Alexander Athletic Club, Meerut V. ACIT, Meerut

ITA 1537/DEL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6442 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 02-11-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 22-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 142(1)

Judgement Text

I.T.A .NO.-1537/DEL/2016 ALEXANDER ATHLETIC CLUB VS ACIT IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-II NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO.-1537/DEL/2016 (ASSESSMENT YEAR-2012-13) ALEXANDER ATHLETIC CLUB, COURT COMPOUND, MEERUT-250001. PAN-AAAAA8807C ( APPELLANT) VS ACIT, CIRCLE-1, NEW DELHI (RESPONDENT) ASSESSEE BY SH.SUNIL KUMAR, CA REVENUE BY NONE DATE OF HEARING 02 . 11 .2016 DATE OF PRONOUNCEMENT 29.12.2016 ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED 16.02.2016 OF CIT(A), MEERUT PERTAINING TO 201213 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- 1. THAT EACH GROUND OF APPEAL IS WITHOUT PREJUDI CE TO EACH OTHER. 2. THAT THE LD. CIT WAS NOT CORRECT AND JUSTIFIED IN SUSTAINING THE ADDITION OF RS. 11,60,6647- ON ACCOUNT OF INTEREST RECEIVED BY THE ASSESSEE ON ITS SURPLUS FUND KEPT AS DEPOSIT WITH THE BANK ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT THE LD. CIT WAS NOT CORRECT AND JUSTIFIED IN SUSTAINING THE ADDITION OF RS. 2,19,729/-ON ACCOUNT OF INTEREST RECEIVED BY THE AS SESSEE ON ITS SAVING BANK ACCOUNT FROM THE BANK ON THE BASIS OF FACTS AND CIR CUMSTANCES OF THE CASE. 4. THAT THE LD. CIT WAS NOT CORRECT AND JUSTIFIED IN SUSTAINING THE ADDITION OF RS. 3,02,7767-ON ACCOUNT OF SPONSORSHIP FEES RECEIVED F ROM ITS MEMBERS AND/OR THERE ASSOCIATED FIRMS/CONCERNS ON THE BASIS OF FAC TS AND CIRCUMSTANCES OF THE CASE. 5. THAT THE LD. CIT WAS NOT CORRECT AND JUSTIFIED IN SUSTAINING THE ADDITION OF RS. 74,9607- ON ACCOUNT OF TENNIS COACHING FEES RECEIVE D FROM ITS MEMBERS ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE. 6. THAT THE LD. CIT WAS NOT CORRECT AND JUSTIFIED IN SUSTAINING THE ADDITION OF RS. 57,5877- ON ACCOUNT OF MISCELLANEOUS RECEIPTS ON TH E BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE. 7. THAT THE APPELLANT RESERVED THE RIGHT TO ADD AM ENDS, ALTER AND/OR DELETE ANY OF THE GROUNDS OF APPEAL. 8. THAT ON THE BASIS OF FACTS OF THE CASE AND IN VI EW OF THE CIRCUMSTANCES IT IS PRAYED THAT EITHER THE ADDITIONS SUSTAINED BY THE L D. CIT MAY PLEASE BE DELETED OR THE MATTER MAY PLEASE BE RESTORE BACK TO THE FILE OF COMMISSIONER OF INCOME TAX (APPEALS) IN THE INTEREST OF NATURAL JUSTICE. 2. AT THE TIME OF HEARING, NO ONE WAS PRESENT ON BE HALF OF THE REVENUE, HOWEVER, AN ADJOURNMENT APPLICATION WAS MOVED ON BEHALF OF THE REVENUE. SINCE, NO ONE WAS PRESENT IN SUPPORT THEREOF, IT WAS PASSED OVER. EVEN IN THE S ECOND ROUND, THE REVENUE REMAINED PAGE 2 OF 4 I.T.A .NO.-1537/DEL/2016 ALEXANDER ATHLETIC CLUB VS ACIT UNREPRESENTED. ACCORDINGLY, CONSIDERING THE SUBMIS SIONS OF THE LD. AR AND THE MATERIAL AVAILABLE ON RECORD, IT WAS CONSIDERED APPROPRIATE TO REJECT THE APPLICATION AND PROCEED WITH THE PRESENT APPEAL EX-PARTE QUA THE REVENUE RESPOND ENT ON MERITS. 3. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSE SSEE RETURNED NIL INCOME IN THE STATUS OF AOP. THE SAID RETURN WAS SELECTED FOR SCRUTINY THROUGH CASS. AFTER ISSUANCE OF NOTICE U/S 143(2) & 142(1) ETC. ALONGWITH DETAILED QUESTIONNAI RE U/S 142(1), THE AO ASSESSED THE INCOME OF THE ASSESSEE AT RS.27,37,841/-. 4. THE ISSUE TRAVELLED IN APPEAL BEFORE THE CIT(A) WHEREIN PARTIAL RELIEF WAS GRANTED TO THE ASSESSEE. HOWEVER, THE GRIEVANCE QUA THE FOLLOWING ADDITIONS STILL REMAINED:- (I) INCOME ON FDR : RS.11,60,064/- (II) INTEREST FROM BANK : RS.2,19,729/- (III) TENNIS COACHING : RS.74,960/- (IV) SPONSORSHIP FEES : RS.3,02,776/- (V) MISCELLANEOUS RECEIPTS : RS.57,587/- 5. THE LD.AR APPEARING ON BEHALF OF THE ASSESSEE FA IRLY SUBMITTED THAT THE ASSESSEE WOULD NOT BE CONTESTING THE ISSUE OF INTEREST INCOM E ON FDRS AS FDRS WERE ADMITTEDLY MAINTAINED OF SURPLUS FUNDS AND IN VIEW OF THE DECI SION OF THE APEX COURT IN THE CASE OF BANGLORE CLUB VS CIT [SC] (14.01.2013), THE ISSUE MAY BE TREATED AS NOT PRESSED. 5.1. HOWEVER, QUA THE ISSUES PERTAINING TO INTEREST ON SAVING BANK ACCOUNTS; TENNIS COACHING: SPONSORSHIP FEES AND MISCELLANEOUS FEES; IT WAS HIS SUBMISSION THAT THE SPECIFIC CLUB HAS BEEN IN EXISTENCE SINCE 1942 AND NEVER IN THE PAST SUCH ADDITIONS ON SAME FACTS HAVE BEEN MADE. 5.2. ADDRESSING THE INTEREST FROM SAVING BANK ACCO UNT, IT WAS SUBMITTED THAT THE SAID ACCOUNT IS USED BY THE ASSESSEE FOR MEETING ITS EVE RYDAY TRANSACTIONS FOR MAINTAINING AND RUNNING THE ACTIVITIES OF THE SPECIFIC CLUB. ALL E XPENSES INCURRED FOR AND BY THE CLUB ARE MET FROM THIS SAVING BANK ACCOUNT. ACCORDINGLY THE ADD ITION ON FACTS HAS BEEN WRONGLY SUSTAINED IN THE PECULIAR FACTS OF THE PRESENT CASE. PAGE 3 OF 4 I.T.A .NO.-1537/DEL/2016 ALEXANDER ATHLETIC CLUB VS ACIT 5.3. ADDRESSING THE ADDITION SUSTAINED QUA TENNIS C OACHING, IT WAS HIS SUBMISSION THAT IT IS THE MEMBERS OF THE CLUB WHO ARE BEING PROVIDED TENN IS COACHING. THE ADDITION MADE IS OF THE NET AMOUNT WHICH REMAINS AFTER MEETING THE COST S OF THE FACILITIES PROVIDED TO THE MEMBERS AS THE EXPENDITURE INVOLVED HAS BEEN INCURR ED FOR PAYING THE COACHING TRAINING PERSONNEL ETC. ACCORDINGLY, ADDITION OF THE SAID A MOUNT IT WAS SUBMITTED IS COVERED UNDER THE PRINCIPLE OF MUTUALITY AND IN FACTS AND LAW CO ULD NOT HAVE BEEN MADE OR SUSTAINED. 5.4. ADDRESSING THE SPONSORSHIP FEES, IT WAS HIS SU BMISSION THAT THE SAID ADDITION HAS BEEN MADE ON ACCOUNT OF WRONG NOMENCLATURE USED BY THE A CCOUNTING PERSONNEL AND ACTUALLY IT COVERS THE FACILITIES PROVIDED TO THE CLUB MEMBERS . 5.5. ADDRESSING THE ADDITION SUSTAINED WHICH HAVE B EEN DESCRIBED AS MISCELLANEOUS RECEIPTS, IT WAS HIS SUBMISSION THAT THIS CONSISTS OF THE PAYMENTS MADE BY MEMBERS FOR BREAKAGE OF CROCKERY ETC. AND THIS IS A NORMAL COL LECTION FROM THE MEMBERS SO AS TO ENSURE THAT THE FACILITIES OF THE CLUB REMAIN AVAILABLE UN INTERRUPTED. 5.6. ACCORDINGLY, IT WAS HIS SUBMISSION THAT EITHER THE ADDITIONS MADE BY THE AO AND SUSTAINED BY THE CIT(A) BE DELETED OR THE ISSUE BE RESTORED TO THE AO DIRECTING HIM TO CONSIDER THE SAME ON THE BASIS OF FACTS AND PAST HI STORY ON THE ISSUES AS ADMITTEDLY NO DISCUSSION ON THE FACTS AND PAST HISTORY HAS BEEN M ADE BY THE TAX AUTHORITIES. THE CLUB, IT WAS SUBMITTED HAS BEEN IN EXISTENCE FROM THE PRE- INDEPENDENT YEARS AND HAS A LONG AND ILLUSTRIOUS HISTORY. 6. SINCE THE ADJOURNMENT APPLICATION MOVED ON BEHAL F OF THE REVENUE, WAS REJECTED ACCORDINGLY AFTER HEARING THE LD.AR AND CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT IN THE ABSENCE OF RELEVANT FA CTUAL DISCUSSION ON THE ISSUES THE IMPUGNED ORDER DESERVES TO BE SET ASIDE. I FIND THAT NO REF ERENCE HAS BEEN MADE BY THE AO OR THE CIT(A) TO THE PAST HISTORY OF THE SAID CLUB STATED TO BE IN EXISTENCE SINCE 1942. THE CLUB IS STATED TO BE PROVIDING TENNIS COACHING FACILITIES F ROM 1960. SIMILARLY THE SUBMISSION THAT INTEREST INCOME EARNED FROM SAVING BANK ACCOUNT IS STATED TO BE THE REGULAR SAVINGS BANK PAGE 4 OF 4 I.T.A .NO.-1537/DEL/2016 ALEXANDER ATHLETIC CLUB VS ACIT ACCOUNT OF THE ASSESSEE FROM WHICH DAY TO DAY EXPEN DITURES ARE MET ARE ALL FACTS FOUND NOT ADDRESSED IN THE RESPECTIVE ORDERS OF THE TAX AUTHO RITIES. SAME IS THE POSITION OF THE CLAIM THAT SPONSORSHIP FEES WHICH IS STATED TO COVER THE FACILITIES MADE AVAILABLE TO THE MEMBERS. THE MISCELLANEOUS RECEIPTS ARE STATED TO BE CONSIST ING OF COLLECTIONS FROM THE MEMBERS FOR BREAKAGE ETC. OF CLUB CROCKERY , ALL THESE ISSUES I T IS SEEN ON FACTS HAVE NOT BEEN ADDRESSED BY THE TAX AUTHORITIES. ACCORDINGLY, FINDING THE O RDERS TO BE DEFICIENT ON THE GROUNDS OF RELEVANT DISCUSSION ON THE ISSUE AS PER FACTS, THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUE IS RESTORED BACK TO THE FILE OF THE AO WITH A DIREC TION TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPP ORTUNITY OF BEING HEARD. IT GOES WITHOUT SAYING THAT THE PAST HISTORY OF THE ASSESSEE ON THE ISSUES NEEDS TO BE TAKEN INTO CONSIDERATION ALONGWITH RELEVANT FACTS IN THE YEAR UNDER CONSIDERATION NEED TO BE TAKEN INTO CONSIDERATION BEFORE ARRIVING AT A CONCLUSION. HOW EVER, THE ADDITION MADE BY THE AO ON THE INTEREST INCOME ON FDR THOUGH CHALLENGED IN THE PRO CEEDINGS HAS BEEN GIVEN UP BY THE LD.AR AND THE ADDITION MADE BY THE AO IS ACCORDINGL Y SUSTAINED TO THE SAID EXTENT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29 TH OF DECEMBER, 2016. SD/- (DIVA SINGH) JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI