Gulmohar Greens Golf & Country Club Ltd., Ahmedabad V. The Dy.CIT, Circle-4, Now Circle-2(1)(1), Ahmedabad

ITA 3302/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9445 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-02-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 27-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: VS AHD GULMOHAR GREENS GOLF; COUNTRY CLUB LTD CO VINOD
• Keywords: Capital receipt
• Section: 14A

Judgement Text

,, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD . BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER SL. NO(S) ITA NO(S) ASSESSMENT YEAR(S) CROSS - APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 3301/AHD/2015 2011 - 1 2 GULMOHAR GREENS GOLF & COUNTRY CLUB LTD. C/O.VINOD & NARENDRA 101/102, SHAILY NR.OLD GUJ.HIGH COURT NAVRANGPURA AHMEDABAD-380 009 (ASSESSEE) PAN: AACCG 4253 G DCIT CIRCLE-2(1)(1) AHMEDABAD (REVENUE) 2. 54/AHD/2016 2011 - 12 REVENUE ASSESSEE 3. 3302/AHD/2015 2012 - 13 ASSESSEE REVENUE 4. 3671/AHD/2015 2012 - 13 REVENUE ASSESSEE ASSESSEE BY : SHRI JYOTISH M.SHAH, AR REVENUE BY : SHRI KAMLESH MAKWANA, SR.DR / DATE OF HEARING 18/02/2016 ! / DATE OF PRONOUNCEMENT 19 TH /02/2016 / O R D E R THESE CROSS-APPEALS BY THE REVENUE AND ASSESSEE A RE DIRECTED AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-2, AHMEDABAD DATED 27/10/2015 & 28/10/201 5 FOR ASSESSMENT YEARS (AYS) 2011-12 & 2012-13 RESPECTIV ELY. SINCE COMMON ISSUES ARE RAISED IN THESE APPEALS AND PERTA IN TO THE SAME ITA NOS. 3301 & 3302/AHD/2015 (BY ASSESSEE) AND ITA NOS.54/AHD/16 & 3671/AHD/15 (BY REVENUE) GULMOHAR GREENS GOLF & COUNTRY CLUB LTD. VS. DCIT ASST.YEARS 2011-12 & 2012-13 - 2 - ASSESSEE, THESE WERE HEARD TOGETHER AND ARE BEING D ISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE . 2. FIRSTLY, I SHALL TAKE UP FOR ADJUDICATION OF ASS ESSEES APPEAL IN ITA NO.3301/AHD/2015 FOR AY 2011-12:- IN THIS APPEAL, MAINLY TWO ISSUES ARE RAISED. THE FIRST ISSUE INVOLVED IN GROUND NOS.1 TO 3 IS RELATING TO REFUN DABLE SECURITY DEPOSIT COLLECTED BY THE ASSESSEE, WHETHER IT IS REVENUE RE CEIPT OR CAPITAL RECEIPT. THE ASSESSEE HAD RECEIVED THE REFUNDABLE SECURITY DEPOSIT DURING THE YEAR AMOUNTING TO RS.3,82,51,000/- WHIC H ARE TO BE REPAID TO ITS MEMBERS AFTER 25 YEARS WITHOUT INTEREST. THE AO WHILE COMPLETING THE ASSESSMENT, HELD THAT 60% OF THE TOTAL SECURITY DEPOSIT IS TO BE TREATED AS INCOME AND ADDED A SUM OF RS.2,29,50,600/- TO TH E RETURNED INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 2.1. AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE LD.CIT(A) PARTLY ALLOWED THE APPEA L OF THE ASSESSEE BY HOLDING THAT ONLY 1/25 TH OF THE SECURITY DEPOSIT COLLECTED DURING THE YEAR WOULD ALONE BE LIABLE FOR TAXATION DURING THE RELEV ANT FINANCIAL YEAR. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESS EE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. ITA NOS. 3301 & 3302/AHD/2015 (BY ASSESSEE) AND ITA NOS.54/AHD/16 & 3671/AHD/15 (BY REVENUE) GULMOHAR GREENS GOLF & COUNTRY CLUB LTD. VS. DCIT ASST.YEARS 2011-12 & 2012-13 - 3 - 3. AT THE VERY OUTSET, THE LD.COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED BY THE DE CISION OF THE COORDINATE BENCH (ITAT B BENCH AHMEDABAD) PASSED IN ITA NO.2337/AHD/2011(REVENUES APPEAL) & ITA NO.2054/ AHD/2011 FOR AY 2008-09 (ASSESSEES OWN APPEAL), DATED 30/11/201 5 (PHOTOCOPY OF THE ORDER IS PLACED ON RECORD). 3.1. THE LD.SR.DR WAS UNABLE TO CONTROVERT THE SUBM ISSION MADE BY THE LD.COUNSEL FOR THE ASSESSEE. 4. I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW AS WELL AS THE DECISION RELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE. THE TRIBUNAL, UNDER THE IDENTICAL FACTS AND CIRCUMSTANCES OF THE CASE, HAS HELD THAT THE SECURITY DEPOSIT COLLECTED FROM ITS MEMBERS WHICH I S REFUNDABLE AND DOES NOT PARTAKE THE CHARACTER OF INCOME. THE RELEVANT FINDING OF THE TRIBUNAL CONTAINED IN PARA-5 IN ASSESSEES OWN CASE PASSED F OR AY 2008-09(SUPRA) READS AS FOLLOWS:- 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE REVENUE HAS NOT DISPUTED THAT THE SECUR ITY DEPOSITS WERE REFUNDABLE TO THE MEMBERS. IT IS ALSO NOT IN DISPU TE THAT IN SOME OF THE CASES THE ASSESSEE-CLUB HAS REFUNDED THE AMOUNT. U NDER THESE FACTS, WE ARE UNABLE TO ACCEPT THE FINDING OF THE AO THAT THE AMOUNT WOULD BE ITA NOS. 3301 & 3302/AHD/2015 (BY ASSESSEE) AND ITA NOS.54/AHD/16 & 3671/AHD/15 (BY REVENUE) GULMOHAR GREENS GOLF & COUNTRY CLUB LTD. VS. DCIT ASST.YEARS 2011-12 & 2012-13 - 4 - SUBJECTED TO INCOME-TAX AND WOULD PARTAKE THE INCOM E OF THE ASSESSEE- CLUB. WE ARE OF THE CONSIDERED VIEW THAT EVERY REC EIPT CANNOT BE TERMED AS INCOME UNLESS IT IS SATISFIES THE REQUIREMENT OF LAW. IN THE PRESENT CASE, THE ASSESSEE-CLUB HAD RECEIVED REFUNDABLE NON -INTEREST BEARING SECURITY DEPOSIT WOULD REMAIN LIABILITY FOR THE ASS ESSEE-CLUB. MEMBER BY GIVING SECURITY DEPOSIT ENTITLES HIMSELF FOR THE CONCESSIONAL RATE SERVICES PROVIDED BY THE ASSESSEE-CLUB. THEREFORE, LOOKING TO THE TOTALITY OF THE FACTS OF THE CASE AND IN VIEW OF TH E JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SIDDHESHWAR SA HAKARI SAKHAR KARKHANA LTD. REPORTED AT 270 ITR 1 (SC) AND ALSO T HE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF UN IQUE MERCANTILE SERVICES PVT.LTD. IN TAX APPEAL NOS.1471 TO 1478 OF 2005, WHEREIN THE HONBLE HIGH COURT HAS CONFIRMED THE VIEW OF THE TR IBUNAL HOLDING THAT THE ASSESSEE WOULD ENTITLE FOR SPREADING OVER THE N ON-REFUNDABLE FEE ON ACCRUAL BASIS, UNDISPUTEDLY THE ONE TIME SECURITY D EPOSIT IS REFUNDABLE. THE HONBLE SUPREME COURT IN THE CASE OF SIDDHESHWA R SAHAKARI SAKHAR KARKHANA LTD. (SUPRA) HAS HELD THAT THESE D EPOSITS ARE AKIN TO TRANSACTION OF LOAN. THEY ARE CLEARLY LIABLE TO BE EXCLUDED FROM TAXABLE INCOME. THEREFORE, RESPECTFULLY FOLLOWING THE JUDG EMENT OF THE HONBLE APEX COURT IN THE CASE OF SIDDHESHWAR SAHAKARI SAKH AR KARKHANA LTD., WE ARE OF THE CONSIDERED VIEW THAT THE SECURITY DEP OSITS AS RECEIVED BY THE ASSESSEE-CLUB CANNOT BE SUBJECTED TO TAX. ACCO RDINGLY, WE FIND NO MERIT IN THIS GROUND OF THE REVENUES APPEAL, SAME IS REJECTED. 4.1. IN VIEW OF THE AFORESAID DECISION OF THE COORD INATE BENCH, I HOLD THAT THE REFUNDABLE SECURITY DEPOSIT COLLECTED IS N OT LIABLE TO BE TAXED INCOME OF THE ASSESSEE. IT IS ORDERED ACCORDINGLY. AS A RESULT, GROUND NOS.1 TO 3 RAISED IN THE ASSESSEES APPEAL ARE ALLO WED. 5. THE SECOND ISSUE RAISED IN GROUND NO.4 IS WITH R EGARD TO CONFIRMATION OF DISALLOWANCE OF RS.1,44,869/- MADE BY AO INVOKING THE ITA NOS. 3301 & 3302/AHD/2015 (BY ASSESSEE) AND ITA NOS.54/AHD/16 & 3671/AHD/15 (BY REVENUE) GULMOHAR GREENS GOLF & COUNTRY CLUB LTD. VS. DCIT ASST.YEARS 2011-12 & 2012-13 - 5 - PROVISIONS OF SECTION 14A OF THE ACT. AT THE VERY OUTSET, THE LD.COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THE SAID ISSU E IS COVERED AGAINST THE ASSESSEE AND IN FAVOUR OF REVENUE IN VIEW OF THE TR IBUNALS ORDER PASSED IN ASSESSEES OWN CASE FOR AY 2008-09(SUPRA). 5.1. THE LD.SR.DR ALSO SUPPORTED THE ORDER OF THE L D.CIT(A) ON THIS ISSUE. 6. I HAVE HEARD BOTH THE PARTIES. LOOKING TO TOTAL ITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE SUBMIS SION MADE BY THE LD.COUNSEL FOR THE ASSESSEE, I HOLD THAT THE DISALL OWANCE OF RS.1,44,869/- BY APPLYING THE PROVISIONS OF SECTION 14A OF THE I. T.ACT, 1961 IS JUSTIFIED AND IN ACCORDANCE WITH LAW. HENCE, GROUND NO.4 RAI SED IN ASSESSEES APPEAL IS HEREBY REJECTED. 7. IN THE RESULT, ASSESSEES APPEAL, I.E. ITA NO.33 01/AHD/2015 FOR AY 2011-12 IS PARTLY ALLOWED AS INDICATED ABOVE. 8. SECONDLY, I TAKE UP THE REVENUES APPEAL IN ITA NO.54/AHD/2016 FOR AY 2011-12:- THE EFFECTIVE ISSUE THAT IS RAISED IN REVENUES AP PEAL IS WHETHER THE LD.CIT(A) IS RIGHT IN HOLDING THAT ONLY 1/25 TH OF THE SECURITY DEPOSIT ITA NOS. 3301 & 3302/AHD/2015 (BY ASSESSEE) AND ITA NOS.54/AHD/16 & 3671/AHD/15 (BY REVENUE) GULMOHAR GREENS GOLF & COUNTRY CLUB LTD. VS. DCIT ASST.YEARS 2011-12 & 2012-13 - 6 - COLLECTED ALONE NEED TO BE TREATED AS INCOME FOR TH E RELEVANT ASSESSMENT YEAR. THIS ISSUE IS ALSO COVERED BY THE DECISION OF THE COORDINATE BENCH PASSED IN ITA NO.2337/AHD/2011 (REVENUES APPEAL) A ND ITA NO.2054/AHD/2011 FOR AY 2008-09 (ASSESSEES OWN APP EAL), DATED 30/11/2015, WHEREIN THE TRIBUNAL HAS HELD THAT THE REFUNDABLE SECURITY DEPOSIT COLLECTED DOES NOT TANTAMOUNT TO INCOME AND THE SAME CANNOT BE TAXED. IN VIEW OF THE FINDING OF THE TRIBUNAL, I HOLD THAT THE GROUND RAISED IN DEPARTMENTAL APPEAL IS TO BE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE, I.E. I TA NO.54/AHD/2016 FOR AY 2011-12 IS DISMISSED. 10. LASTLY, I TAKE UP THE ASSESSEES APPEAL IN ITA NO.3302/AHD/2015 AND REVENUES APPEAL IN ITA NO.3671/AHD/2015 FOR AY 2012- 13:- [A] ASSESSEES APPEAL FOR AY 2012-13 :- GROUND NOS.1 TO 3 RAISED IN ASSESSEES APPEAL (I. E. IN ITA NO.3302/AHD/2015) ARE IDENTICAL TO THE GROUNDS AS W ERE RAISED IN ITA NO.3301/AHD/2015 FOR AY 2011-12(ASSESSEES APPEAL-S UPRA). MY FINDINGS RENDERED IN ITA NO.3301/AHD/2015 FOR AY 20 11-12 REGARDING THE SAME WILL HOLD GOOD FOR THIS ASSESSMENT YEAR AL SO. THEREFORE, GROUND NOS.1 TO 3 ARE RAISED IN THE ASSESSEES APPE AL ARE ALLOWED. ITA NOS. 3301 & 3302/AHD/2015 (BY ASSESSEE) AND ITA NOS.54/AHD/16 & 3671/AHD/15 (BY REVENUE) GULMOHAR GREENS GOLF & COUNTRY CLUB LTD. VS. DCIT ASST.YEARS 2011-12 & 2012-13 - 7 - 11. GROUND NO.4 IS WITH REGARD TO CONFIRMATION OF DISALLOWANCE OF RS.3,13,296/- MADE BY AO APPLYING PROVISIONS OF SEC TION 14A OF THE I.T.ACT, 1961. THIS GROUND IS ALSO IDENTICAL TO GR OUND NO.4 RAISED IN ASSESSEES APPEAL IN ITA NO.3301/AHD/2015 FOR AY 20 11-12(SUPRA). MY FINDINGS RENDERED IN ITA NO.3301/AHD/2015 WILL HOLD GOOD FOR THIS ASSESSMENT YEAR ALSO. THUS, GROUND NO.4 RAISED BY THE ASSESSEE IS REJECTED. 12. GROUND NO.5 WAS NOT PRESSED BY THE LD.COUNSEL F OR THE ASSESSEE AND, THEREFORE, THE SAME IS DISMISSED AS SUCH. 13. GROUND NO.6 IS WITH REGARD TO INITIATION OF PEN ALTY U/S.271(1)(C) OF THE I.T.ACT,1961. THIS GROUND DOES NOT ARISE OUT O F THE ORDER OF THE LD.CIT(A) AND, THEREFORE, THE SAME IS REJECTED. 14. GROUND NO.7 IS GENERAL IN NATURE WHICH REQUIRE NO INDEPENDENT ADJUDICATION. 15. [B] REVENUES APPEAL FOR AY 2012-13 :- THE SOLITARY ISSUE IN THIS REVENUES APPEAL IS WHE THER THE LD.CIT(A) IS JUSTIFIED IN HOLDING THAT SECURITY DEP OSITS AMOUNTING TO RS.13,05,200/- ALONE NEED TO BE TAXED IN THE CURREN T YEAR INSTEAD OF RS.1,95,78,000/- ASSESSED BY THE AO. THIS ISSUE IS IDENTICAL TO THE ISSUE RAISED IN REVENUES APPEAL IN ITA NO.54/AHD/2016 FO R AY 2011- 12(SUPRA). MY DECISION PASSED FOR AY 2011-12 WILL HOLD GOOD FOR THIS ASSESSMENT YEAR ALSO. IT IS ORDERED ACCORDINGLY. AS A RESULT, REVENUES APPEAL FOR AY 2012-13 IS DISMISSED. ITA NOS. 3301 & 3302/AHD/2015 (BY ASSESSEE) AND ITA NOS.54/AHD/16 & 3671/AHD/15 (BY REVENUE) GULMOHAR GREENS GOLF & COUNTRY CLUB LTD. VS. DCIT ASST.YEARS 2011-12 & 2012-13 - 8 - 16. I SUMMARIZE THE RESULT AS UNDER:- (I) ASSESSEES APPEAL IN ITA NO.3301/AHD/2015 FOR A Y 2011-12 IS PARTLY ALLOWED. (II) REVENUES APPEAL IN ITA NO.54/AHD/2016 FOR AY 2011-12 IS DISMISSED. (III) ASSESSEES APPEAL IN ITA NO.3302/AHD/2015 FOR AY 2012-13 IS PARTLY ALLOWED. (IV) REVENUES APPEAL IN ITA NO.3671/AHD/2015 FOR A Y 2012-13 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH FEBRUARY,2016 AT AHMEDABAD. SD/- ( . ) ( GEORG E GEORGE K. ) JUDICIAL MEMBER AHMEDABAD; DATED 19/ 02 /2016 '..,.../ T.C. NAIR, SR. PS. !'#$#%! / COPY OF THE ORDER FORWARDED TO : 1. )*+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 01023 4 / CONCERNED CIT 4. 4 ( )*+ ) / THE CIT(A)-2, AHMEDABAD 5. 567.23 , )*+)23 ! , )1 / DR, ITAT, AHMEDABAD 6. 79 :+ / GUARD FILE. / BY ORDER, /5*. //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD