ITO, Panchkula V. M/s Panchkula Golf Club, Panchkula

ITA 1190/CHANDI/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8370 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 17-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital receipt
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 1190/CHD/2016 ASSESSMENT YEAR: 2010-11 THE ITO, VS M/S PANCHKULA GOLF CLUB, WARD - 3, 903, SECTOR -3, PANCHKULA. PANCHKULA. PAN: AAAAP5757C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAVI SARANGAL RESPONDENT BY : SHRI MANOJ KUMAR DATE OF HEARING : 18.01.2017 DATE OF PRONOUNCEMENT : 19.01.2017 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) PANCHKULA DATED 01.09.2016 FOR ASSESSMENT YEAR 2010-11. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT DURING TH E ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE CLAIM ABOUT THE CLUB AS MUT UAL CONCERN. THE ASSESSING OFFICER NOTED THAT CLUB IS NOT A MUTUAL CONCERN AS ITS GOVERNING BODY COMPRISED OF C HIEF SECRETARY, GOVERNMENT OF HARYANA AS PRESIDENT, 2 PRINCIPAL SECRETARY TO CHIEF SECRETARY, GOVERNMENT OF HARYANA AS PRESIDENT, FINANCIAL COMMISSIONER, TOWN COUNTRY PLANNING, GOVERNMENT OF HARYANA AS VICE PRESIDENT AND CHIEF ADMINISTRATOR, HUDA AS MEMBER, THE OTHER MEMBERS ARE ALSO NOMINATED BY THE PRESIDE NT. THIS INDICATES THAT THE MANAGEMENT AND CONTROL OVER THE ASSESSEE CLUB WAS WITH THE STATE GOVERNMENT. THE C LUB WAS NOT ASSESSED AS MUTUAL CONCERN IN ASSESSMENT YE AR 2007-08 AS IT FAILED TO FULFILL THE THREE TESTS OF MUTUALITY. THE CLAIM OF THE ASSESSEE AS A MUTUAL CONCERN WAS NOT ACCEPTED BY THE ASSESSING OFFICER. FURTHER ASSESSING OFFICER NOTED THAT SUM OF RS. 84,65,816/- AS ONE TIME ENTRANCE FEE CONTRIBUTION F ROM THE MEMBERS IS A REVENUE RECEIPT WHEREAS THE ASSESS EE HAS TAKEN SAME AS CAPITAL RECEIPT ON THE BASIS OF MUTUALITY. THEREFORE, CONTRIBUTION OF RS. 84,65,81 6/- RECEIVED BY THE ASSESSEE CLUB FROM THE MEMBERS WAS HELD AS TAXABLE INCOME. 3. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT PRINCIPLE OF MUTUALITY IS APPLICABLE IN THE CA SE OF THE ASSESSEE WHICH IS FOLLOWED BY THE ASSESSEE SINC E INCEPTION. FURTHER, IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2008-09, ITAT CHANDIGARH BENCH IN T HE CASE OF THE SAME ASSESSEE IN ITA 813/2013 DATED 06.05.2015 SETTLED THE CONTROVERSY BY ALLOWING CLAI M OF THE ASSESSEE IN WHICH IT WAS HELD THAT ASSESSEE IS ENTITLED TO EXEMPTION UNDER THE CONCEPT OF MUTUALIT Y 3 AND THE ENTRANCE FEES HAS TO BE TREATED AS CAPITAL FEES. THE LD. CIT(APPEALS) CALLED FOR THE DETAILS FROM TH E ASSESSEE AND NOTED THAT IN PRECEDING ASSESSMENT YEA R 2007-08, CLAIM OF THE ASSESSEE WAS NOT ALLOWED BY T HE DEPARTMENT. HOWEVER, IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2008-09, ITAT CHANDIGARH BENCH CONSIDERED THE SAME ISSUE AND HELD THAT ASSESSEE IS ENTITLED TO EXEMPTION UNDER THE CONCEPT OF MUTUALIT Y AND THE ENTRANCE FEES HAS TO BE TREATED AS CAPITAL RECEIPT AND THE RECEIPT FROM MEMBERS HAVE BEEN ALLO WED FOR EXEMPTION UNDER THE CONCEPT OF MUTUALITY. THE ORDER OF THE TRIBUNAL IS REPRODUCED IN THE IMPUGNED ORDER. THE LD. CIT(APPEALS), THEREFORE, HELD THAT AS PER DECISION OF THE TRIBUNAL IN THE CASE OF THE ASSESSE E, THE CONTRIBUTION FROM MEMBERS IS EXEMPTED UNDER THE CONCEPT OF MUTUALITY. THIS GROUND WAS, ACCORDINGLY , ALLOWED. 3(I) THE REVENUE IS IN APPEAL CHALLENGING THE ORDER OF THE LD. CIT(APPEALS) IN HOLDING THAT ASSESSEE CLUB IS ENTITLED TO EXEMPTION UNDER THE CONCEPT OF MUTUALIT Y AND THE ENTRANCE FEES HAS TO BE TREATED AS CAPITAL RECEIPT. 4. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT F IND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSING OFFICER MADE THE ADDITION OF RS. 84,65,81 6/- ON ACCOUNT OF ONE TIME ENTRANCE FEES CONTRIBUTION F ROM THE MEMBER, WHICH WAS CONSIDERED AS REVENUE RECEIPT 4 WHEREAS THE ASSESSEE HAS CLAIMED IT AS CAPITAL RECE IPT ON THE BASIS OF MUTUALITY. THE ITAT CHANDIGARH BEN CH IN THE CASE OF THE ASSESSEE FOR PRECEDING ASSESSMEN T YEAR 2008-09 VIDE ORDER DATED 06.05.2015 (SUPRA) DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESS EE. THE TRIBUNAL HELD THAT ASSESSEE IS ENTITLED TO EXEM PTION ON THE BASIS OF MUTUALITY AND THAT ENTRANCE FEES WA S HELD AS CAPITAL RECEIPT. THERE IS NO INFIRMITY POI NTED OUT IN THE ORDER OF THE LD. CIT(APPEALS) IN FOLLOWI NG THE ORDER OF THE TRIBUNAL FOR THE PURPOSE OF DELETING T HE ADDITION. THE APPEAL OF THE REVENUE FAILS AND IS DISMISSED. 5. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH SA INI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19 TH JANUARY,2017. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD