Rajpath Club Ltd., Ahmedabad V. The Pr.CIT-3, Ahmedabad

ITA 112/AHD/2021

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 0456 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-10-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 23-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BIREN SHAH; G. M. THAKOR
• Keywords: Business expenditure; Capital expenditure; Set aside
• Section: 263; 11; 143(3); 37(1); 201; 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER& SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T .A . No s. 11 1& 11 2/ Ah d/2 02 1 (As se ss me nt Y ea rs : 20 15 -1 6 & 20 16 -1 7) Raj pa th C lu b Li mi t ed, Sar kh ej G an dh in ag ar Hi gh wa y, On S .G . H ig h wa y, Ah me da bad - 38 00 05 9 vs. Pri nc ip al C o mmi ss i one r of Inc o me Ta x- 3, Ah me da bad [ PAN N o. AA AC R7 37 9A ] (Appellant) .. (Respondent) Appellant by : Shri Biren Shah & Shri G. M. Thakor, A.Rs. Respondent by: Dr. Darsi Suman Ratnam, CITDR Dat e of H ea ri ng 18.10.2023 Dat e of P ro no un ce me nt 30.10.2023 O R D E R PER SIDDHARTHA NAUTIYAL, JM: Both theappeals have been filed by the assesseeagainst the order passed by the Ld. Principal Commissioner of Income Tax-3,(in short “Ld. PCIT”),Ahmedabadvide order dated 31.03.2021passed for the Assessment Years2015-16 & 2016-17.Since common facts and issues for consideration are involved for both the Assessment Years under consideration, both the appeals are being disposed of by way of a common order. 2. The Assessee has raised the following grounds of appeal:- A.Y. 2015-16 “1. On the facts and in the circumstances of the case, the order passed by the learned PCIT 3 Ahmedabad u/s.263 of the I.T. Act is ab initio void being bad in law. 2. On the facts and in the circumstances of the case, the learned CIT erred in setting aside the assessment order dated 13 th December 2017 ITA Nos. 111&112/Ahd/2021 Rajpath Club Ltd. vs.PCIT Asst. Years –2015-16 & 2016-17 - 2 - passed by the DCIT, Circle 3(1)(2) u/s. 143(3) of the I.T. Act, directing the Assessing Officer to pass a fresh assessment order. 3. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.” A.Y. 2016-17 “1. On the facts and in the circumstances of the case, the order passed by the learned PCIT 3 Ahmedabad u/s.263 of the I.T. Act is ab initio void being bad in law. 2. On the facts and in the circumstances of the case, the learned CIT erred in setting aside the assessment order dated 13 th December 2017 passed by the DCIT, Circle 3(1)(2) u/s. 143(3) of the I.T. Act, directing the Assessing Officer to pass a fresh assessment order. 3. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.” 3. The brief facts of the case are that the assessee, Rajpath Club Ltd. is a Club and primarily involved in various activities which are covered under the concept of mutuality.For A.Y. 2015-16, the assessee filed it’s return of income declaring total income of Rs. 5,89,15,000/-. 4. During the course of assessment proceedings the Assessing Officer observed that assessee has received income from lawn and marriage hall bookings amounting to Rs. 2,25,65,490/- and the Assessing Officer asked the assessee to provide the break-up of the same. On analysis of the details provided by the assessee, the Assessing Officer observed that out of the above receipts, a sum of Rs. 60,38,990/- pertains to the use of above facilities by the guests of the members (and not by the members themselves) and therefore, the assessee was asked to explain as to why the above income should not be taxed in the hands of assessee as the same is not governed by the concept of mutuality. Accordingly, the Assessing Officer held that such receipts from Lawn ITA Nos. 111&112/Ahd/2021 Rajpath Club Ltd. vs.PCIT Asst. Years –2015-16 & 2016-17 - 3 - booking and Hall booking facilities by non-members are not covered under the concept of mutuality and therefore, the same cannot be treated as exempt for purposes of taxation. Accordingly, Ld. Assessing Officer made addition of Rs. 60,38,990/- to the income of the assessee. 5. On scrutiny of assessment records, the Ld. PCIT observed that assessee has claimed deduction of Rs. 65,46,611/- @ 10% under Section 57(iii) of the Act out of “income from other sources” shown at Rs. 6,54,66,110/-. The PCIT observed that the assessee did not submit details and documentary evidences to prove the nexus that such expenses had been incurred wholly and exclusively for the purpose of earning “income from other sources” and the Assessing Officer had also not verified this issue by calling for relevant details / documents and conducting enquiries. Accordingly, the PCIT initiated proceedings under Section 263 of the Act against the assessee. Before the PCIT, the assessee was asked to explain as to why 10% of deduction under Section 57(iii) of the Act should not be disallowed and added to the income of the assessee. In response, the assessee relied on the case of ITAT Ahmedabad in the case of Sports Club of Gujarat Ltd. in ITA No. 2166/Ahd/2014 , wherein on similar set of facts ITAT Ahmedabad allowed 10% as deduction out of taxable income which is not arising on principles of mutuality. Further in this case, the ITAT Ahmedabad also observed that this practice of claiming 10% deduction out of income from other sources has been claimed by the assessee on consistent basis for many years. However, the PCIT was of the view that perusal of the nature of expenses claimed by the assessee reveals that none of the expenses applicable has been apparently incurred for the purpose of earning interest income. The PCIT was of the view that the Assessing Officer had allowed the aforesaid expenses against “income from other sources” ITA Nos. 111&112/Ahd/2021 Rajpath Club Ltd. vs.PCIT Asst. Years –2015-16 & 2016-17 - 4 - without verifying the nature of expenses and without verifying the nexus of these expenses with the earning of interest income by the assessee. The PCIT further observed that this issue has also been decided by the Hon’ble High Court of Gujarat in assessee’s own case for A.Y. 1975-76 and 1976-77 (217 ITR 379 (Guj.)) wherein it has been held that no amount of expenses is allowable unless they are incurred wholly and exclusively for the purpose of earning such interest income. Accordingly, the PCIT set-aside the assessment order as being erroneous and prejudicial to the interest of Revenue with the following observation:- “...It is clear from a plain reading of above provision that in order to get deduction, the expenditure should be incurred wholly and exclusively for the purpose of making or earning the income from other sources and that it should not be in the nature of capital expenditure. Section 58(1)(a) further provides that no deduction shall be allowed in case the expenditure is in the nature of personal expenses of the assessee. The question which arises in this case is whether the expenditure incurred for borrowing money for purchasing shares for acquiring controlling interest in a company can be held to be an expenditure incurred wholly or exclusively for earning income from dividend. There is no dispute in this case that the shares in question were purchased by the assessee for the purpose of acquiring controlling interest in the company and not for earning dividend. That being so, the expenditure incurred by way of interest on the loan taken by the assessee for the said purpose cannot be held to be an expenditure incurred wholly and exclusively for the purpose of earning income by way of dividends. From the nature of transaction, it is clear that the expenditure was not for the purpose of earning income by way of dividends but for the purpose of acquiring controlling interest in the company and, therefore, it would not be allowable as a deduction under section 57(iii) of the Act. We are supported in our opinion by the decision of the Gujarat High Court in the case of Sarabhai Sons (P.) Ltd. v. CIT [1993] 201 ITR 464. in that case, it was held that if the dominant purpose for which the expenditure was incurred was not to earn the income, the expenditure incurred in that behalf would fall outside the purview of section 57(iii) of the Act. We are also supported in our above conclusion by the decision of this court in Chinai and Co. Pvt. Ltd. v. CIT [1994] 206 ITR 616. in that case, there was a dispute in regard to deduction of expenditure under section 37 of the Act. The expenditure was incurred by the assessee in ITA Nos. 111&112/Ahd/2021 Rajpath Club Ltd. vs.PCIT Asst. Years –2015-16 & 2016-17 - 5 - fighting another group, of shareholders to protect the investment in the erstwhile managed company. The court held that such an expenditure was not a business expenditure. It was observed that section 37 of the Act dealt with deductions, inter alia, of any expenditure laid out or expended wholly and exclusively for the purposes of business or profession. Such deduction has to be in respect of any expenditure for business which was carried on by the assessee at any time during the previous year, it was held that expenditure incurred in proxy war should not be deducted as business expenditure. It may be pertinent to mention the distinction in the language used by the Legislature in sections 37(1) of the Act and 57(iii) of the Act. Section 37 provides for deduction of expenditure incurred wholly and exclusively "for the purpose of business" whereas section 57(iii) provides for deduction only of expenditure incurred wholly and exclusively "for the purpose of making or earning such income". "Such income" refers to "income from other sources". The expression "for the purpose of business" is narrower than the expression "for the purpose of making or earning such income". In order that an expenditure may be admissible under section 57(iii) it is necessary that the primary motive of incurring it is directly to earn income falling under the head "income from other sources". That is not so under section 37 which allows deduction of expenditure "incurred wholly and exclusively for the purposes of the business". Under section 57(iii), deduction will not be allowed if the expenditure is not incurred for the purpose of earning income falling under the head "income from other sources". Thus, the Court has made its decision on the question of law in the affirmative i.e. in the favour of the Revenue and against the assessee. 5. These facts have rendered the order passed by the AO for AY 2015- 16 u/s. 143(3) dated 13.12.2017 to be erroneous and prejudicial to the interest of revenue. After having considered the position of law and facts and circumstances of the instant case, I am of the considered opinion that the assessment order u/s.143(3) of the Act dated 13.12.2017 passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of revenue in accordance with the Explanation 12(a) below section 263(1) of the Act as the order is passed without considering the legal provisions and hence it has made the assessment order passed not only erroneous but also prejudicial to the interest of revenue. Accordingly, the impugned assessment order is set aside with a direction to the Assessing Officer to make requisite inquiries and proper verification with regard to the issues mentioned above and redo the assessment de-novo after due consideration of the facts and law in this regard. The assessee is at liberty to adduce the facts as deemed relevant before the assessing officer at the time of assessment proceedings in consequence to this order and the Assessing Officer shall allow the assessee adequate opportunity of being heard and to make relevant submissions. It may be ensured that the fresh assessment ITA Nos. 111&112/Ahd/2021 Rajpath Club Ltd. vs.PCIT Asst. Years –2015-16 & 2016-17 - 6 - order is passed within the prescribed time as stipulated under section 153(3) of the Act.” 6. The assessee is in appeal before us against the aforesaid order passed by Ld. PCIT. Before us, the assessee submitted that the assessee has been consistently claiming expenditure @ 10% out of income disclosed under the head “income from other sources” as deduction under Section 57(iii) of the Act from A.Y. 1994-95 onwards and the same has been allowed by the Assessing Officer during the course of assessment proceedings. It was submitted before us that the assessee had provided computation of income of last 10 years before PCIT in support of the above contention. Further, the assessee also submitted copies of assessment orders passed by the Assessing Officer under Section 143(3) of the Act for A.Ys. 2008-09 to 2014-15 and it was submitted that in the aforesaid years this issue has been considered by the Ld. Assessing Officer and the expenses so claimed by the assessee have been allowed. Accordingly, the argument of the assessee was that assessee has been consistently following this practice of claiming 10% deduction as expenditure against income from other sources under Section 57(iii) of the Act and Department has also been consistently allowing the same after carrying out due verification during the course of assessment proceedings. Further, the assessee submitted that identical issue was decided in the case of Sports Club Ltd. by Hon’ble ITAT Ahmedabad in A.Y. 1966-67 to 1969-70 and in A.Y. 2010-11 as well. Copy of both the orders were also submitted before Ld. PCIT for his perusal.Accordingly, from the above facts, it is evident that the order passed by Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue. 7. In response, Ld. D.R. submitted that it is a well settled principle of law that any expenditure can be allowed under Section 57(iii) of the Act ITA Nos. 111&112/Ahd/2021 Rajpath Club Ltd. vs.PCIT Asst. Years –2015-16 & 2016-17 - 7 - only if it is demonstrated by the assessee that such expenditure has been incurred for the purpose of earning interest income. In the instant facts, the Ld. PCIT has made a categorical observation that looking into the nature of expenses, it can be said that these expenses were not incurred for the purpose of earning interest income and lawn income taxable under the head “income from other sources”. Ld. Departmental Representative submitted that simply because the assessee has been incorrectly claiming expenses under Section 57(iii) of the Act in the past years, which have been erroneously allowed by the Department, that the assessee can continue to claim such ineligible expenses in the future years as well. Accordingly, it was submitted that the Ld. PCIT, in the instant facts has correctly observed that the assessment order passed is erroneous and prejudicial to the interest of the Revenue. 8. We have heard the rival contentions and perused the material available on record. 9. For an order to be revised under Section 263 of the Act, both the conditions have to be satisfied i.e. it should “erroneous” as well as “prejudicial” to the interest of the Revenue. In the instant case, certain facts are noteworthy. Firstly, this issue was examined by the Assessing Officer during the course of assessment proceedings and therefore, it is not the allegation of the Department that the Ld. AO had failed to apply his mind to the issue under consideration. Secondly, it is also an admitted fact that the assessee has been consistently following the practice of claiming 10% deduction against income from other sources on a consistent basis for A.Y. 1994-95 onwards. This fact is also not in dispute. Thirdly, similar claim has been allowed to the assessee in the past assessment year after carrying out due verification by the concerned ITA Nos. 111&112/Ahd/2021 Rajpath Club Ltd. vs.PCIT Asst. Years –2015-16 & 2016-17 - 8 - Assessing Officers during the course of assessment proceedings. The Counsel for the assessee has produced before us copies of assessment orders passed by Assessing Officers for various assessment years (From A.Ys. 2008-09 to A.Ys. 2014-15), wherein for several years this issue had been examined by the Assessing Officer and claim of deduction was allowed to the assessee under Section 57(iii) of the Act. Fourthly, on identical set of facts, the Ahmedabad ITAT in the case of DCIT vs. Sports Club of Gujarat in ITA No. 2166/Ahd/2014 along with C.O. No. 21/Ahd/2014 has allowed this issue in favour of the assessee. Copy of the aforesaid judgment was also produced before the PCIT during the course of 263 proceedings. 10. It would be useful to reproduce the relevant extracts of the ruling for ready reference:- “7. We have heard the rival contentions and perused the material available on record. In this appeal Revenue has raised two grounds against the order of ld. CIT(A) deleting the addition of Rs.1,31,17,183/- made on account of guest fees and hire charges and the other ground against deletion of Rs.6,10,847/- which was made on account of deduction claimed from income from other sources u/s 57(iii) of the Act. Further going through the decision of the Co-ordinate Bench in ITA No.1467/Ahd/2012 for AY 2009-10 & ITA Nos. 2121 & 2122/Ahd/1972-73 for Asst.1966-67 & 1967-68 in assessee’s own case, we find that similar issues came up before the Co-ordinate Bench. We will take up each ground separately. 8. Ground no.1 reads as under – 1) The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the addition of Rs.1,31,17,183/- made on account of Guest fees, hire of rooms and hire charges in respect of club properties. The addition of Rs.1,31,17,183/- was made on account of guest fees from members at Rs.807541/-, hire charges from members in respect of club property at Rs.1264218/- and income from room s at Rs.11045424/-. The ITA Nos. 111&112/Ahd/2021 Rajpath Club Ltd. vs.PCIT Asst. Years –2015-16 & 2016-17 - 9 - above issue was adjudicated by the Co-ordinate Bench for Asst. Year 2009-10 in ITA No.1467/Ahd/2012 by observing as below :- 6. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the judgement/decision relied upon by the parties. The issue in the present case is whether the receipts from guest fees, income from hire of rooms, hire charges in respect of club lawn is to be considered exempt by following principal of mutuality. We find that the ld.CIT(A), following the Tribunal’s order in assessee’s own case in earlier years, held that the assessee was entitled for the benefit on the basis of doctrine of mutuality. We further find that the Coordinate Bench of Tribunal in assessee’s own case for AY 2006-07 vide order dated 11/01/2013 had decided the issue in favour of assessee by holding as under:- “2. The only ground in this appeal is against the disallowance of Rs.52,95,900/-made by the A.O. on account of guest fees, room charges and hire charges in respect of club lawn collection from non-members, by holding that the income earned from the persons who were not regular members of the club was not offered though it was out of purview of mutuality. Ld. CIT(A) has deleted this addition by observing as under:- "I have carefully considered the facts of the case and the submissions of the A.R. along with the case laws as relied upon, I am inclined to accept the contention of the appellant supported by various decisions in favour of appellant in earlier years by various appellant authorities on the same issue. Even by submission dated 13-11-09, appellant submitted latest decision of the Hon'ble ITAT 'B' Bench Ahmedabad in the case of appellant itself for A. Y. 03-04 and A. Y. 04-05 (ITA No.2793/Ahd/2006 and 1398/Ahd/2007) wherein Hon'ble ITAT vide its order dt:30- 10-2009 considered the similar disallowance and addition in respective years and after taking into account the factual and legal position as well as earlier year's appellate order in the, case of appellant as well as the Hon'ble ITAT Ahmedabad D Bench decision Dt:23-02-07 passed in the case of Rajpath Club Ltd. in ITA No.2830/Ahd/2006 relating to A.Y. 03-04 allowed the appeal of the appellant for deleting such additions. It is, therefore, respectfully following such decision, the addition so made is directed to be deleted. The appellant gets a relief of Rs. 52,95,900/-." 3. Since Id. CIT(A) has given relief to the assessee by placing reliance on the decision of Hon'ble ITAT in assessee's own case for the A.Y. 2003-04 and 2004-05, we feel no need to interfere with the order passed by Id. CIT(A) and the same is hereby upheld.” ITA Nos. 111&112/Ahd/2021 Rajpath Club Ltd. vs.PCIT Asst. Years –2015-16 & 2016-17 - 10 - 6.1. Before us, Revenue has not brought any contrary binding decision in its support nor has placed any material on record to demonstrate that the decisions of the Tribunal in assessee’s own case for AY 200-07 has been set aside by Hon’ble Jurisdictional High Court. We further find that reliance placed by the Revenue in the case of Sports Club of Gujarat Ltd. vs. CIT(supra) are on different facts and, therefore, the ratio of the judgement is not applicable to the facts of the present case. In view of the aforesaid facts, we find no reason to interfere with the order of the ld.CIT(A) and thus the ground of Revenue is dismissed. 6.2. Thus, appeal of the Revenue for AY 2008-09 is dismissed. 9. Respectfully following the decision of the Co-ordinate Bench for Asst. Year 2009-10 we find that the issue raised in this appeal is similar to the one adjudicated by the Co-ordinate Bench in ITA No.1467/Ahd/12, in favour of assessee. We dismiss the ground of Revenue. 10. Now we take up ground no.2 which reads as under :- 2) The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the disallowance of Rs.6,10,847/- made on account of 'income from other sources' u/s,57 of the Act, which Assessee failed to prove to have been incurred wholly & exclusively for the purpose of earning such interest income. 11. During the course of assessment proceedings, ld. Assessing Officer observed that assessee has claimed 10% of interest income at Rs.6,10,847/- as deduction u/s 57(iii) of the Act. When Assessing Officer raised question for this deduction assessee replied that they have been consistently allowed 10% as deduction out of taxable income which is not arising on principles of mutual consent. This has been established and allowed by the Tribunal since Asst. Year 1966-67 onwards. However, the ld. AO denied this claim. 12. We observe that in appeal before ld. CIT(A) the issue has been decided in favour of assessee by ld. CIT(A) observing as below :- 3.3 Decision: I have carefully perused the assessment order and the submissions given by the appellant. The last controversy on this topic had arisen in A. Y. 1987-88. The same issue was decided by C1T( A)- 111, Ahmedabad vide order dated 17/06/1991 which reads as under:- "The alternative plea of the appellant that 10% of the income .. should be allowed as expenses is accepted fn view of a notice under section 263 dt. 04/09/1986 for assessment year 1985-86 --- ITA Nos. 111&112/Ahd/2021 Rajpath Club Ltd. vs.PCIT Asst. Years –2015-16 & 2016-17 - 11 - where it has been proposed that the income from bank deposit should be included after allowing expenses therefrom at 10%. I, : therefore, direct the Assessing Officer to allow the expenses at 10% in respect of bank deposits also." Thereafter, from A. Y. 1989-90 onwards, the issue had become settled i.e. the interest income would be charged as income from other sources and 10% of the same would be allowed as deduction for concerned expenses. In the A. Y. 2010-11, the AO is raking up the controversy after 20 years on the issue which has not been agitated by either of the side. This is not the new issue to my mind, therefore, the principle of consistency required to be followed as has been held in various below mentioned case laws: (i) DCIT Vs. Sulabh International Social Service Organisation [350 ITR 189 (Patna)] (ii) CIT Vs. Ranganathar& Co. [316 ITR 252 (Mad)] (iii) Gopal Purohit Vs. Jt. CIT [334 ITR 308 (SC)] The facts of the case are also similar in this year and, therefore, respectfully following the decision of the department up to A. Y. 2009-10, the disallowance made by the A. O. is hereby deleted. The ground of appeal is, therefore, allowed. 13. We further observe that the Co-ordinate Bench in ITA Nos.2121 & 2122/Ahd/1972-73 for Asst. Years 1966-67 & 1967-68 has decided this issue for the first time and decided by observing as under :- “10. This brings us to consider the other aspect of the matter. viz. whether any deduction would be permissible in computing the income from interest. Section 57(iii) permits deduction of expenditure other than capital expenditure laid down or expended wholly and exclusively for the purpose of making or earning the income from other sources, which, in the interest case, is income from interest. The assessee would be entitled to deduction of a reasonable expenditure for earning the said income. Having regard to the facts of the case, we think that 10% of the gross receipts from interest should be allowed as reasonable expenditure u/s 57(iii) of the Act, in computing the income from interest, for all the year under appeal.“ 14. Respectfully following the decision of the Co-ordinate Bench and looking to the facts of the present case we find that assessee has been claiming 10% of the interest income and the same has been consistently allowed for last so many years. Therefore, we find no reason to interfere with the order of ld. CIT(A). We uphold the same. This ground of Revenue is also dismissed. ITA Nos. 111&112/Ahd/2021 Rajpath Club Ltd. vs.PCIT Asst. Years –2015-16 & 2016-17 - 12 - 15. Other grounds of the appeal are of general nature, which need no adjudication. 16. Cross Objection by the assessee has not been pressed and therefore, the same is dismissed as not pressed. 17. In the result, appeal of the Revenue and the C.O. by assessee both are dismissed.” 11. Accordingly, we observe that on similar set of facts, this issue has been decided by ITAT Ahmedabad in favour of the assessee in the case of DCIT vs. Sports Club of Gujarat in ITA No. 2166/Ahd/2014 along with C.O. No. 21/Ahd/2014. In the case of CIT vs. Excel Industries Ld. 38 taxmann.com 100 (SC), the Hon'ble Supreme Court held that once a consistent view has been taken in favour of the assessee for past assessment years, there is no reason to take a different view unless there are very convincing reasons. The Hon’ble Supreme Court observed that in several assessment years, the Revenue accepted the order of the Tribunal in favour of the assessee and did not pursue the matter any further. That being so, the Revenue cannot be allowed to flip flop on the same issue and ought to, let the matter rest rather than spent the tax payer’s money in pursuing litigation for the sake of it. Similarly, Hon’ble Supreme Court in the case of RadhasoamiSatsang [1992] 60 Taxman 248 (SC), has made the following observations on the principle of consistency in tax proceedings:- “13. We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.” ITA Nos. 111&112/Ahd/2021 Rajpath Club Ltd. vs.PCIT Asst. Years –2015-16 & 2016-17 - 13 - 12. In view of the above, since this stand taken by the assessee with respect to claiming 10% deduction against income from other sources have been accepted by the Department in the past years, looking into the facts of the instant case, we are of the considered view that the order passed by the Assessing Officer cannot be held to be erroneous and prejudicial to the interest of the Revenue under Section 263 of the Act. During the course of assessment proceedings, the Assessing Officer had given due application of mind to this issue.Even in the past years similar issue has been decided by the Assessing Officer in favour of the assessee after carrying out due verification in proceedings under Section 143(3) of the Act.Further, similar view on this issue has been taken by ITAT Ahmedabad in the case of M/s. Sports Club of Gujarat Ltd. (supra). Accordingly, in our considered view looking into the instant facts, the order passed by Assessing Officer neither erroneous nor prejudicial to the interest of Revenue. 13. In the result, the appeal of the assessee is allowed. 14. Since facts and issues for consideration for A.Y. 2016-17 are identical to AY 2015-16, the appeal of the assessee is allowed for A.Y. 2016-17 as well. 15. In the combined result, both the appeals are filed by the assessee are allowed. This Order pronounced in Open Court on 30/10/2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 30/10/2023 TANMAY, Sr. PS TRUE COPY ITA Nos. 111&112/Ahd/2021 Rajpath Club Ltd. vs.PCIT Asst. Years –2015-16 & 2016-17 - 14 - आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad