DCIT 8(1)(1), MUMBAI V. ROYAL WESTERN INDUA TURF CLUB LTD, MUMBAI

ITA 3237/MUM/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9346 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 03-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SUMIT LALCHAND; SALIS KAPOOR MS ANANY KAPOOR
• Keywords: Capital asset; Gift; Rule of consistency; Capital receipt
• Section: 143(3); 142(1); 56(2); 143(1); 195; 250; 143(2); 264; 72; 13; 119; 56; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NOS. 3237/MUM/2017 (A.Y: 2012-13 ) DCIT 8(1)(1) RM NO. 624, AAYAKAR BHAVAN, MK ROAD, MUMBAI 400020. / VS. ROYAL WESTERN INDIA TURF CLUB LTD., MAHALAXMI RACE COURSE, MAHALAXMI, MUMBAI ./ ./ PAN/GIR NO. : AABCR8519H ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SMT MAMTA BANSAL, CIT-DR / RESPONDENT BY : SHRI SALIS KAPOOR, MS. ANANY KAPOOR & SHRI SUMIT LALCHANDANI (AR) / DATE OF HEARING 19/01/2021 !'# / DATE OF PRONOUNCEMENT 28/01/2021 / O R D E R PER PAVAN KUMAR GADALE: THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 14,MUMBAI PASSED U/S. 143(3) AND 250 OF THE INCOME TAX ACT, 1961. THE REVENUE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL: I. THE LD. CIT(A) ERRED IN TREATING THE ENTRANCE F EES RECEIVED FROM ITS MEMBERS AS CAPITAL RECEIPT IGNORI NG THE FACT THAT THE FACILITIES MADE AVAILABLE TO THE MEMB ERS ARE ITA NO S. 3237 /MUM/2017 M/S. ROYAL WESTERN INDIA TURF CLUB LTD., MUMBAI. - 2 - IN THE ORDINARY COURSE OF ITS BUSINESS AND HENCE WE RE RIGHTLY TAXED AS A REVENUE RECEIPT BY THE A.O II. THE LD. CIT(A) ERRED IN TREATING THE INFRASTRU CTURE FACILITIES RECEIVED FROM ITS MEMBERS AS CAPITAL REC EIPT IGNORING THE FACT THAT THE FACILITIES MADE AVAILABL E TO THE MEMBERS ARE IN THE ORDINARY COURSE OF ITS BUSINESS . 2. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESS EE IS ENGAGED IN CONDUCTING HORSE RACES AND PROVIDING HOSPITALITY SERVICES TO ITS MEMBERS AND GUESTS. THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 26.09.2012 WITH A TOTAL LOSS OF RS.(-)2,95,35,944/- AND THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) AND 142(1) OF THE AC T WERE ISSUED ALONG WITH THE QUESTIONNAIRE. IN COMPLIANCE, THE LD.AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED THE DETAILS. THE A.O ON PERU SAL OF THE FINANCIAL STATEMENTS FOUND THAT THE ASSESSEE HAS CREDITED ENTRANCE FEES OF RS. 16,18,93,250/-TO THE GENERAL RESERVES ACCOUNT AND CLAIMED AS CAPITA L RECEIPTS. WHEREAS THE A.O, IS OF THE OPINION THAT T HE AMOUNT RECEIVED BY THE ASSESSEE AS ENTRANCE FEES FROM THE LIFE MEMBERS, CLUB AND STAND MEMBERS, SERVICE MEMBERS AND LOCAL MEMBERS OF THE TURF CLUB ITA NO S. 3237 /MUM/2017 M/S. ROYAL WESTERN INDIA TURF CLUB LTD., MUMBAI. - 3 - HOUSE HAS TO BE TREATED AS REVENUE INCOME. THE ASSESSEE HAS FILED THE SUBMISSIONS ON 05.02.2015 REFERRED AT PAGE 2 PARA 4 OF THE ASSESSMENT ORDER. THE A.O WAS NOT SATISFIED WITH THE SUBMISSIONS AS THE ASSESSEE COLLECTS ENTRANCE FEES, ANNUAL FEES, AND PROVIDE AMENITIES AND FACILITIES TO ITS MEMBERS AND NON-MEMBERS .FURTHER THE ONETIME PAYMENT MADE BY THE MEMBERS FOR THE SPECIAL FACILITIES WAS IN THE ORDINARY COURSE OF BUSINESS AND CANNOT BE TREATED AS CAPITAL RECEIPT AND MADE ADDITION OF RS16,81,93,250/-.SIMILARLY, THE A.O FOUND RS. 65 LAKHS WAS CREDITED TO CAPITAL RESERVE ACCOUNT AND WAS TREATED AS A CAPITAL RECEIPT. THE EXPLANATIONS OF THE ASSESSEE ARE THAT, THESE ARE THE VOLUNTARY CONTRIBUTIONS RECEIVED FROM THE MEMBERS TOWARDS INFRASTRUCTURE FACILITIES FOR CLUB MEMBERS. BUT THE A.O. OBSERVE THAT THE ASSESSEE CLUB WAS FORMED FOR THE PURPOSE OF CARRYING ON THE BUSINESS OF CONDUCTING HORSE RACES IN ALL ITS BRANCHES AND ESTABLISH CLUBS, FOUR STAR HOTELS AND OTHER CONVENIENCES IN CONNECTION WITH THE PROPERTY OF THE CLUB. THEREFORE, THE RECEIPTS RECEIVED FROM THE MEMBERS TOWARDS INFRASTRUCTURE FACILITY ITA NO S. 3237 /MUM/2017 M/S. ROYAL WESTERN INDIA TURF CLUB LTD., MUMBAI. - 4 - CONTRIBUTIONS ARE REVENUE RECEIPTS AND MADE ADDITION. THE A.O ALSO MADE ADDITION IN RESPECT OF ANNUAL SUBSCRIPTIONS,AS IT WAS NOT OFFERED FOR TAXATION ON ACCOUNT OF MUTUALITY CONCEPT AND ASSESSED THE TOTAL INCOME OF RS. 14,87,12,101/- AND PASSED ORDER U/S 143(3) AND 250 OF THE ACT DATED 16.03.2015. 3. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED A N APPEAL WITH THE CIT(A). ON THE FIRST DISPUTED ISSUE WITH RESPECT TO TREATMENT OF ENTRANCE FEES RECEIVED FROM THE LIFE MEMBERS AS CAPITAL RECEIPTS, WHERE TH E A.O HAS TREATED AS REVENUE RECEIPT IN THE CURRENT YEAR. AND ON THE SECOND DISPUTED ISSUE WITH RESPECT TO VOLUNTARY CONTRIBUTIONS RECEIVED FROM MEMBERS TOWARDS INFRASTRUCTURE FACILITIES, THE ASSESSEE CONSIDERED AS A CAPITAL RECEIPTS, WHEREAS, THE AO TREATED AS REVENUE RECEIPT AND THE ANNUAL SUBSCRIPTION FEES IS TREATED AS CAPITAL RECEIPT AND DIRECTLY CREDITED TO THE CAPITAL RESERVES. IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) CONSIDERED THE GROUNDS OF APPEAL AND THE SUBMISSIONS OF THE ASSESSEE REFERRED AT PAGE 2 TO 3 OF THE CIT(A) ORDE R. ITA NO S. 3237 /MUM/2017 M/S. ROYAL WESTERN INDIA TURF CLUB LTD., MUMBAI. - 5 - THE ASSESSEES CASE IS SIMILAR TO THE EARLIER ASSESSMENT YEARS 2007-08 TO 2009-10, WHERE THE HONBLE TRIBUNAL HAS DISMISSED THE REVENUE APPEALS. THE LD.CIT(A) RELIED ON THE ASSESSEES OWN CASE AN D TREATED THE ENTRANCE FEES RECEIVED AS A CAPITAL REC EIPT AND DIRECTED A.O DELETE THE ADDITION. IN RESPECT OF VOLUNTARY CONTRIBUTION, RECEIVED FROM ITS MEMBERS TOWARDS THE INFRASTRUCTURE FACILITIES, THE LD.CIT(A ) OBSERVED THAT THE CONTRIBUTIONS RECEIVED FOR SPECIF IC PURPOSE ARE TO BE TREATED AS CAPITAL RECEIPT AND DIRECTED A.O. TO DELETE THE ADDITION. ON THE THIRD DISPUTED ISSUE OF TAXABILITY OF ANNUAL SUBSCRIPTIO NS, THE CIT(A) FIND THAT IN EARLIER YEARS ALSO THE ASSE SSEE HAS NOT PRESSED THIS GROUND OF APPEAL AND THE SAME WAS DISMISSED AND PARTLY ALLOWED THE ASSESSES APPEAL. AGGRIEVED BY THE ORDER, THE REVENUE HAS FI LED AN APPEAL BEFORE THE TRIBUNAL. 4. THE LD. DR SUBMITTED THAT THE CIT(A) HAS ERRED IN GRANTING THE RELIEF AS THE AMOUNT RECEIVED TOWAR DS ENTRANCE FEES FROM ITS LIFE MEMBERS HAS TO BE TREA TED AS REVENUE RECEIPT BECAUSE IT WAS COLLECTED FOR PROVIDING THE FACILITIES AVAILABLE TO THE MEMBERS I N ITA NO S. 3237 /MUM/2017 M/S. ROYAL WESTERN INDIA TURF CLUB LTD., MUMBAI. - 6 - THE ORDINARY COURSE OF BUSINESS. ON THE SECOND ISSUE THE LD. CIT(A) HAS ERRED IN TREATING THE VOLUNTARY CONTRIBUTION RECEIVED FOR THE INFRASTRUCT URE FACILITIES AS CAPITAL RECEIPTS AS THE CLUB FACILIT IES WERE AVAILABLE TO THE MEMBERS IN THE ORDINARY COURS E OF BUSINESS AND PRAYED FOR ALLOWING THE REVENUE APPEAL. 5. CONTRA, LD. AR SUPPORTED THE ORDERS OF THE LD.CIT(A) AND RELIED ON THE ORDERS OF THE HONBLE TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEARS. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA-FACIE, THE REVENUE HAS CHALLENGED TWO ISSUES WITH RESPECT TO TREATMENT OF ENTRANCE FEES RECEIVED BY THE ASSESSEE AS CAPITAL RECEIPT AND THE VOLUNTARY CONTRIBUTION RECEIVED FRO M THE MEMBERS FOR INFRASTRUCTURE FACILITIES. ON THE F IRST DISPUTED ISSUE, THE LD. AR SUBSTANTIATE HIS ARGUMENTS REFERRING TO THE PAPER BOOK AND SUBMITTED THAT IN THE ASSESSEES OWN CASE FOR A.Y 2007-08 TO 2009-10 THE COORDINATE BENCH OF THIS TRIBUNAL HAS ITA NO S. 3237 /MUM/2017 M/S. ROYAL WESTERN INDIA TURF CLUB LTD., MUMBAI. - 7 - DISMISSED THE REVENUE APPEAL AND UPHELD THE ACTION OF THE CIT(A). WE FIND THE LD.CIT(A) HAS RELIED ON THE SUBMISSIONS OF THE ASSESSEE AND THE DECISION OF THE COORDINATE BENCH OF HONBLE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y 2007-08 TO 2009-10. WE CONSIDERED IT APPROPRIATE TO REFER TO THE OBSERVATI ONS OF THE HONBLE TRIBUNAL IN REVENUE APPEAL IN ITA NO . 5569 & 5570/MUM/2015. A.Y 2010-11AND 2011-12 WHERE THE HONBLE TRIBUNAL HAS CONSIDERED THE EARLIER DECISION OF THE ASSESSEE OWN CASE FOR THE A.Y 2007-08 AND 2008-09 AND DISMISSED THE REVENUE APPEAL AT PAGE 2 PARA 5 TO 6 WHICH IS READ AS UNDER : 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIN D THAT IDENTICAL ISSUE CAME UP BEFORE THE TRIBUNAL IN ASSE SSEES OWN CASE FOR A.YS. 2007-08 TO 2008-09 AND THE TRIBU NAL VIDE ITS ORDER DATED 27.07.2016 IN ITA NO. 6335, 42 35 & 6336/MUM/2012 DISMISSED THE APPEAL OF THE REVENUE OBSERVING AS UNDER: 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDE R, CONCLUSION DRAWN IN THE IMPUGNED ORDER, ASSERTION M ADE BY THE ID. RESPECTIVE COUNSEL AND THE MATERIAL FACT S AVAILABLE ON RECORD, IF KEPT IN JUXTAPOSITION AND A NALYZED, THERE IS NO DISPUTE TO THE FACT THAT RIGHT FROM PRA CTICALLY THE DATE OF INCORPORATION I.E. 1925 ONWARDS, THE EN TRANCE FEE FROM THE MEMBERS WAS TREATED AS CAPITAL IN NATU RE. AS EXPLAINED BY THE LD. COUNSEL THAT MAJORITY OF THE O RDERS WERE PASSED U/S 143(3) OF THE ACT. WE HAVE NOTED TH E FACTS OF ASSESSMENT YEAR 2005-06, THE ORDER PASSED BY ITA NO S. 3237 /MUM/2017 M/S. ROYAL WESTERN INDIA TURF CLUB LTD., MUMBAI. - 8 - THE LD. COMMISSIONER OF INCOME TAX (APPEALS), WHERE IN, VIDE GROUND NO.2(PAGE-2 ONWARDS), ENTRANCE FEE, REC EIVED FROM ITS MEMBERS HELD THAT THE ONETIME ENTRANCE FEE S, RECEIVED FROM ITS MEMBERS IS IN THE NATURE OF LIFET IME MEMBERSHIP FEES, HENCE IT CANNOT BE TREATED AS ANNU AL SUBSCRIPTION AS THE SAME IS COLLECTED ONCE IN LIFET IME, THEREFORE, IT IS A CAPITAL RECEIPT. THE HONBLE JUR ISDICTIONAL HIGH COURT IN CIT VS DINERS BUSINESS SERVICES PVT. LTD. 263 ITR 1(BOM.) HELD THAT ANY SUM PAID BY A MEMBER TO ACQUIRE THE RIGHTS OF A CLUB IS A CAPITAL RECEIPT. WE FURTHER NOTE THAT FOR ASSESSMENT YEAR 2003-04, WHILE FRAMIN G THE ASSESSMENT U/S 143(3) OF THE ACT AND ALSO FOR ASSESSMENT YEAR 2001-02, IDENTICALLY THE CLAIM OF T HE ASSESSEE WAS ALLOWED. NO CONTRARY MATERIAL WAS BROU GHT TO OUR NOTICE. IT IS ALSO NOTED THAT EVEN REVISIONA L JURISDICTION U/S 263 WAS INVOKED BY THE DEPARTMENT AND FINALLY THE ENTRANCE FEES WAS TREATED AS CAPITAL RE CEIPT, THEREFORE, WE FIND FORCE IN THE CONTENTION OF THE A SSESSEE. 2.4. IF THIS ISSUE IS ANALYZED ON THE PRINCIPLE OF CONSISTENCY, WE NOTE THAT IN EARLIER YEARS, IDENTIC ALLY THE CLAIM OF THE ASSESSEE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY ACCEPTING THE ENTRANCE FEES AS CAPITAL RECEIPT, THEREFORE, WE ARE OF THE VIEW THAT UNLESS AND UNTIL CONTRARY FACTS ARE BROUGHT ON RECORD BY THE R EVENUE, NO U-TURN IS PERMISSIBLE. THE LEARNED ASSESSING OFF ICER IS BOUND BY RULE OF CONSISTENCY. THE FOLLOWING CASES S UPPORT THE CASE OF THE ASSESSEE: - I. PARSHURAM POTTERY WORKS LTD. VS ITO 106 ITR 1 (S C) II. SECURITY PRINTERS 264 ITR 276(DEL.) III. CIT VS NEO POLYPACK PVT. LTD. 245 ITR 492 (DEL .) IV CWT VS ALLIED FINANCE PVT. LTD. 289 ITR 318 (DEL .) V. BERGER PAINTS INDIA LTD. VS CIT 266 ITR 99 (SC) VI. DCIT VS UNITED VANASPATI (275 ITR 124) AT) (CHANDIGARH ITAT) VII. UNION OF INDIA VS KUMUDINI N. DALAI 249 ITR 21 9 (SC) ITA NO S. 3237 /MUM/2017 M/S. ROYAL WESTERN INDIA TURF CLUB LTD., MUMBAI. - 9 - VIII UNION OF INDIA VS SATISH PANNALAL SHAH 249 ITR 221 IX. B.F.VARGHESE VS STATE OF KERALA 72 ITR 726 (KER .) X. CIT VS NARENDRA DOSHI 254 ITR 606 (SC) XI. CIT VS SHIVSAGAR ESTATE 257 ITR 59 (SC) XII. PRADIP RAMANLAL SETH VS UOI 204 ITR 866 (GUJ.) XIII. RADHASWAMY SATSANG VS CIT 193 ITR 321 (SC) XIV. AGGARWAL WAREHOUSING & LEASING LTD. 257 ITR 23 5 (MP) 2.5. THE SUM AND SUBSTANCE OF THE AFORESAID JUDICIA L PRONOUNCEMENTS IS THAT ON THE BASIS OF PRINCIPLE OF JUDICIAL DISCIPLINE, CONSISTENCY HAS TO BE FOLLOWED AND ONCE IN A PARTICULAR YEAR, IF ANY VIEW IS TAKEN, IN THE ABSENCE OF ANY CONTRARY MATERIAL, NO CONTRARY VIEW IS TO BE TAKEN AS FINALITY TO THE LITIGATION IS ALSO A PR INCIPLE WHICH HAS TO BE FOLLOWED. BEFORE US, NO CONTRARY FA CTS OR ANY ADVERSE MATERIAL WAS' BROUGHT ON RECORD BY THE REVENUE, THEREFORE, ON THE PRINCIPLE OF CONSISTENCY ALSO, THE ASSESSEE IS HAVING A GOOD CASE IN ITS FAVOUR, T HUS, CONSIDERING THE TOTALITY OF FACTS, WE FIND NO INFIR MITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEAL). 6. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBU NAL IN THE ASSESSEES OWN CASE, WE DISMISS THE APPEALS OF THE REVENUE FOR BOTH THE YEARS UNDER CONSIDERATION. 7. IN RESPECT OF THE SECOND DISPUTED ISSUE WITH REGARD TO VOLUNTARY CONTRIBUTION FROM THE MEMBERS FOR INFRASTRUCTURE FACILITIES. THE CONTENTIONS OF T HE LD.DR THAT THE CIT(A) HAS ERRED IN TREATING THE SAM E AS REVENUE RECEIPT AND GRANTED THE RELIEF. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS RECEIVED THE VOLUNTARY CONTRIBUTION FROM THE TWO MEMBERS AND ITA NO S. 3237 /MUM/2017 M/S. ROYAL WESTERN INDIA TURF CLUB LTD., MUMBAI. - 10 - REFERRED TO PAPER BOOK AT PAGE 119 AND 120, WHERE THE CONFIRMATIONS IN RESPECT OF VOLUNTARY CONTRIBUTION MADE BY THE TWO MEMBERS FOR MUTUAL BENEFIT OF MEMBERS OF THE CLUB ARE FILED. FURTHER, THE LD. AR EMPHASIZED THAT ON SUCH SIMILAR ISSUE, THE HONBLE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT VS. KDA ENTERPRISES (P.) LTD. ITA NO 2662/M?2013 HAS HELD AT PARA 31 AND 32 AS UNDER: 31. AS PER THE PROVISIONS OF LAW PREVAILING DURING THE YEAR UNDER CONSIDERATION, THE GIFT RECEIVED BY ONE CORPORATE BODY FROM ANOTHER CORPORATE BODIES DO NOT COME UNDER THE AMBIT OF INCOME AS CONTEMPLATED U/S 2(24) OF THE ACT OR ANY OTHER PROVISIONS OF THE ACT. THE GIF T RECEIVED ARE A VOLUNTARY PAYMENTS MADE BY THE DONOR S TO THE ASSESSEE. NEITHER THE ASSESSEE HAS ANY LEGAL RI GHT TO CLAIM THE GIFT FROM THE DONOR NOR DONORS HAVE ANY L EGAL OR CONTRACTUAL OBLIGATIONS TO GIVE GIFT TO THE ASSESSE E. THE GIFTS RECEIVED BY THE ASSESSEE WAS A VOLUNTARY PAYM ENTS MADE BY THE DONOR, WITHOUT CONSIDERATION TO THE ASSESSEE. THE GIFT RECEIVED HAS NOTHING TO DO WITH THE BUSINESS OF THE ASSESSEE SO AS TO CONSTITUTE ITS IN COME FROM BUSINESS OR A REVENUE RECEIPT IN THE NATURE OF INCOME. 32. AS PER SECTION 14 OF THE ACT, INCOME OF AN ASSE SSEE IS CLASSIFIED UNDER THE FOLLOWING HEADS OF INCOME VIZ SALARIES , INCOME FROM HOUSE PROPERTY , PROFIT AND GAINS OF BUSINESS OR PROFESSION , CAPITAL GAIN AND INCOME FROM OTHER SOURCES . PROVISIONS OF THE ACT PROVIDES FOR WHAT CAN BE CONSIDERED AS INCOME UNDER THE VARIOUS HEADS OF INCOME. THUS INCOME OF AN ASSESSEE SHALL BE CHARGEABLE TO TAX ONLY IF IT FALLS UNDER A NY HEADS ITA NO S. 3237 /MUM/2017 M/S. ROYAL WESTERN INDIA TURF CLUB LTD., MUMBAI. - 11 - OF INCOME. THUS GIFT RECEIVED IS NEITHER IN THE NAT URE OF SALARY NOR IN THE NATURE OF INCOME FROM HOUSE PROPE RTY. BY NO STRETCH OF IMAGINATION IT CAN BE SAID THAT TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF RECEIVING GI FTS FROM CORPORATE BODIES; HENCE THE GIFT CAN ALSO NOT BE CONSIDERED AS THE INCOME FROM BUSINESS OF THE ASSES SEE. AS THE GIFT HAS NO RELATION TO ANY CAPITAL ASSET, T HE SAME CAN ALSO NOT BE CONSIDERED AS CAPITAL GAIN FOR THE ASSESSEE. WITH RESPECT TO INCOME FROM OTHER SOURCE, THAT INCOME OF EVERY KIND WHICH IS NOT CHARGEABLE TO TAX UNDER ANY HEAD OF INCOME ARE SUBJECTED TO TAX UNDER THE RESIDUARY HEAD OF INCOME I.E. INCOME FROM OTHER SOU RCES. HOWEVER AGAIN WHAT IS SUBJECTED TO TAX UNDER THE PROVISIONS OF SECTION 56 IS INCOME OF REVENUE NATUR E. THE GIFT WAS ALWAYS TREATED AS NON TAXABLE CAPITAL RECE IPT IN THE HANDS OF THE RECIPIENT TILL 31.03.2005. THEREAF TER THE LEGISLATURE VIDE FINANCE (NO.2) ACT, 2004 W.E.F. 1. 04.2005 INSERTED CLAUSE (V) TO SUB SECTION (2) OF SECTION 5 6 OF THE ACT SO AS TO INCLUDE ANY SUM OF MONEY RECEIVED WITH OUT CONSIDERATION FROM ANY PERSON, OTHER THAN EXCEPTION PROVIDED IN THAT SECTION, BY AN INDIVIDUAL OR HINDU UNDIVIDED FAMILY WAS MADE SUBJECTED TO TAX. THE SCO PE OF THE SAID SECTION WAS FURTHER NARROWED DOWN BY RA ISING THE LIMIT OF RECEIPT FROM RS.25,000/- TO RS.50,000/ - WITH EFFECT FROM 1.04.2006. THE SAID SECTION WAS AMENDED FROM TIME TO TIME BY AMENDING THE LIMIT OF RECEIPTS AND NATURE OF TRANSACTION BUT THE APPLICABILITY OF THE SAID SECTION WAS RESTRICTED ONLY TO AN INDIVIDUAL OR HIN DU UNDIVIDED FAMILY. THUS WHEN THE LEGISLATURE INTENDE D FOR BRINGING TO TAX NET THE GIFT RECEIVED BY AN ASSESSE E IT HAS SPECIFICALLY PROVIDED SO BY ENACTING THE LAW. AS PE R SECTION 56(2)(V) THE GIFTS RECEIVED BY AN INDIVIDUA L AND HUF ONLY ARE MADE LIABLE TO TAX. THEREAFTER FOR THE FIRST TIME TWO OTHER CATEGORY OF ASSESSEES WERE ADDED WIT H EFFECT FROM 1.06.2010 BY FINANCE ACT, 2010 IN CLAUS E ITA NO S. 3237 /MUM/2017 M/S. ROYAL WESTERN INDIA TURF CLUB LTD., MUMBAI. - 12 - (VIIA) OF SECTION 56(2) OF THE INCOME TAX ACT, 1961 . THESE TWO CATEGORIES OF THE ASSESSEES ARE A FIRM AND A COMPANY . HOWEVER, THE PARLIAMENT RESTRICTED THE TAXABILITY TO RECEIPT IN THE FORM OF SHARES OF AN U NLISTED COMPANY WITHOUT CONSIDERATION OR WITHOUT SUFFICIENT CONSIDERATION. THUS EVEN AFTER THIS AMENDMENT, ANY OTHER MOVABLE / IMMOVABLE PROPERTIES RECEIVED AS GIFT WAS NOT COVERED AND ACCORDINGLY NOT SUBJECTED TO TAX. HOWEV ER, CERTAIN GIFTS ARE MADE TAXABLE FROM TIME TO TIME BY VARIOUS WELL THOUGHT AND WELL INTENDED AMENDMENTS I N THE ACT AND ALL THE DEFINITION REGARDING TAXABILITY OF GIFT (I.E. RECEIPT OF ASSETS WITHOUT SUFFICIENT OR WITHO UT ANY CONSIDERATION) ARE INCLUSIVE AND ONLY THOSE INSTANC E OF GIFTS ARE REQUIRED TO BE TAXED AND NOT ALL GIFTS. T HIS IS SO, MORE PARTICULARLY, BECAUSE ALL GIFTS ARE CAPITAL RE CEIPT IN NATURE AND ONLY CERTAIN GIFTS ARE MADE TAXABLE. AS PROVISIONS OF SECTION 56(2)(V)(VI), (VII) AND (VIIA ) SPECIFICALLY COVERS THE INSTANCES OF GIFT WHICH ARE TAXABLE UNDER THE PROVISIONS OF IT ACT; AND ALL OTHER GIFTS RECEIVED BY THE ASSESSEE OTHER THAN THOSE COVERED IN OTHER SECTIONS ARE NOT CHARGEABLE TO TAX BEING CAPITAL RE CEIPT IN NATURE. HONBLE SUPREME COURT IN THE CASE OF PADMAR AJE R. KADAMBANDE VS. CIT, 195 ITR 877 (SC); HONBLE BOMBAY HIGH COURT IN CASE OF MEHBOOB PRODUCTIONS PRIVATE LTD. VS. CIT, 106 ITR 758 AND IN CASE OF H.H.MAHARANI SHRI VIJAYKUVERBA SAHEB OF MORVI & ANR . VS. CIT, 49 ITR 594, HELD THAT GIFTS ARE CAPITAL RE CEIPTS WHEN CONSIDERATION ARE NOT IN THE NATURE OF INCOME AND,HENCE, SAME CANNOT BE CHARGED TO TAX UNDER THE PROVISIONS OF INCOME TAX ACT. 8. WE CONSIDERED THE COORDINATE BENCH DECISIONS, AND THE FACTS WHICH ARE IDENTICAL AND SIMILAR IN T HE EARLIER YEARS OBSERVE THAT THE LD.DR COULD NOT ITA NO S. 3237 /MUM/2017 M/S. ROYAL WESTERN INDIA TURF CLUB LTD., MUMBAI. - 13 - CONTROVERT THE FINDINGS OF THE CIT(A) WITH ANY NEW COGENT EVIDENCE OR INFORMATION. WE FIND THE LD.CIT( A) HAS GRANTED THE RELIEF RELYING ON THE ASSESSEES OW N CASE OF EARLIER YEARS AND PASSED A REASONED ORDER. ACCORDINGLY, WE UP HELD THE ORDER OF THE LD.CIT(A) ON THESE DISPUTED ISSUES AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.01.2021 SD/- SD/- (RAJESH KUMAR) (PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL ME MBER MUMBAI, DATED 28 .01.2021 KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / THE CIT(A) 4. ) ( ) / CONCERNED CIT 5. ,-. //'( , '(# , & / DR, ITAT, MUMBAI 6. .34 5 / GUARD FILE. / BY ORDER, , / //TRUE COPY// / ( ASST. REGISTRAR) !' #, / ITAT, MUMBAI