M/S. Madras Cricket Club, 1 Bells Road, Chennai. Appellant v. Income Tax Officer, Company Ward Iv (1), Chennai 600 017. Respondent

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 30.11.2009 Coram : THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN and THE HONOURABLE MR.JUSTICE M.M.SUNDRESH Tax Case (Appeal) No.1319 of 2009 M/s. Madras Cricket Club,1 Bells Road, Chennai. Appellant v. Income Tax Officer,Company Ward IV (1),Chennai 600 017. Respondent Tax Case Appeal filed under section 260A of the Income Tax Act against the order of the Income TaxAppellate Tribunal, Chennai 'B' Bench dated 13.05.2008 in ITA No.42-46/Mds/2008 for theassessment year 1999-00 2001-02, 2002-03, 2003-04 and 2004-05. For Appellant : Mr.Ashok Pathy, forM/s. Pass Associates JUDGMENT (Judgment of the Court was deliveredby K.RAVIRAJA PANDIAN, J.) The order of the Appellate Tribunal Chennai 'B' Bench dated 13.05.2008 in ITA No.42-46/Mds/2008for the assessment year 1999-00 2001-02, 2002-03, 2003-04 and 2004-05, is put in issue in thisappeal by formulating the following substantial question of law :"Whether, the Income Tax Appellate Tribunal was right in law in holding that principle of mutuality and 'No man can trade with himself', is not applicable to the interest income from fixed depositearned by the appellant from bank out of the surplus funds raised from contribution of severalmembers of the appellants club even when the benefit of interest derived is utilised by severalmembers of the appellants club? 2. The appellant company, incorporated under the Companies Act, with the object to promote socialinteraction among the members of the club, their families and friends to provide club house facilitiesfor sports/games both indoor and outdoor. The appellant claimed that the mutual association and theentire income of the appellant is not liable to tax since it is mutual in character. A part of theappellant's income is in the form of interest income received from deposits with the bank. For theassessement year 2002-03 the appellant company furnished its return of income on 1st March 2002declaring a loss of Rs.51,09,692/-. The appellant's case was reopened under section 147 of the Act toassess the interest income earned from fixed deposits with the Banks, and a notice under section148 of the Act was issued on 20.03.2006. The appellant filed its return in response to the said noticeon 28.09.2006. The assessing officer vide his order dated 28.12.2006 completed the assessmentunder section 143(3) of the Income Tax Act determining the total disclosed income at Rs.17,70,194/-and tax thereon at Rs.7,24,895/- by treating the interest income received by the assessee from thedeposits with Bank is income received from non members and hence will not be considered asmutual income. The Commissioner of Income Tax (Appeals) by a common order dated 23.10.2007 forthe assessment years 1999-2000, 2001-02, 2002-03, 2003-04 and 2004-05 dismissed the appellant'sappeal by observing that the bank is not a member of the appellant's club. Against that order, theassessee preferred an appeal before the Income Tax Appellate Tribunal. The Tribunal, by reason ofthe impugned order dated 13.05.2008, dismissed the appeal filed by the assessee. The correctness ofthe same is canvassed by the assessee by filing this appeal by formulating the question of lawreferred to above. 3. The very same common order of the Tribunal, which is the subject matter of the present appealhas been considered by this Court in respect of other assessment years in Tax Case Nos.928, 1067 to1069 of 2009, wherein this Court dismissed the appeal by holding as follows :"The very question came up for consideration before this court in a batch of cases rendered inMadras Gymkana Club vs. Deputy Commissioner of Income Tax reported in (2009) 28 DTRJudgments page 9. (T.C. Nos.397 to 404 of 2008 dated 30.07.2009). The Division Bench, after adetailed analysis of the question involved took the view that investment and surplus funds by suchclubs with some of the member Banks and Institutions in the form of Fixed deposits and securitiesnot with a definite idea of using the same in any specific projects for further development of theinfrastructural facilities of the clubs failed to satisfy the concept of mutuality and therefore thebenefit of exemption cannot be extended to the interest income." 4. Following the same, this appeal is liable to be dismissed as the question of law has been answeredagainst the assessee and in favour of the revenue. Accordingly, the appeal stands dismissed. Nocosts. The connected miscellaneous petition is dismissed. (K.R.P.,J.) (M.M.S.,J.)30.11.2009mf K.RAVIRAJA PANDIAN, J. and M.M.SUNDRESH, J. T.C. (A) No.1319 of 2009 30.11.2009