The DCIT, Circle-4, Ahmedabad V. Karnavati Club Ltd., Ahmedabad

ITA 2384/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0296 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-10-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 04-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R N PARBAT
• Keywords: Question of law; Capital receipt
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NO: 2384/AHD/2013 (ASSESSMENT YEAR: 2010-11) THE DCIT CIRCLE-4, AHMEDABAD V/S KARNAVATI CLUB LTD. SARKHEJ GANDHINAGAR HIGHWAY, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACK7865Q APPELLANT BY : SHRI R. N. PARBAT, CIT/DR RESPONDENT BY : SHRI SUNIL TALATI, A.R. ( )/ ORDER DATE OF HEARING : 13 -10-201 6 DATE OF PRONOUNCEMENT : 18 -10-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-VIII, AHMEDABAD DATED 22.07.2013 PERTAINING TO A.Y. 2010- 11. ITA NO. 2384 /AHD/2013 . A.Y. 2010-1 1 2 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 15,76,21,000/- MADE BY THE A.O. ON ACCOUNT OF ENTRANCE FEES TREATING THE SAME AS REVENUE RECEIPT. 3. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A.O. N OTICED FROM THE ANNUAL REPORT THAT THE ASSESSEE HAS RECEIVED ENTRANCE FEES OF RS. 15,76,21,000/- WHICH HAS BEEN TREATED AS CAPITAL RECEIPT AND NOT O FFERED AS INCOME. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE ENTR ANCE FEES RECEIVED SHOULD NOT BE TREATED AS REVENUE RECEIPT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. ASSESSEE FILED A DETAILED REPLY CLAIMING THE ENTRAN CE FEES AS A CAPITAL RECEIPT. THE DETAILED REPLY OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE A.O. WHO PROCEEDED BY TREATING THE ENTRANCE FEES AS REVENUE RECEIPT. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CLAIM. IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT TH E TRIBUNAL IN ASSESSEES OWN CASE HAS DECIDED THE ISSUE IN FAVOUR OF THE ASS ESSEE AND AGAINST THE REVENUE. THE LD. CIT(A) WAS CONVINCED AND HELD THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY DIRECTED THE A.O. TO DELETE THE ADDITION. 6. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ISSUE IS N OW SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONB LE JURISDICTIONAL HIGH ITA NO. 2384 /AHD/2013 . A.Y. 2010-1 1 3 COURT IN ASSESSEES OWN CASE QUA TAX APPEAL NO. 839 OF 2007. THE LD. D.R. WAS NOT IN A POSITION TO POINT OUT ANY DISTINGUISHI NG FEATURE, WHICH MAY WARRANT A DIFFERENT VIEW. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL; THE ISS UE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. 8. THE HONBLE JURISDICTIONAL HIGH COURT WAS SEIZED WI TH THE FOLLOWING SUBSTANTIAL QUESTION OF LAW. WHETHER THE APPELLATE TRIBUNAL IS RIGHT IN LAW AND ON FACTS IN CONFIRMING THE ORDER PASSED BY THE CIT(A) DELETING THE ADDITION OF RS. 40,02,500/- BEING ENTRANCE FEES RECEIVED FROM THE NEW MEMBERS FOR LIF E MEMBERSHIP? 9. THE HONBLE HIGH COURT CONSIDERED THE FOLLOWING FAC TS AND DECIDED ACCORDINGLY AND THE SAME READS AS UNDER:- 3. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE IS A LIMITED COMPANY RUNNING A CLUB FOR ITS MEMBERS, IN THIS CASE, THE ASSESSMENT WAS COMPLETED VIDE ORDER PASSED U/S. 143(3) OF THE INCOME-TAX ACT, 1961 DATE D 26.03.2001 DETERMINING THE TOTAL INCOME AT RS. 14,29, 220/- AFTER MAKING CERTA IN ADDITIONS / DISALLOWANCES, AS AGAINST THE RETURN OF INCOME OF R S . NIL. BEING AGGRIEVED BY THE SAID ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A), WHICH CAME TO BE ALLOWED, VIDE ORDER DATED 16.04.2002. AGAINST THE SAID ORDER, THE DEPARTMENT PREFERRED APPEAL BEING ITA NO.2337/AHD/2002 BEFORE THE INCOME TAX APPELLATE TR IBUNAL. THE SAID APPEAL WAS DISMISSED BY THE TRIBUNAL VIDE ORDER DAT ED 10.10.2006. HENCE, THESE TAX APPEALS. 4. AT THE OUTSET, MR. S.N. SOPARKAR, LEARNED SENIOR ADVOCATE SUBMITTED THAT THE CONTROVERSY RAISED IN THESE APPEALS STANDS SETTLED BY A JUDGMENT OF THIS COURT IN ITA NO. 2384 /AHD/2013 . A.Y. 2010-1 1 4 THE CASE OF JUNAGADH GYMKHANA V. INCOME-TAX OFFICER , [2015] 56 TAXMANN.COM 281 (GUJARAT) WHEREIN, IT HAS BEEN HELD THAT PRINCI PLE OF MUTUALITY WOULD APPLY TO A TRANSACTION BETWEEN A MEMBER AND THE CLUB AND THE REFORE, 'GUEST CHARGE' RECEIVED BY CLUB FROM ITS MEMBERS WOULD NOT BE LIAB LE TO TAX. 5. LEARNED SENIOR STANDING COUNSEL FOR THE REVENUE WAS NOT IN A POSITION TO POINT OUT ANY DISTINGUISHING FEATURE, WHICH MAY WARRANT A DIFFERENT VIEW. 6. IN VIEW OF THE ABOVE AND FOR THE REASONS GIVEN I N THE AFORE-MENTIONED JUDGMENT, THE QUESTION RAISED IN THESE TAX APPEALS ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE APPEALS STAND DISPOSED OF ACCORDINGLY. 10. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 18 - 10- 2016. SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD