Marathi Bandhkam Vyavsayik Association Vs ITO (ITAT Pune)
In this case, the assessee (a builders’ association trust) filed a revised return claiming exemption based on the principle of mutuality instead of sections 11 & 12. The AO ignored the revised return and made additions, which was partly corrected by the CIT(A).
The Tribunal held that:
- Revised return must be considered – AO erred in relying on the original return instead of the valid revised return.
- Principle of mutuality applies only to member contributions, not to income involving third parties.
- Interest on bank FDs/savings accounts is taxable, as it involves third-party (bank) transactions, relying on Supreme Court rulings (Bangalore Club / Secunderabad Club).
- However, only net income should be taxed, not gross interest:
- Tribunal allowed 5% of interest income as deductible expenditure (in absence of proper working).
Final outcome:
- Major additions deleted (mutuality accepted for member receipts)
- Interest income taxable, but
- Partial relief granted by allowing estimated expenses (5%)
- Appeal partly allowe
FULL TEXT OF THE ORDER OF ITAT PUNE
The appeal filed by the assessee is directed against the order dated 08.07.2025 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Year (“AY”) 2017-18.
2. There is a delay of 03 days in filing of this appeal before the Tribunal for which the assessee has filed an affidavit explaining the reasons for such delay. After hearing both the sides, we are of the view that the delay is attributable to the sufficient cause. We, therefore, in light of the decisions of the Hon’ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) and in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 Live Law (SC) 339, condone the said delay and proceed to decide the appeal.
