IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER &

SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.7645/Del/2018 (Assessment Year: 2015-16)

All India Oriental Bank of Vs. ITO (Exemption)

Employees Welfare Ward-1(1)

Society, 294, Chandni E-2, Block, 24^th Floor, Chowk, Delhi – 110006 Pratyakash Kar Bhawan, Civic Centre, New Delhi – 110002 (cid:1)थायीलेखासं./जीआइआरसं./PAN/GIR No: AAATAL0816A Appellant .. Respondent Appellant by : Sh. K. Sampath, Adv.

Sh. Ajay Kumar Arora, Adv.

Respondent by : Sh. Ajay Kumar Arora, Sr. DR Date of Hearing 03.02.2026 Date of Pronouncement 06.03.2026 O R D E R PER ANUBHAV SHARMA, JM:

This appeal is preferred by the assessee against the order dated

27.09.2018 of Ld. Commissioner of Income Tax(A)-40, Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in Appeal No : CIT(A), Delhi-40/10135/2017-18 arising out of the assessment order dated 11.12.2017 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by ITO, Ward-1(1) for AY: 2015-16.

2. Heard and perused the record. Appellant, All India Oriental Bank of Commerce Employees Welfare Society, is registered with the Registrar of Societies since 27.12.1976 and has been assessed to tax since then. The Memorandum of Association of the Society inter alia states the aims and objects of the Society as under:-

“(a) to work for the social, cultural and economic welfare of the members of the society;

(b) to work for the dissemination of knowledge, holding seminars, arranging library facilities etc.;

(c) to provide games outdoor and indoor and other positive facilities and to arrange picnics, symposium, cinema, jugglery or other shows, lectures, travelling parties, excursions and to invite and entertain respectable and reputed notable and artists;

(d) to provide for relief measures for the members and their dependants;

(e) And for other objects and purposes which may be conducive to and beneficial for the members."

3. As for the subject assessment year, Appellant submitted a return of income on 16.03.2016 declaring Nil income but the Appellant was assessed at an income of Rs. 2,86,64,884 as the ld. AR held that the subscriptions received from members during the year in a sum of Rs. 2,57,88,398/-was covered by the 'Principle of Mutuality', which as per the decision of the apex Court in Chelmsford Club vs. CIT (2000) 243 ITR 89, was not taxable. However, the AO held, that the other component of interest received on the FDR's from banks amounting to Rs. 2,86,60,231/- and the savings bank interest of Rs. 4,653/- were not covered by the 'Principle of Mutuality', having been received from a third party, which amount therefore, was taxable as income, in terms of the ruling of the apex Court in Bangalore Club vs. CIT (2000) 350 ITR 509. The same is sustained by CIT(A) for which assessee/appellant is in appeal and has raised following grounds;

“On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in confirming the following action of the Assessing Officer:-

1. Determining taxable income at Rs. 2,86,64,884/- against Nil income;

2. Making an addition of Rs. 2,86,64,884/- being the gross amount of interest earned on Fixed Deposits with Banks by denying exemption on the principle of mutuality;

3. Taxing gross amount of interest earned without allowing proportionate expenses incurred on earning the income.

All the above actions being arbitrary, erroneous and unlawful must be quashed with directions for appropriate relief.”

4. The contention of ld. Counsel is that the AO completely missed out the fact that, in pursuance of the objectives of the Society, the Appellant had paid claims, benefits including retirement benefits and pension as under all of which had to be set off against the taxable receipts:-