ACIT Vs Poona Club Ltd. (ITAT Pune)
The cross appeals by the Revenue and the assessee arose from the order of the CIT(A)-3, Pune dated 01.04.2016 for Assessment Year 2010-11 passed under section 143(3) of the Income-tax Act, 1961. The Tribunal heard both appeals together and disposed of them by a consolidated order.
In the assessee’s appeal, only Grounds Nos. 1 to 4 were pressed. The dispute related to interest income of ₹86,20,216 earned on bank deposits. The assessee had initially claimed that the interest was exempt on the principle of mutuality and, alternatively, sought deduction of 7.5% of the interest income as expenditure. The Assessing Officer, relying on Bangalore Club v. Commissioner of Income Tax (350 ITR 509) (SC), held that the interest income was taxable and did not allow any deduction. The CIT(A) upheld the taxability of the interest income and held that only expenditure directly incurred for earning such income was allowable under section 57(iii).
Before the Tribunal, the assessee contended that both issues stood covered by earlier Tribunal orders in its own case. The Tribunal observed that the issue of taxability of interest income had already been settled against the assessee in earlier years. On the issue of deduction, it referred to its earlier orders, including its latest order for Assessment Years 2008-09 and 2009-10, wherein it had held that the assessee was entitled to deduction at 7.5% of the interest income and was not entitled to any deduction under section 57(iii) over and above that amount. Following those earlier decisions, the Tribunal partly allowed Grounds Nos. 1 to 4 by restricting the deduction to 7.5% of the interest income. The remaining grounds in the assessee’s appeal were not pressed and were dismissed accordingly.
