Poona Club Ltd, Pune V. Deputy Commissioner of Income-tax, Circle - 4, Pune

ITA 2242/PUN/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 4278 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 25-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Business income; Rule of consistency; Tangible material; Difference of opinion; Capital receipt; Reason to believe; Change of opinion; Reassessment proceedings; Capital expenditure
• Section: 148; 143(3); 143(1); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER Sl. No. ITA No. Name of Appellant Name of Respondent Asst. Year 1-8 890/PUN/2017 891/PUN/2017 892/PUN/2017 893/PUN/2017 894/PUN/2017 895/PUN/2017 1653/PUN/2017 2242/PUN/2017 Poona Club Ltd., 6, Bund Garden Road, Pune- 411001. PAN : AABCP1272B DCIT, Circle-4, Pune. 2006-07 2007-08 2008-09 2009-10 2011-12 2012-13 2013-14 2014-15 9-14 1235/PUN/2017 1236/PUN/2017 1237/PUN/2017 1238/PUN/2017 1939/PUN/2017 2221/PUN/2017 ACIT, Circle-4, Pune. Poona Club Ltd., 6, Bund Garden Road, Pune- 411001. PAN : AABCP1272B 2008-09 2009-10 2011-12 2012-13 2013-14 2014-15 आदेश / ORDER PER BENCH : These are the cross appeals filed by the assessee as well as by the Revenue directed against the respective orders of ld. Assessee by : Shri Neelesh Khandelwal Revenue by : Shri M. G. Jasnani Date of hearing : 10.03.2022 Date of pronouncement : 20.04.2022 Poona Club Ltd. 2 Commissioner of Income Tax (Appeals)- 2/3, Pune [‘CIT(A)’ for short] for the assessment years 2006-07 to 2014-15. 2. Since the identical facts and issues are involved in all above captioned cross appeals, we proceed to dispose of the same by this common order. 3. For the sake of convenience and clarity, the facts relevant to the appeal in ITA No.890/PUN/2017 for the assessment year 2006-07 are stated herein. ITA No.890/PUN/2017, A.Y. 2006-07 – By Assessee : 4. Briefly, the facts of the case are that the appellant is a Recreational Club. The return of income for the assessment year 2006-07 was originally filed on 29.11.2006 disclosing total income of Rs.25,35,019/-. The said return of income was processed u/s 143(1) of the Income Tax Act, 1961 (‘the Act’) on 06.10.2007 accepting the returned income. Subsequently, the Dy. Commissioner of Income Tax, Circle- 4, Pune (‘the Assessing Officer’) issued a notice u/s 148 dated 19.02.2013 after recording the following reasons :- Poona Club Ltd. 3 Poona Club Ltd. 4 Poona Club Ltd. 5 Poona Club Ltd. 6 Poona Club Ltd. 7 Poona Club Ltd. 8 Poona Club Ltd. 9 Poona Club Ltd. 10 5. On receipt of the reasons recorded for issuing notice u/s 147, the assessee filed objections, which were disposed by the Assessing Officer, then proceeded with re-assessment proceedings. Subsequently, the Assessing Officer completed the reassessment vide order dated 29.03.2014 passed u/s 143(3) r.w.s. 147 of the Act at a total income of Rs.1,52,42,673/-. While doing so, the Assessing Officer made addition of Rs.1,41,895/- by disallowing 7.5% of the interest income as expenditure claimed by the appellant on the lines of the decision of the Hon’ble ITAT in assessee’s own case. Similarly, the Assessing Officer made addition by disallowing the expenses of Rs.9,39,456/- claimed against the Venue charges received from Members’ Guest of Rs.11,74,320/-. Similarly, disallowed expenses of Rs.16,02,779/- claimed against the Dinner Receipts from Members’ Guest of Rs.16,50,800/-. The Assessing Officer also made disallowance of expenses claimed of Rs.3,93,975/- against the Receipts from Cricket Ground Booking by non-members and the disallowance of Rs.1,44,191/- claimed against the Hoarding Charges of Rs.5,76,765/- and expenses claimed against the Miscellaneous Receipts of Rs.44,952/-. The entrance fee of Rs.1,21,43,905/- received from non-members was also brought to tax. Poona Club Ltd. 11 6. Being aggrieved by the order of assessment, an appeal was filed before the ld. CIT(A) contending the very validity of initiation of reassessment proceedings on the ground that the reassessment proceedings were initiated on mere change of opinion on same set of facts as existing at the time of original assessment proceedings and also challenged the additions, on merits. The ld. CIT(A) while upholding the validity of the reassessment proceedings, deleted the additions by holding that the expenses claimed by the appellant club against the interest income are in line with the decision of the ITAT for the assessment year 1994-95 in ITA No.625/PUN/1998, which is accepted by both the Department and the assessee. 7. Being aggrieved by the decision of the ld. CIT(A), the assessee is in appeal before us. 8. Ground of appeal no.1 challenges the findings of the ld. CIT(A) upholding the validity of reassessment proceedings. It is submitted that the ld. CIT(A) ought not to have upheld the validity of the reopening of assessment, inasmuch as, there was no fresh tangible information which had come into possession of the Assessing Officer enabling him to form the opinion that the income had escaped assessment to tax. It is further submitted that there is no reasons to believe that the income escaped assessment, inasmuch as, the disallowances which are made by the Assessing Officer are Poona Club Ltd. 12 already subject-matter of appeal before the Tribunal for the assessment year 1994-95 in assessee’s own case and the claim made by the assessee are in line with the decision of the Hon’ble ITAT for assessment year 1994-95 in assessee’s own case which is accepted by both the assessee as well as the Department. 9. On the other hand, ld. CIT-DR placing reliance on the order of the ld. CIT(A) prayed that the validity of the reassessment should be upheld. 10. We heard the rival submissions and perused the material on record. The issue in the present ground of appeal no.1 relates to the validity of the reassessment proceedings. The admitted facts of the case are that the appellant club had filed the return of income claiming certain percentage of the interest received from bank. Receipts from venue charges from members’ guest, dinner receipts from members’ guest, receipts from cricket ground books from members’ guest as expenditure, entrance fees from members was claimed to be exempt from tax. The claim of expenditure made by the appellant club is in tune with the decision of the Hon’ble ITAT in assessee’s own case for the assessment year 1994-95 in ITA No.625/PUN/1998. The decision of the ld. CIT(A) for assessment year 2010-11 came to be accepted by both the assessee as well as the Department. This claim was accepted by the Assessing Officer Poona Club Ltd. 13 by accepting returned income in the assessment u/s 143(1) of the Act. Now, the Assessing Officer seeking to reopen the assessment on the ground that based on the decision of the Hon’ble Supreme Court in the case of Bangalore Club vs. CIT, 350 ITR 509 (SC), wherein, the Hon’ble Supreme Court held that the interest charges by the club is not exempt on the ground of mutuality and, therefore, sought to disallow the expenses claimed against the interest income from bank and other charges like receipts from venue charges from members’ guest, dinner receipts from members’ guest, receipts from cricket ground books from members’ guest, entrance fees from members. 11. On perusal of the details furnished along with return of income, it would be crystal clear that the appellant club not sought the exemption from tax on income of interest or receipts from members’ guest on the ground of mutuality. In-fact, the appellant had offered to tax the interest income and miscellaneous receipt from sale of empty bottles, receipts from venue charges from members’ guest, dinner receipts from members’ guest, receipts from cricket ground books from members’ guest, entrance fees from members but only sought allowance of expenditure as certain percentage of income as upheld by the Hon’ble ITAT, Pune Bench in assessee’s own case for the assessment year 1994-95 in ITA Poona Club Ltd. 14 No.625/PUN/1998. The decision of the Hon’ble ITAT had attained finality as the issue was not agitated in further appeal before the Hon’ble High Court either by the assessee or by the Department. The return of income filed by the appellant is in consonance with settled position of law in assessee’s own case. Even in cases, where the proceedings u/s 147 of the Act was sought to be initiated with reference to the assessment made u/s 143(1), the ingredients of section 147 of the Act are required to be satisfied. Therefore, an assessment completed u/s 143(1) cannot be reopened unless new or fresh tangible information/material had come into possession of the Assessing Officer subsequent to completion of the assessment u/s 143(1) and there should exist reasons to believe that the income chargeable to tax had escaped assessment. Reference can be made in this regard to the decision of the Hon’ble Gujarat High Court in the case of Ami Ashish Shah vs. ITO, 440 ITR 417 (Guj.-HC), wherein, the Hon’ble Gujarat High Court reiterated the above position after referring to the following decisions :- (i) Ratna Trayi Reality Service (P.) Ltd. v. ITO, 356 ITR 493 (Guj.). (ii) CIT v. Orient Craft Ltd., 354 ITR 536 (Delhi). (iii) Indivest Pte. Ltd. v. Addl. DIT, 350 ITR 120 (Bom.). 12. In the present case, from the reasons recorded it would be clear that the premises on which the Assessing Officer formed an Poona Club Ltd. 15 opinion that the income had escaped assessment is the decision of the Hon’ble Supreme Court in the case of Bangalore Club (supra), which is subsequent to the completion of the assessment u/s 143(1) of the Act. But the return of income filed by the assessee is in consonance with the law laid down by the Hon’ble Supreme Court in the case of Bangalore Club (supra). Therefore, it cannot be said that there is any tangible information which came into possession of the Assessing Officer enabling him to form an opinion that the income had escaped assessment. Thus very factual premises on which the reassessment proceedings were initiated is mistaken of acts. Therefore, in such circumstances, the reassessment proceedings cannot be said to be validly assumed as held in the recent judgement of the Hon’ble Bombay High Court in the case of Raimaladitya Textile Pvt. Ltd. in Writ Petition No.2199 of 2021 dated 22.03.2022 held mistake certainly not to be reason to believe that income escaped assessment. Further, in the absence of any tangible material, it cannot be said that there exist the reasons to believe that the income chargeable to tax had escaped assessment. Thus, it is settled position of law that the Assessing Officer had no power to revise assessment which has been concluded and no assessment can be reopened on the mere change of opinion as held by the Hon’ble Supreme Court in the case of CIT vs. Kelvinator of Poona Club Ltd. 16 India Ltd., 320 ITR 561 (SC). Thus, we are of the considered opinion that the Assessing Officer had failed to satisfy necessary ingredients before invoking the jurisdiction u/s 147 of the Act and, therefore, the reassessment proceedings are not valid in law. Accordingly, we quash the reassessment proceedings. 13. In the result, the appeal filed by the assessee in ITA No.890/PUN/2017 for the assessment year 2006-07 stands allowed. ITA Nos.891 to 893/PUN/2017, A.Y. 2007-08 to 2009-10 – By Assessee : 14. Since the facts and issues involved in appeals of the assessee in ITA Nos.891 to 893/PUN/2017 for A.Y. 2007-08 to 2009-10 are identical, therefore, our decision in ITA No.890/PUN/2017 for A.Y. 2006-07 shall apply mutatis mutandis to the appeals of the assessee in ITA Nos.891 to 893/PUN/2017 for A.Y. 2007-08 to 2009-10. Accordingly, the appeals of the assessee in ITA Nos.891 to 893/PUN/2017 for A.Y. 2007-08 to 2009-10 stands allowed on the lines of our decision in ITA No.890/PUN/2017 for assessment year 2006-07. ITA Nos.1235 & 1236/PUN/2017, A.Y. 2008-09 & 2009-10 – By Revenue : 15. These are the cross appeals filed by the Revenue challenging the deletion of addition made by the ld. CIT(A). In the assessee’s Poona Club Ltd. 17 appeal for the assessment years 2008-09 & 2009-10 in ITA Nos.892 & 893/PUN/2017 for the reasons mentioned therein, we had quashed the reassessment proceedings. Hence, the cross appeals filed by the Revenue do not survive. 16. In the result, the cross appeals of the Revenue in ITA Nos.1235 & 1236/PUN/2017, A.Y. 2008-09 & 2009-10 stand dismissed. ITA No.894/PUN/2017, A.Y. 2011-12 – By Assessee : ITA No.1237/PUN/2017, A.Y. 2011-12 – By Revenue : 17. Briefly, the facts of the case are that the assessee is a Recreational Club. The return of income for the assessment year 2011-12 was filed on 30.09.2011 declaring total income of Rs.9,95,710/-. The said return of income was processed u/s 143(1) of the Act on 12.03.2013 accepting the returned income. Subsequently, the case was converted into scrutiny assessment and the assessment was completed by the Assessing Officer vide order dated 29.03.2014 passed u/s 143(3) of the Act at a total income of Rs.3,77,14,049/- by disallowing the claim of expenditure on account of venue charges from members’ guest, dinner receipts from members’ guest, receipts from cricket ground books from members’ guest etc. by holding that the principle of mutuality does not apply in the case of receipts from non-members placing reliance on the Poona Club Ltd. 18 decision of the Hon’ble Apex Court in the case of Bangalore Club (supra). Similarly, the Assessing Officer also brought to tax the entrance fee received from corporate members of Rs.2,35,03,900/- by holding that the corporate members do not have any voting rights and the rights of voting for regular/permanent members much different from non-voting members placing reliance on the decision of the Hon’ble Supreme Court in the case of CIT vs. Calcutta Stock Exchange Association Ltd., 36 ITR 222 and Delhi Stock Exchange Association Ltd. vs. CIT, 41 ITR 415. 18. Being aggrieved by the above additions, an appeal was filed before the ld. CIT(A), who vide impugned order confirmed the disallowances of expenditure @ 7.5% claimed against the interest income and also confirmed the disallowance of expenditure claimed against the three receipts like venue charges, dinner receipts and receipts from providing cricket ground facility to members’ guests. As regards to the venue charges received from members’ guest and dinner receipts, the ld. CIT(A) held that net profit of 20% should be adopted as receipts from the members’ guest and 15% of receipt from the cricket ground following the order of the Hon’ble ITAT in assessee’s own case (supra) which attained the finality. As regards to the hoarding charges, the ld. CIT(A) held that the hoarding charges received by the appellant are held to be non- Poona Club Ltd. 19 taxable on the principle of mutuality following the decision of the Hon’ble ITAT in assessee’s own case (supra). However, the ld. CIT(A) denied the claim of setting off the excess of expenditure/income incurred in the operations of the club. With regard to the entrance fee receipts, ld. CIT(A) held that the entrance fee received from NRI members and corporate members is capital receipts, hence not taxable. 19. Being aggrieved by that part of the ld. CIT(A), which is against the assessee, the assessee is in appeal in ITA No.894/PUN/2017 and the Revenue is in appeal in ITA No.1237/PUN/2017 being aggrieved by that part of the order of the ld. CIT(A), which is against the Revenue. ITA No.894/PUN/2017, A.Y. 2011-12 – By Assessee : 20. Now, we shall take up assessee’s appeal in ITA No.894/PUN/2017 for the assessment year 2011-12. 21. Grounds of appeal no.1 and 2 are not pressed at the time of hearing of the appeal and the same are dismissed as not pressed. 22. Ground of appeal no.3 challenges the decision of the ld. CIT(A) disallowing the expenditure claim @ 7.5% of the interest income. It is submitted that this issue raised in the present ground of appeal is decided in assessee’s own case for the assessment year Poona Club Ltd. 20 1994-95. This decision attained the finality as the Revenue is not in further appeal. Therefore, it is submitted that following the decision of the Tribunal, the ld. CIT(A) ought not to have disallowed the expenditure at the rate of 7.5% of interest income as deduction. 23. On the other hand, ld. CIT-DR supported the order of the ld. CIT(A). 24. We heard the rival submissions and perused the material on record. The issue in the present ground of appeal no.3 relates to the allowance of expenditure at the rate of 7.5% of the interest income claimed. Admittedly, there is no specific expenditure incurred to earn the interest income. However, incurring of sum indirect expenditure cannot be ruled out. It is trite law that what can be taxed is only real income not hypothetical income, when the specific expenditure cannot be identified, it is appropriate to estimate certain amount of expenditure. In the present case, in earlier year, the Tribunal took a view that 7.5% of interest income should be allowed as deduction. This finding had attained the finality, accepted both the assessee as well as the Department. Even on the principle of consistency, the same should have been followed by the lower authorities. The decision of the Hon’ble ITAT in assessee’s own case is also in consonance with the ratio of decision of the Hon’ble Allahabad High Court in the case of CIT vs. Kisan Poona Club Ltd. 21 Sahkari Chini Mills Ltd., 274 ITR 119, wherein, the Hon’ble Allahabad High Court confirmed the findings of the Tribunal that where the assessee held some interest income other than the exempted income, it must incur some expenses for earning the interest income and the expenditure cannot be identified. Then estimated expenditure in terms of the percentage of the income can be allowed as deduction by holding as under :- “4. It is not in dispute that the respondent-assessee earned interest on investments with banks and post-office deposits. However, it claimed expenses to the tune of Rs. 2,03,573. The aforesaid expenses, which it had debited was towards maintenance of office, staff, audit and other ex-penses. Under section 57 of the Act certain deductions are permissible while computing income chargeable under head ‘Income from other sources’. Section 57(iii) provides for deduction of any other expenditure, which is not in the nature of capital expenditure and is laid out or expended wholly and exclusively for the purpose of making or earning such income. The respondent-assessee must have incurred some expenses for earning interest income other than the exempted interest income and, therefore, if the Tribunal has fixed 5 per cent of the taxable interest income as a deduction while computing income from other sources, it cannot be said that the Tribunal has committed any illegality.” 25. Further, admittedly, the issue in the grounds of appeal i.e. allowance of 7.5% of the interest income as expenditure against the interest income came to be accepted by the Department in the assessment year 2010-11 and as well as earlier years. Though, the principle of res-judicata does not apply in respect of matter pertaining to income-tax as each assessment is separate and distinct proceedings but in the absence of any change in the facts and law warranting different view, no authority of the quasi judicial or Poona Club Ltd. 22 judicial can generally be permitted to take a different view. This position is laid down by the Hon’ble Supreme Court in the case of Bharat Sanchar Nigam Ltd. vs. Union of India, 282 ITR 273 (SC). The Hon’ble Bombay High Court in the case of PCIT vs. Quest Investment Advisors (P.) Ltd., 409 ITR 545 (Bom.-HC) after extracting the observation made by the Hon’ble Supreme Court in the case Bharat Sanchar Nigam Ltd. (supra) made in para 20 held as follows :- “8. However, subsequently the Apex Court in Bharat Sanchar Nigam Ltd. v. Union of India [2006] 282 ITR 273 has after referring to the decision of Radhasoami Satsang (supra) has observed as under :— "20. The decisions cited have uniformly held that res judicata does not apply in matters pertaining to tax for different assessment years because res judicata applies to debar courts from entertaining issues on the same cause of action whereas the cause of action for each assessment year is distinct. The courts will generally adopt an earlier pronouncement of the law or a conclusion of fact unless there is a new ground urged or a material change in the factual position. The reason why courts have held parties to the opinion expressed in a decision in one assessment year to the same opinion in a subsequent year is not because of any principle of res judicata but because of the theory of precedent or the precedential value of the earlier pronouncement. Where facts and law in a subsequent assessment year are the same, no authority whether quasi-judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision of where the earlier decision is per incuriam. However, these are fetters only on a co-ordinate Bench which, failing the possibility of availing of either of these gateways, may yet differ with the view expressed and refer the matter to a Bench of superior strength or in some cases to a Bench of superior jurisdiction." (emphasis supplied) 9. The principle accepted by the Revenue for 10 earlier years and 4 subsequent years to the Assessment Years 2007-08 and 2008-09 was that the entire expenditure is to be allowed against business income and no expenditure is to be allocated to capital gains. Once this principle was accepted and consistently applied and followed, the Poona Club Ltd. 23 Revenue was bound by it. Unless of course it wanted to change the practice without any change in law or change in facts therein, the basis for the change in practice should have been mentioned either in the assessment order or atleast pointed out to the Tribunal when it passed the impugned order. None of this has happened. In fact, all have proceeded on the basis that there is no change in the principle which has been consistently applied for the earlier assessment years and also for the subsequent assessment years. Therefore, the view of the Tribunal in allowing the respondent's appeal on the principle of consistency cannot in the present facts be faulted with, as it is in accord with the Apex Court decision in Bharat Sanchar Nigam Ltd.'s case (supra).” 26. Similarly, the Hon’ble Bombay High Court placing reliance on its earlier decision in the case of CIT vs. Arts and Crafts Exports, 22 taxmann.com 53 (Bom.-HC) held in the case of CIT vs. Macbrout Engineering (P.) Ltd., 52 taxmann.com 219 (Bom.-HC) that where the decision of the Tribunal in the case of the assessee for the earlier years had been accepted by the Revenue and no argument was advanced to establish that the said decision of the Tribunal was erroneous, the decision cannot be assailed by the Revenue in the subsequent years. Therefore, we do not see any reason to deviate from the decision of the Hon’ble ITAT for earlier years in assessee’s own case and, accordingly, we allow 7.5% of the interest income as allowable expenditure. 27. The ratio of the decision of the Hon’ble Supreme Court in the case of Bangalore Club (supra) has no application in deciding the issue of allowability of expenditure. The issue in the said decision is in relation to the taxability of interest income received from Poona Club Ltd. 24 corporate members invoking the principle of mutuality, whereas, in the present case, it is a question of allowability of expenditure against the interest income, therefore, the decision of Hon’ble Supreme Court in the case of Bangalore Club (supra) has no application to the instant case. Accordingly, the ground of appeal no.3 raised by the assessee stands allowed. 28. Ground of appeal no.4 not pressed at the time of hearing of the appeal and the same is dismissed as not pressed. 29. In the result, the appeal filed by the assessee in ITA No.894/PUN/2017 for the assessment year 2011-12 stands partly allowed. ITA No.1237/PUN/2017, A.Y. 2011-12 – By Revenue : 30. Now, we shall take up Revenue’s appeal in ITA No.1237/PUN/2017 for the assessment year 2011-12. 31. Ground of appeal no.1 to 4 challenges the decision of the ld. CIT(A) allowing the certain percentage of expenditure against the receipts from the members’ guest on account of venue charges from members’ guest, dinner receipts from members’ guest, receipts from cricket ground books from members’ guest. Admittedly, this issue was squarely covered by the decision of the Hon’ble ITAT in assessee’s own case in earlier years and the decision of the Hon’ble Poona Club Ltd. 25 Supreme Court in the case of Bangalore club (supra) have no application, inasmuch as, the issue before the Hon’ble Supreme Court in the said case relates to the taxability of the interest earned on FDs from the corporate members on the principle of mutuality. Admittedly, in the present case, the assessee club has not sought exemption of income earned from the above activities but only sought the deduction of expenditure as certain percentage of the receipts. It was rightly allowed by the ld. CIT(A) following the decision of the Hon’ble ITAT in assessee’s own case in earlier years. Therefore, we do not find any merit in the grounds of appeal raised by the Revenue. Accordingly, ground of appeal no.1 to 4 stands dismissed. 32. Ground of appeal no.5 and 6 challenges the decision of the ld. CIT(A) holding that the entrance fees received from the corporate members, NRI receipts as capital receipts. It is contended that the corporate members, NRI members have no voting rights and the duration of membership is only limited for fixed tenure of 7 years and, therefore, the entrance fees received from these members should held to be revenue receipts following the decision of ITAT in assessee’s own case for the assessment year 1994-95 in ITA No.625/PUN/1998. Poona Club Ltd. 26 33. On the other hand, ld. AR submitted that entrance fees received from the NRI members and Corporate members cannot be form part of the revenue receipts, as the voting rights are not germane to decide the issue whether the entrance fee is capital receipts or not. The Hon’ble ITAT in assessee’s own case for earlier years also held that the entrance fees received from the members is capital receipts. The ld. AR also placed reliance on the decision of the ITAT, Ahmedabad Bench in the case of ACIT vs. Karnavati Club Ltd., 4 ITR 174. 34. The issue whether the entrance fee is as revenue account or capital account is no more res-integra as the issue was decided by the Hon’ble Bombay High Court in the case of CIT vs. W.I.A.A. Club Ltd., 136 ITR 569 (Bom.-HC) wherein it held as follows :- “Now, it is important to bear in mind that though entrance fee is received by the assessee from time to time, it is received from different persons and it is not one of those payments which are made by the same person by virtue of any recurring liability. Entrance fee is paid by a member only once and it is this payment which has to be considered whether it is in the nature of income or a capital receipt. If we look at the articles of association of the assessee-club, it is clear that in order to avail of the rights of a member and the facilities and the services provided by the assessee-club, it is not enough for a person merely to pay the annual subscription. As a matter of fact a person cannot exercise the rights and privileges of a member merely by volunteering to pay the annual subscription. What a member has to acquire first is the right of membership of the club. A person has first to get elected as a life or ordinary member, as the case may be, in the manner provided in the articles of association. It is only after a person is elected that he is required to pay the subscription and entrance fee within fourteen days of notice of his election under article 31. The acquisition of right as an ordinary member is done by the payment of the entrance fee of Rs. 500 in the relevant assessment years. In lieu of this payment of the entrance fee, a member does not get any return in the form of any Poona Club Ltd. 27 services or amenities. All that he gets is a right to avail of the amenities or facilities provided by the club on a payment of the annual subscription. This right can be exercised by him as long as the membership is not determined as provided by article 44. This receipt of Rs. 500 received by the club is a return for vesting a right of membership in the member and, therefore, in our view, the entrance fee would clearly be in the nature of a capital receipt in the hands of the assessee.” 35. The said decision of the Hon’ble Bombay High Court in the case of W.I.A.A. Club Ltd. (supra) is reiterated again by the Hon’ble Jurisdictional High Court in the case of CIT vs. Diners Business Services (P.) Ltd., 263 ITR 1 (Bom.-HC) wherein it held as follows :- “5. As stated above, the Assessing Officer made an addition of Rs. 4,08,950 to the income of the assessee on account of non-refundable entrance fees received by the assessee. The Commissioner (Appeals) found that the entrance fees were charged by the assessee for enrolment of its customers as members of the "executive centre". The entrance fees were a one-time fee and only members were eligible to avail of the facilities available in the "executive centre". The Commissioner (Appeals) found that the entrance fees were non- refundable. In the case of CIT v. W.I.A.A. Club Ltd. [1982] 136 ITR 5691 (Bom.), it has been held that the entrance fees were paid to the club in order to acquire the right to avail of services and facilities extended by the club. It was held that the entrance fees constituted receipt in the capital field. Hence, the Commissioner (Appeals) ordered deletion of Rs. 4,08,950 made by the Assessing Officer on account of non-refundable entrance fees received by the assessee. In view of the judgment of the Bombay High Court in the case of W.I.A.A. Club Ltd. (supra), the Tribunal was right in ordering deletion of Rs. 4,08,950 made by the Assessing Officer on account of non-refundable entrance fees.” 36. The fact that the members have voting rights or not have no bearing to decide the issue whether the receipts is a capital nature or revenue nature. Therefore, respectfully following the decision of the Hon’ble Jurisdictional High Court in the case of W.I.A.A. Club Poona Club Ltd. 28 Ltd. (supra), we hold that the entrance fee received from the corporate members is capital in nature and uphold the order of the ld. CIT(A). The decision relied upon by the Assessing Officer have no application to the issue. Hence, the ground of appeal no.5 and 6 raised by the Revenue stands dismissed. 37. In the result, the appeal filed by the Revenue in ITA No.1237/PUN/2017 for the assessment year 2011-12 stands dismissed. ITA Nos.895, 1653 & 2242/PUN/2017, A.Ys. 2012-13, 2013-14 & 2014-15 – By Assessee : 38. Since the facts and issues involved in all the above captioned appeals are identical, therefore, our decision in ITA No.894/PUN/2017 for A.Y. 2011-12 shall apply mutatis mutandis to the remaining appeals of the assessee in ITA Nos.895, 1653 & 2242/PUN/2017 for A.Ys. 2012-13, 2013-14 & 2014-15. Accordingly, the appeals of the assessee in ITA Nos.895, 1653 & 2242/PUN/2017 for A.Ys. 2012-13, 2013-14 & 2014-15 are partly allowed. ITA Nos.1238, 1939 & 2221/PUN/2017, A.Ys. 2012-13, 2013-14 & 2014-15 – By Revenue : 39. Since the facts and issues involved in all the above captioned cross-appeals are identical, therefore, our decision in ITA Poona Club Ltd. 29 No.1237/PUN/2017 for the assessment year 2011-12 shall apply mutatis mutandis to the remaining cross-appeals of the Revenue in ITA Nos.1238, 1939 & 2221/PUN/2017 for A.Ys. 2012-13, 2013- 14 & 2014-15. Accordingly, the cross-appeals of the Revenue in ITA Nos.1238, 1939 & 2221/PUN/2017 for A.Ys. 2012-13, 2013- 14 & 2014-15 are dismissed. 40. To sum up, all the above captioned appeals filed by the assessee are partly allowed and the cross-appeals filed by the Revenue are dismissed, in the terms indicated above. Order pronounced on this 20 th day of April, 2022. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 20 th April, 2022. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-2/3, Pune. 4. The Pr. CIT-2, Pune. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “B” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅ फ़ाइल/ Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.