DHEERAJ DREAMS,MUMBAI vs. ITO 23(1)(4), MUMBAI

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ITA 4963/MUM/2016Status: DisposedITAT Mumbai18 January 2017AY 2011-123 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found a need to examine the facts more closely, particularly regarding the nature of the banks involved and to compare them with the Bangalore Club judgment. Therefore, the issue was remanded for fresh adjudication.

What were the facts?

The assessee, a Cooperative Housing Society, earned interest from bank Fixed Deposits and claimed it as exempt based on the principle of mutuality. The revenue authorities disagreed, considering the bank a separate business entity.

What were the issues?

The applicability of the principle of mutuality to interest income earned by a Cooperative Housing Society from bank Fixed Deposits, and whether the facts align with the Bangalore Club judgment.

Which sections of the Income-tax Act were involved?

Not specified

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Income Tax Appellate Tribunal, “J” BENCH, MUMBAI

Before: SHRI D. KARUNAKARA RAO & SHRI AMARJIT SINGHShri C.V. Dharkar Shri Tufail Ahmad Khan, DR

For Appellant: Shri C.V. Dharkar
For Respondent: Shri Tufail Ahmad Khan, DR
Hearing: 12.01.2017Pronounced: 18.01.2017

सुनवाई की तायीख / Date of Hearing : 12.01.2017 घोषणा की तायीख /Date of Pronouncement : 18.01.2017 आदेश / O R D E R

PER D. KARUNAKARA RAO, AM:

1.

This appeal filed by the assessee on 03.08.2016 is against the order of the CIT (A)-40, Mumbai dated 6.5.2016 for the assessment year 2011-2012.

2.

In this appeal, assessee raised the solitary issue relating to the applicability of the „principle of mutuality‟ in respect of the interest receipts earned by the assessee from the Fixed Deposits (FDs) with Indian Overseas Bank and District Co-operative Bank. Briefly stated relevant facts of the case are that the assessee is a Cooperative Housing Society (CHS) and earned a sum of Rs. 6,88,577/- from the bank accounts of savings and FDs. The said amount was claimed as „exempt‟ in view of the applicability of the „principle of mutuality‟ to the CHS. On finding the interest earned is not from the CHS, from the Bank, a separate business entity, in effect; the Revenue Officers invoked the ratio laid down by the Hon‟ble Supreme Court in the case of Bangalore Club Vs Commissioner of Income-tax (SC) 350 ITR 509 and others. It is the opinion of the IT Officers that the said amount is outside the principle of mutuality. On appeal, CIT (A) confirmed the said addition. Aggrieved with the same, assessee is in appeal before the Tribunal.

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