IN THE HIGH COURT OF JUDICATURE AT PATNA

Miscellaneous Appeal No.541 of 2007

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M/S Patna Golf Club Limited through its Honorary Secretary Manik Vedsen, Bailey Road,

P.O. Rajbanshi Nagar P.S. Sachivalaya Thana District Patna

.... .... Appellant

Versus

1. Commissioner of Income Tax-I, Patna

2. Income Tax Officer, Ward-2(2), Patna

.... .... Respondents

with

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Miscellaneous Appeal No. 542 of 2007

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M/S Patna Golf Club Limited through its Honorary Secretary Manik Vedsen, Bailey Road,

P.O. Rajbanshi Nagar P.S. Sachivalaya Thana District Patna

.... .... Appellant

Versus

3. Commissioner of Income Tax-I, Patna

4. Income Tax Officer, Ward-2(2), Patna

.... .... Respondents

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Appearance :

(in both cases)

For the Appellant : Mr. Ajay Kumar Rastogi, Advocate

For the Respondents: Mrs. Archana Sinha, Sr. Standing Counsel

Mr. Alok Kumar, Advocate

Ms. Shalini Bihari, Advocate

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CORAM: HONOURABLE MR. JUSTICE HEMANT GUPTA

and

HONOURABLE MR. JUSTICE RAMESH KUMAR DATTA

ORAL JUDGMENT

(Per: HONOURABLE MR. JUSTICE HEMANT GUPTA)

Date: 11-03-2016

The assessee is in appeal under Section 260A of the

Income Tax Act, 1961 arising out of an order passed by the Income

Tax Appellate Tribunal, Patna Bench, Patna (for short, „the

Tribunal‟) pertaining to assessment years 1997-1998 and 1998-1999.

M. A. No. 541 of 2007 arises out of assessment year 1998-1999

whereas M.A. No. 542 of 2007 arises out of assessment year 1997-

1998.

2. This court has formulated following substantial

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questions of law arise for consideration:-

(i) Whether the Tribunal is justified in following the judgements of

Karnataka High Court and Gujarat High Court reported in

287 ITR page 263 and 211 ITR Page 379 for holding that

interest income received by the club from fixed deposit in bank

is not income from mutual activity?

(ii) Whether on the facts and in the circumstances of the case the

Tribunal is justified in not considering the submission that

interest cannot be treated as income from other sources and

also in giving a complete go by to the judicial decisions relied

upon in this regard vide submission dated 11.11.2003?

(iii) Whether the Tribunal is justified in upholding separate and

independent taxation of interest from bank even though there is

a loss of Rs. 23,870/- after considering the interest of Rs.

2,44,232/- ?

3. As per the facts available on record, the assessee has

received interest income from the funds deposited in the bank and

the said income claims to have been utilized for the maintenance

and other objectives of the club and, therefore, that income has to be

treated as incidental and that should not be taxed. Reliance is placed

upon a Supreme Court judgment in the case of CIT Vs. Bankipur

club[1997] 226 ITR page 97 and also upon the judgment in the case

of Chemsford Club Vs. CIT 243 ITR 87.

4. On the other hand, argument of learned counsel for the

Revenue is that the income derived from interest is from other

sources and principle of mutuality does not apply to the income so

derived from the fixed deposit. She has placed reliance upon a

Division Bench judgment of Gujarat High Court in the case of Sports

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Club of Gujrat Limited Vs. Commissioner of Income Tax 171 ITR

504 which has been referred to by the Commissioner, Income Tax

(Appeals) as well as by the Tribunal.

5. We do not find any substantial question of law arises

for consideration. In Bankipur Club