DCIT - 9(1)(1), MUMBAI V. AAKASH LAVLESH LEISURE PVT. LTD., MUMBAI

ITA 5180/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0224 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 16-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE LD J
• Assessee Lawyers: MA YUR KISHNADWALA; SUNIL K RAMANI LD ARS
• Keywords: Capital receipt
• Section: 143(3)

Judgement Text

AAKASH LAVLESH LEISURE PRIVATE LIMITED ASSESSMENT YEARS-2010-11 & 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.5180/MUM/2016 ( / ASSESSMENT YEAR: 2010-11) DEPUTY COMMISSIONER OF INCOME TAX-9(1)(1) R.NO.260A, 2 ND FLOOR AAYKAR BHAWAN M.K.ROAD, MUMBAI-400 020 / VS. AAKASH LAVLESH LEISURE PVT. LTD. JUHU MILLENNIUM CLUB PLOT NO. A-1, GULMOHAR ROAD JVPD SCHEME MUMBAI 400 049 ./PAN : AAACL-6655-R ( /APPELLANT ) : ( / RESPONDENT ) & ./I.T.A. NO.695/MUM/2017 ( / ASSESSMENT YEAR: 2011-12) DEPUTY COMMISSIONER OF INCOME TAX-9(1)(1) R.NO.260A, 2 ND FLOOR AAYKAR BHAWAN M.K.ROAD, MUMBAI-400 020 / VS. AAKASH LAVLESH LEISURE PVT. LTD. JUHU MILLENNIUM CLUB PLOT NO. A-1, GULMOHAR ROAD JVPD SCHEME MUMBAI 400 049 ./PAN : AAACL-6655-R ( /APPELLANT ) : ( / RESPONDENT ) & C.O. NO.257/MUM/2018 ( / ASSESSMENT YEAR: 2010-11) AAKASH LAVLESH LEISURE PVT. LTD. JUHU MILLENNIUM CLUB PLOT NO. A-1, GULMOHAR ROAD JVPD SCHEME MUMBAI 400 049 / VS. DEPUTY COMMISSIONER OF INCOME TAX-9(1)(1) R.NO.260A, 2 ND FLOOR AAYKAR BHAWAN M.K.ROAD, MUMBAI-400 020 ./PAN : AAACL-6655-R ( /APPELLANT ) : ( / RESPONDENT ) AAKASH LAVLESH LEISURE PRIVATE LIMITED ASSESSMENT YEARS-2010-11 & 2011-12 2 & C.O. NO.256/MUM/2018 ( / ASSESSMENT YEAR: 2011-12) AAKASH LAVLESH LEISURE PVT. LTD. JUHU MILLENNIUM CLUB PLOT NO. A-1, GULMOHAR ROAD JVPD SCHEME MUMBAI 400 049 / VS. DEPUTY COMMISSIONER OF INCOME TAX-9(1)(1) R.NO.260A, 2 ND FLOOR AAYKAR BHAWAN M.K.ROAD, MUMBAI-400 020 ./PAN : AAACL-6655-R ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : MAYUR KISHNADWALA & SUNIL K.RAMANI, LD. ARS REVENUE BY : SATISH CHANDRA RAJORE, LD. JCIT-DR / DATE OF HEARING : 29/11/2018 / DATE OF PRONOUNCEMENT : 05/12/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEALS BY REVENUE FOR ASSESSMENT YEAR S [AY] 2010-11 & 2011-12 AGITATE SEPARATE ORDERS OF FIRST APPELLAT E AUTHORITY ON COMMON GROUNDS OF APPEAL. SINCE COMMON ISSUES ARE INVOLVED , WE DISPOSE-OFF THE SAME BY WAY OF THIS COMMON ORDER FOR THE SAKE O F CONVENIENCE & BREVITY. ALTHOUGH THE ASSESSEE HAS FILED CROSS-OBJECTIONS AGAINST THE SAME, HOWEVER, THE SAME HAS NOT BEEN PRESSED DURING HEARING AND THEREFORE, AT THE OUTSET, STANDS DISMISSED IN LIMINE. 2. FIRST, WE TAKE UP ITA NO.5180/MUM/2016 WHICH CON TEST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) 20, M UMBAI, [CIT(A)], APPEAL NO. CIT(A)-20/ACIT-9(1)/IT-52/2013-14 DATED 27/05/2016 ON FOLLOWING GROUNDS OF APPEAL: - AAKASH LAVLESH LEISURE PRIVATE LIMITED ASSESSMENT YEARS-2010-11 & 2011-12 3 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO TREAT 60% O F THE ADVANCE MEMBERSHIP FEES RECEIVED EVERY YEAR AS INCOME INSTEAD OF TREAT ING THE ENTIRE ADVANCE MEMBERSHIP FEES AS INCOME FOR THE YEAR UNDER CONSID ERATION. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN TREATING NONREFUNDABLE ONE - -- - TIME ENTRANCE FEES AS CAPITAL RECEIPTS INSTEAD OF TREATING THE SAME AS REVENUE RE CEIPTS. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. AS SISTANT COMMISSIONER OF INCOME TAX-9(1), MUMBAI [AO] IN SCR UTINY ASSESSMENT U/S 143(3) ON 05/03/2013 WHEREIN THE INCOME OF THE ASSESSEE HAS BEEN ASSESSED AT RS.201.12 LACS BEFORE SET-OFF OF BROUGH T FORWARD LOSSES AS AGAINST RETURNED LOSS OF RS.88.46 LACS E-FILED BY THE ASSESSEE ON 15/10/2010 WHICH WAS LATER ON REVISED TO LOSS OF RS .212.21 LACS ON 29/09/2011. DURING IMPUGNED AY, THE ASSESSEE BEING RESIDENT CORPORATE ENTITY WAS OPERATING A BUSINESS CLUB IN THE NAME OF JUHU CLUB MILLENNIUM AT JUHU. THE CLUB WAS PROVIDING VARIOUS FACILITIES AND ACTIVITIES LIKE HEALTH CENTER, SWIMMING POOL, SQUASH COURT, TENNIS COURT, BANQUET HALL, PARTY LAWN, BAR & RESTAURANT . THE ASSESSEE EARNS INCOME FROM PROVIDING AFORESAID FACILITIES TO ITS MEMBERS. 3. DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED THA T THE ASSESSEE RECEIVED MEMBERSHIP FEES AGGREGATING TO RS.495.88 LACS WHICH COMPRISED-OFF OF MEMBERS ONE-TIME ENTRANCE FEES OF RS.362.82 LACS AND ADVANCE MEMBERSHIP FEES OF RS.133.06 LACS. AGAINST THE SAME, THE ASSESSEE HAD ALREADY OFFERED TO TAX RECEIPTS AG GREGATING TO RS.82.54 LACS IN THE SHAPE OF ENTRANCE FEES OF RS.14.20 LACS & ADVANCE MEMBERSHIP FEES OF RS.68.34 LACS. ALTHOUGH THE ASSESSEE DEFENDED T HE METHOD OF REVENUE RECOGNITION , HOWEVER, NOT CONVINCED, LD. AO TREATED AAKASH LAVLESH LEISURE PRIVATE LIMITED ASSESSMENT YEARS-2010-11 & 2011-12 4 THE DIFFERENTIAL AMOUNT OF RS.413.34 LACS AS INCOM E OF THE ASSESSEE AND COMPLETED THE ASSESSMENT. 4. THE LD. FIRST APPELLATE AUTHORITY, RELYING UPON THE DECISION OF ITS PREDECESSOR RENDERED IN ASSESSEES OWN CASE FOR AY 2008-09, CONCLUDED THAT THE ONE-TIME ENTRANCE FEES OF RS.362 .82 LACS WAS CAPITAL IN NATURE AND HENCE, NOT TAXABLE IN THE HANDS OF TH E ASSESSEE. REGARDING ADVANCE MEMBERSHIP FEES OF RS.133.06 LACS , LD. CIT(A) CONCLUDED THAT ONLY 60% OF THE SAME WAS TAXABLE DUR ING IMPUGNED AY KEEPING IN VIEW THE FACT THAT ONLY 70% OF THE FACIL ITIES BEING PROVIDED BY THE ASSESSEE WERE COMPLETED DURING IMPUGNED AY. AGG RIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 5. BOTH THE REPRESENTATIVES CONVERGE ON THE POINT T HAT THE ISSUE WAS RECURRING IN NATURE AND HAS ALREADY BEEN DEALT BY T HE TRIBUNAL IN OTHER YEARS, THE COPIES OF WHICH HAS BEEN PLACED ON RECOR D. 6. WE HAVE CAREFULLY HEARD THE ORDERS OF LOWER AUTH ORITIES AND THE FOLLOWING DECISIONS OF THIS TRIBUNAL IN ASSESSEES OWN CASE: - NO. ITA NO. AYS ORDER DATED 1. ITA NO.7905/MUM/2011 & OTHERS 2004-05 TO 2008-09 26/09/2016 2 ITA NO.1685/MUM/2017 2012-13 14/06/2017 THE LEAD ORDER OF THE TRIBUNAL IS FOR AY 2008-09 WH EREIN SIMILAR ISSUES WAS AGITATED BY ASSESSEE AS WE AS REVENUE IN CROSS APPEALS. UPON CAREFUL CONSIDERATION OF CATENA OF JUDGMENTS, THE T RIBUNAL, ON PAGE NUMBER-67 OF THE SAID JUDGMENT, REACHED A CONCLUSIO N THAT NON- REFUNDABLE ENTRANCE FEES RECEIVED BY THE ASSESSEE W AS CHARGEABLE TO TAX AS REVENUE RECEIPTS. THE ISSUE OF TAXABILITY OF ADVANCE MEMBERSHIP FEES HAS BEEN REMITTED BACK TO THE FILE OF LD. AO W ITH CERTAIN DIRECTIONS FOR RE-ADJUDICATION. THIS DECISION OF THE TRIBUNAL HAS SUBSEQUENTLY BEEN AAKASH LAVLESH LEISURE PRIVATE LIMITED ASSESSMENT YEARS-2010-11 & 2011-12 5 FOLLOWED FOR AY 2012-13 ALSO. FACTS AND CIRCUMSTANC ES BEING PARI- MATERIA THE SAME, RESPECTFULLY FOLLOWING THE SAME, WE CONCL UDE THAT ONE- TIME ENTRANCE FEES RECEIVED BY THE ASSESSEE WAS CHA RGEABLE TO TAX AS REVENUE RECEIPTS IN THE HANDS OF THE ASSESSEE. THE DECISION OF FIRST APPELLATE AUTHORITY STANDS REVERSED TO THAT EXTENT. THE ISSUE OF TAXABILITY OF ADVANCE MEMBERSHIP FEES STANDS REMITTED BACK TO THE FILE OF LD. AO ON SIMILAR LINES. RESULTANTLY, GROUND NUMBER-1 STAN DS ALLOWED FOR STATISTICAL PURPOSES WHEREAS GROUND NUMBER-2 STANDS ALLOWED. THE APPEAL STANDS PARTLY ALLOWED. ITA NO.695/MUM/2017 7. SIMILAR ARE THE FACTS IN AY 2011-12 WHEREIN THE ASSESSEE HAS BEEN SADDLED WITH SIMILAR ADDITION OF RS.138.06 LACS ON ACCOUNT OF MEMBERSHIP FEES. THE LD. CIT(A) HAS GRANTED PARTIAL RELIEF TO THE ASSESSEE AGAINST WHICH THE REVENUE IS IN FURTHER AP PEAL BEFORE US WITH SIMILAR GROUNDS OF APPEAL. FACTS & CIRCUMSTANCES BE ING THE SAME, GROUND NUMBER-2 STANDS ALLOWED WHEREAS GROUND NUMBE R-1 STAND ALLOWED FOR STATISTICAL PURPOSE SINCE THE MATTER OF ADVANCE MEMBERSHIP FEES STAND REMITTED BACK TO THE FILE OF LD. AO. THE APPEAL STANDS PARTLY ALLOWED. CONCLUSION 8. BOTH OF REVENUES APPEAL STAND PARTLY ALLOWED WH EREAS BOTH OF ASSESSEES CROSS-OBJECTIONS STANDS DISMISSED IN LIMINE. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH DECEMBER, 2018 SD/- SD/- (MAHAVIR SINGH) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER AAKASH LAVLESH LEISURE PRIVATE LIMITED ASSESSMENT YEARS-2010-11 & 2011-12 6 MUMBAI; DATED :05/12/2018 SR.PS:-JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ,- &. , . , / DR, ITAT, MUMBAI 6. -/01 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI