Ita/194/2001 Of Investors Club Trichur,Rep.by Its Secy v. The Commissioner Of Income Tax, Cochin

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR THURSDAY, THE 7TH FEBRUARY 2008 / 18TH MAGHA 1929 ITA.No. 194 of 2001() --------------------- (AGAINST ORDER DATED 11/04/2001 IN ITA.745/COCH/1994 ofI.T.A.TRIBUNAL,COCHIN BENCH ) .................... APPELLANT / ASSESSEE : ----------------- INVESTORS CLUB TRICHUR, MAHATHMA PRESS BUILDING,PALACE ROAD, THRISSUR, KERALA, PIN – 680 020,REPRESENTED BY ITS SECRETARY SHRI.K.O.JOSE, S/O.OUSEPH, AGED 41 YEARS. BY ADV. SRI.M.UNNIKRISHNA MENON RESPONDENTS/REVENUE: ------------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) SRI.GEORGE K. GEORGE, SC FOR IT THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 07/02/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & T.R.RAMACHANDRAN NAIR, JJ. ------------------------- I.T.A. No. 194 of 2001 --------------------------------- Dated, this the 7[th] day of February, 2008 J U D G M E N T C.N.Ramachandran Nair, J. The appeal is filed against the order of the Income TaxAppellate Tribunal confirming disallowance of income tax exemptionclaimed by the appellant. The main income of the appellant, inrespect of which the exemption is claimed, is floor charges collectedfor allowing use of the space and facilities of the appellant fortrading in shares / stock. Even though appellant claimed thatappellant has permitted only its members to trade in shares / stockin its premises, there is no document to prove it, as vouchers andthe records were admittedly destroyed to save the members fromindividual tax liability. In any case, we find that the Tribunalaccepted appellant's contention that share trading was permittedonly to its members. 2.The question raised before the Tribunal was as towhether the appellant was entitled to exemption on the ground ofmutuality? In other words, the claim is that the appellant's benefitof the floor charges collected from members goes back to the same ITA No.194/2001 members, and so much so, based on principles of mutualityappellant's income is entitled to exemption. The Tribunal has foundthat the appellant was not giving any benefit to its members andfloor charges were collected pertaining to trade of shares on behalfof outsiders by the members. Therefore, the claim of mutuality wasturned down by the Tribunal. 3.We do not know, how appellant can claim exemption onprinciple of mutuality, when appellant has a case that it is entitledto exemption as a charitable institution and it has even gotregistration under Section 12A of the Income Tax Act. In any case,since the findings of the Tribunal on facts are contrary to theprinciple of mutuality, we do not find any ground to interfere withthe order of the Tribunal. So far as, the claim of exemption as acharitable institution is concerned, we find that petitioner'sinstitution does not qualify exemption by virtue of the bar containedin Section 11(4A) of the Income Tax Act. The Tribunal hasextracted the relevant provision of the Act, which disqualifiesAppellant for exemption. Since on facts, the Tribunal found thatAppellant comes within the mischief of Section 11 (4A) of the IT ITA No.194/2001 Act, we do not find any ground to interfere with Tribunal's order.Moreover, since disallowance of exemption is based on findings offacts, there is no substantial question of law arising out of theTribunal's order. The Income Tax Appeal is, therefore, dismissed. (C.N.RAMACHANDRAN NAIR, JUDGE) (T.R.RAMACHANDRAN NAIR, JUDGE) jg