ACIT u/s 143(3) on account of interest earned on FDR’s and saving bank a/cs.

2.

That the imposition of tax demand of Rs.6,09,260/- u/s 143(3) is arbitrary illegal and excessive.

3. That the appellant craves leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”

3.

The Ld.CIT(A) relied on the decision of the Apex Court in the case of Bangaluru Club vs. CIT (2013) 29 Taxman 29 (S.C.) order dt. 14.1.2013, and held that the principle of mutuality does not cover interest earned on F.D.Rs and savings bank accounts and that the same are taxable.

4.

I do not find any infirmity in this finding of the First Appellate Authority. Hence I dismiss the appeal filed by the assessee.

5.

In the result ITA 6902/Del/14 stands dismissed.

6.

In ITA 6903/Del/14 the grounds read as under.

1.

That having regard to the facts and circumstances of the case, Ld.CIT(A) has erred in law and on facts in not deleting the addition of Rs.3,88,715/- as levied by Ld.ACIT u/s 143(3) on account of rental income received from bank.

2. That the imposition of tax demand of Rs.10,36,809/- u/s 143(3) is arbitrary illegal and excessive. 3. That the appellant craves leave to add, modify, amend or delete any of the grounds of appeal

at the time of hearing and all the above grounds are without prejudice to each other.”

7. In this case also the ld.CIT(A) applied the decision of the Hon’ble Supreme Court in the case of Bangaluru Club (supra) and dismissed the case of the assessee.

8. I find no reason to interfere in this finding of the First Appellate Authority. Hence this appeal by the assessee also is dismissed.

9. In the result both the appeals filed by the assessee are dismissed. Order pronounced in the Open Court on 28th September, 2016.

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