DDIT (E) II(1), MUMBAI V. GOREGAON SPORTS CLUB, MUMBAI

ITA 5065/MUM/2010

• Counselvise Citation: 506519914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 21-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Charitable institution; Benefit of exemption
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER I.T.A. NO.5065/MUM/2010 (ASSESSMENT YEAR : 2006-07) DY. DIRECTOR OF INCOME TAX (EXEMPTIONS)-II(1), MUMBAI-400 710 VS. GOREGAON SPORTS CLUB, CHINCHOLI BUNDER, OPP. SWAGAT PARK, MALAD (WEST), MUMBAI-400 064. PAN AAATG0279P APPELLANT RESPONDENT. APPELLANT BY : MR. A.K. NAYAK. RESPONDENT BY : MR. HARESH P. SHAH. DATE OF HEARING : 21.09.2011. DATE OF PRONOUNCEMENT : 30-09-2011. O R D E R. PER P.M. JAGTAP, A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LEARNED CIT(APPEALS)- I, MUMBAI DATED 23.2.2010 AND THE SOLITARY ISSUE WH ICH ARISES OUT OF THE SAME FOR OUR CONSIDERATION IS WHETHER THE LEARNED CIT(A) IS JUST IFIED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION IN RESPECT OF ITS INCOME U/S .11 OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE ASSESSEE IS A SPORTS CLUB, WHICH CLAIMED EXE MPTION U/S 11 OF THE ACT AS A CHARITABLE INSTITUTION. EARLIER YEARS THE ASSESSEE WAS GRANTED EXEMPTION IN RESPECT OF ITS INCOME U/S 11 OF THE ACT BUT CONTROVERSY OF THE EXE MPTION STARTED FROM AY 2000-01 AS NOTED BY THE ASSESSING OFFICER. IT WAS NOTICED BY T HE ASSESSING OFFICER THAT THOUGH THE ASSESSEE HAS CLAIMED AS A CHARITABLE INSTITUTION, I N FACT, IT WAS AN ASSOCIATION FOR THE 2 ITA NO.4646/MUM/2010 BENEFITS OF CERTAIN MEMBERS AS WELL AS THEIR FAMILI ES. THE ASSESSEE HAD NOT INCURRED ANY EXPENDITURE ON CHARITABLE ACTIVITIES AND THE EXPEND ITURE WAS INCURRED ON PROVIDING VARIOUS AMENITIES TO ITS MEMBERS OR MAY BE TO NON-MEMBERS A LSO. IN THE OPINION OF THE ASSESSING OFFICER, THE ASSESSEE WAS A MUTUAL ASSOCIATION WHER EAS THE MEMBERS WERE THE BENEFICIARIES OF THE CLUB ACTIVITIES. THE ASSESSING OFFICER ALSO EXAMINED THE OBJECTS AND ACTIVITIES OF THE ASSESSEE CLUB WHERE THE SAME CONS TITUTED THE CHARITABLE PURPOSES WITHIN THE MEANING OF SECTION 202(15) OF THE ACT. THE ASSE SSING OFFICER HAS NARRATED THE OBJECTS OF THE TRUST IN THE ASSESSMENT ORDER. THE A SSESSING OFFICER ALSO EXAMINED THE RULES AND REGULATIONS IN RESPECT OF ADMITTING THE M EMBERS AND THE CATEGORIES OF MEMBERS. THE ASSESSING OFFICER HAS NOTED THAT THOUGH THE CLU B CLAIMS THAT IT IS OPEN TO PUBLIC AND IS CREATED FOR THE ADVANCEMENT OF AN OBJECT OF GENE RAL PUBLIC UTILITY, BUT THE SAME IS RESTRICTED IN MANY WAYS. IT IS FURTHER NOTED THAT T HE MEMBERSHIP OF THE CLUB IS RESTRICTED AND NOT OPEN TO PUBLIC AS THE ACCEPTANCE OF THE MEM BERSHIP IS IN THE DISCRETION OF THE EXECUTIVE COMMITTEE. THE ASSESSING OFFICER ALSO NOT ED THAT THE ASSESSEE CLUB HAS BEEN SET UP TO PROVIDE RECREATIONAL SERVICES, FACILITIES AND AMENITIES TO ITS MEMBERS IN ADDITION TO SPORTS FACILITIES. IN THE BACKGROUND OF THESE FA CTS, THE ASSESSING OFFICER RELIED ON SOME OF THE DECISIONS OF THE HONBLE SUPREME COURT AS WELL AS HIGH COURTS AND CAME TO THE CONCLUSION THAT THE ASSESSEE CLUB IS PRE-DOMINA NTLY AN ASSOCIATION WHERE THE MEMBERS HAVE CONTRIBUTED ONLY FOR THE PURPOSE OF THEIR OWN BENEFIT AND FOR ACQUIRING CERTAIN AMENITIES. HENCE, THE ASSESSING OFFICER TREATED THE ASSESSEE AS A TRADING INSTITUTION AND NOT AN INSTITUTION CREATED FOR CHARITABLE PURPOSE. SUM AND SUBSTANCE, IN THE OPINION OF THE ASSESSING OFFICER, IT IS A MUTUAL ASSOCIATION AND H ENCE HAVING NO CHARITABLE PURPOSE, EXEMPTION U/S 11 WAS DENIED TO THE ASSESSEE. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A ), WHO ALLOWED THE APPEAL FILED BY THE ASSESSEE, FOLLOWING THE ORDER OF THE TRIBUNA L FOR AY 2000-01 IN ASSESSEES OWN CASE, AND DIRECTED THE ASSESSING OFFICER TO GRANT E XEMPTION TO THE ASSESSEE U/S 11 OF THE ACT. 3 ITA NO.4646/MUM/2010 4. WE HAVE HEARD THE PARTIES. THE LD. COUNSEL FOR T HE ASSESSEE SUBMITTED THAT ON IDENTICAL SET OF FACTS, THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2000-01 IN ITA NO. 1491/MUM/2004 VIDE ORDER DATED 18.07.2008. THE LD. COUNSEL HAS FILED THE COPY OF THE ORDER OF THE TRIBUNAL, WH ICH IS PLACED ON RECORD. ON PERUSAL OF THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE, THERE SHOULD NOT BE CONTROVERSY IN RESPECT OF THE FACT THAT THE SAME ISSUE HAS BEEN DECIDED BY TH E TRIBUNAL BY HOLDING THAT EXEMPTION TO THE ASSESSEE CANNOT BE DENIED U/S 11 OF THE ACT. THE OPERATIVE PART OF THE TRIBUNAL ORDER, I.E. PARA NO. 17, READS AS UNDER: 17. THE DECISION IN THE CASE OF SHREE KANDIVALI VY AYAM MANDIR IN ITA NO. 331/MUM/2005 ON SIMILAR FACTS IN WHICH ONE OF US WA S THE PARTY (JM) HAS PASSED THE ORDER FOR GRANTING EXEMPTION U/S. 11. FOLLOWING THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF SHREE KANDIVALI VYAYAM MANDIR (SUPRA) (UNREPORTED), WE ARE OF THE VIEW THAT THE ASSESSING OFFICER ERRED IN HOLDIN G THAT THE ASSESSEE IS ONLY A MUTUAL ASSOCIATION AND NOT A CHARITABLE TRUST. WE A GREE WITH THE CONCLUSION OF CIT(A) THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT OF EXEMPTION U/S. 11 OF THE I.T. ACT IN RESPECT OF THE INTEREST INCOME EARNED BY THE M FROM DEPOSITS MADE TO THE BANK. FOLLOWING THE ORDER FOR ASST. YEAR 2001-02, THE TRI BUNAL HAS ALLOWED THE BENEFIT OF EXEMPTION U/S.11 OF THE ACT TO THE ASSESSEE IN A.YS 2002-03, 2003-04, 2004-05. THE ISSUE INVOLVED IN THE PRESENT APPEAL THUS IS SQUARE LY COVERED BY THE ORDERS OF THE TRIBUNAL PASSED IN ASSESSEES OWN CASE FOR THE EARLIER YEAR AND RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(A) DIR ECTING THE A.O. TO ALLOW THE BENEFIT OF EXEMPTION U/S.11 TO THE ASSESSEE FOR THE YEAR UN DER CONSIDERATION. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED ON 30 TH SEPT., 2011.. SD/- SD/- (R.S. PADVEKAR) (P.M. JAG TAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 30 TH SEPT., 2011. *REDDY GP 4 ITA NO.4646/MUM/2010 COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, G-BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI