IN THE ITAT, DELHI BENCH
BHAVNESH SAINI, J.M. & B.R.R. KUMAR, A.M.
ACIT v. India Habitat Centre
ITA No. 5779/Del./2017
1 February, 2021
Assessee by: M.P. Rastogi, Advocate
Revenue by: Prakash Dubey, Sr. Departmental Representative
Bhavnesh Saini, J.M.
This appeal by Revenue has been directed against the Order of learned Commissioner (Appeals)-40, Delhi, dated 5-6-2017 for the assessment year 2014-2015 on the following grounds :--
1. 'On the facts and in the circumstances of the case and law, learned Commissioner (Appeals) has erred in ignoring the fact that the activities of the assessee involve rendering of services in relation to carrying on of commerce or business and hence, proviso to section 2(15) is clearly applicable in the case of the assessee.
2. On the facts and in the circumstance of the case and in law, the learned Commissioner (Appeals) has erred in deleting the addition of Rs. 1,21,38,992 made on account of bank interest being not covered under principle of mutuality in view of the judgment of Hon'ble Supreme Court in the case of Bangalore Club v. CIT (2013) 350 ITR 509 (SC) : 2013 TaxPub(DT) 0434 (SC).'
2. We have heard the Learned Representative of both the parties through video conferencing and perused the material available on record.
3. Brief facts of the case are that return of income for the assessment year under appeal was filed on 30-9-2014 disclosing NIL income. The assessee-society is registered under section 12A of the Income Tax Act, 1961 vide Order, dated 13-1-1989 and also granted approval under section 80G(5)(vi) of the Income Tax Act, 1961 vide Order, dated 19-7-2011. The assessing officer reproduced the primary aims and objects of the assessee-society in the assessment Order and found that after declaring total income and deducting the expenditure, assessee has net balance of Rs. 4,61,08,034. The assessee submitted before the assessing officer that its income is covered by the principle of mutuality as it is a Members Association. Therefore, income from mutual activity is considered exempt by the assessee-society. The assessing officer, however, noted that the activities of the assessee-society are hybrid, partly covered by provisions of section 11 read with section 2(15) and partly by principle of mutuality. It is noted that assessee-society can have income from different heads or income from different sources, but, it cannot have its income and expenditure from the same source apportioned on the basis of different principles as claimed by the assessee-society. Therefore, assessee-society cannot be allowed to compartmentalize its activities and income arising therefrom under charitable activities and mutual activities. The assessing officer, therefore, noted that all the above activities of the assessee-society shall have to be seen.