IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN MONDAY, THE 22ND MARCH 2010 / 1ST CHAITHRA 1932 ITA.No. 1768 of 2009() ---------------------- ITA.19/COCH/2008 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT: ----------------------------- THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/RESPONDENT: ------------------------- M/S. TRIVANDRUM CLUB, THIRUVANANTHAPURAM. ADV. SRI.T.M.SREEDHARAN FOR R SMT.C.K.SHERIN FOR R SRI.V.P.NARAYANAN FOR R THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 22/03/2010, ALONG WITH ITA NOS.1770 &1777 OF 2009, THE COURT ON 22/03/2010 DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. .................................................................... I.T. Appeal Nos.1768, 1770 & 1777 of 2009 .................................................................... Dated this the 22nd day of March, 2010. JUDGMENT Ramachandran Nair, J. The main question raised in the departmental appeals is whether the Tribunal was justified in holding that the rectification of assessment made by the Assessing Officer was not tenable for the assessment years 1999-2000, 2000-2001 and 2001-2002. We have heard Standing Counsel for the appellant and Adv.Sri.T.M.Sreedharan appearing for the respondent-assessee. 2. The respondent-assessee is a Members' Club which claimed exemption on the rental income received from temporary members. This court held that the principle of mutuality does not apply in respect of rental income received from temporary members. The issue raised for earlier years is covered by Division Bench judgment in COMMISSIONER OF INCOME-TAX VS. TRIVANDRUM CLUB reported in (2006) 282 ITR 505. In fact, for some years the assessee did not maintain separate accounts pertaining to rent received from I.T.A. 1768, 1770&1777/09 2 members and non-members. In those cases, the Tribunal has in second appeal, estimated the rent from non-members at 50% of the total rent receipts. However, without noticing that the assessee has maintained separate accounts for subsequent years, the Assessing Officer adopted 50% estimation made by the Tribunal for earlier years in these years also. Later the Assessing Officer noticed the mistake and made disallowance of the actual rent received from non-members. It was this order that was challenged in appeal on the ground that the mistake is not rectifiable under Section 154 of the Act. We are unable to uphold the assessee's contention because if the direction issued by the Tribunal while disposing of appeal for any year is wrongly followed in the assessment for another year, certainly the case requires rectification because facts are different for different years. Estimation applies only when separate accounts are not maintained and so much so, the Assessing Officer wrongly took 50% of rent receipt as received from non-members. Since admittedly assessee maintained separate accounts for the above three assessment years, the Assessing Officer rightly rectified the mistake he committed by invoking powers under Section I.T.A. 1768, 1770&1777/09 3 154. For earlier years, the issue stands decided by judgment of this court abovereferred. In the circumstances, we allow the appeals filed by the Revenue by cancelling the orders of the Tribunal and by remanding the matter to the Assessing Officer to revise assessments based on judgment abovereferred and make disallowance of actual rent received from non-members. C.N.RAMACHANDRAN NAIR Judge P.S.GOPINATHAN Judge pms