ASST CIT 8(1)(1), MUMBAI V. ROYAL WESTERN INDIA TRUF CLUB LTD, MUMBAI

ITA 5569/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9622 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 09-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUMIT LALCHAND; SALIL KAPOOR MS SAUMYA SINGH
• Keywords: Rule of consistency; Capital receipt
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI D T GARASIA, JUDICIAL MEMBER & SHRI N K PRADHAN, ACCOUNTANT MEMBER ITA NOS.5569 & 5570/MUM/2015 ASSESSMENT YEARS : 2010-11 & 2011-12 A CIT 8 ( 1 )(1) MUMBAI VS. ROYAL WESTERN INDIA TRUF CLUB LTD MAHALAXMI RACE COURSE, MAHALAXMI MUMBAI 400 034 PAN AABCR8519H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PURUSHOTTAM KUMAR RESPONDENT BY : SHRI SALIL KAPOOR, MS. SAUMYA SINGH & SHRI SUMIT LALCHANDANI DATE OF HEARING : 1 4 .09 .2017 DATE OF PRONOUNCEMENT : 22 .0 9 .2017 O R D E R PER D T GARASIA, JUDICIAL MEMBER: THESE APPEALS HAVE BEEN FILED BY THE REVENUE AGAINS T THE ORDERS OF CIT(A)-14, MUMBAI, BOTH DATED 29.09.2015, RELATING TO ASSESSMENT YEARS 2010-11 & 2011-12. SINCE IDENTICAL ISSUE IS INVOLV ED IN BOTH THESE APPEALS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. THE ONLY GROUND TAKEN IN THESE APPEALS READS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN TREATING THE ENTRANCE FEES RECEIVED FROM PITS MEMBER AS CAPITAL RECEIPTS IGNORING THE FACT THAT F ACILITIES THAT ARE MADE AVAILABLE TO THE MEMBERS ARE DONE IN THE NORMA L COURSE OF ITS ITA NO.5569 & 5570/MUM/2015 ROYAL WESTERN INDIA TURF CLUB LTD. 2 BUSINESS AS THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RACE COURSE. 3. WE SHALL TAKE UP THE APPEAL FOR A.Y. 2010-11. T HE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF CO NDUCTING HORSE RACING, TURF CLUB HOUSE AND PROVIDING HOSPITALITY SERVICES TO IT S MEMBERS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS CREDITED AN AM OUNT OF ` .5,71,47,250/- TO THE GENERAL RESERVES, WHICH HAS NOT BEEN OFFERED FOR TAXATION CLAIMING IT TO BE CAPITAL RECEIPT. THE AMOUNT WAS RECEIVED BY THE ASSESSEE AS ENTRANCE FEES FROM VARIOUS TYPES OF MEMBERS OF THE CLUB. TH E ASSESSING OFFICER HELD THAT ONE-TIME PAYMENT MADE BY THE MEMBERS ARE FOR S PECIAL FACILITIES AND THE SAME IS DONE IN THE NORMAL COURSE OF ITS BUSINESS A ND, THEREFORE, CANNOT BE TREATED AS CAPITAL RECEIPTS. THE CIT(A) FOLLOWING THE DECISION OF HIS PREDECESSOR IN THE ASSESSEES OWN CASE FOR A.YS. 20 05-06 TO 2009-10 TREATED THE AMOUNT AS CAPITAL RECEIPT. AGGRIEVED, THE REVE NUE IS IN APPEAL BEFORE US. 4. DURING THE COURSE OF HEARING, THE LEARNED AR SUB MITTED THAT FOR THE A.YS 2007-08 TO 2009-10, THE MATER TRAVELLED UP TO THE TRIBUNAL AND THE TRIBUNAL ALSO DISMISSED THE APPEAL OF THE DEPARTMEN T. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE ASSESSIN G OFFICER. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT IDENTICAL I SSUE CAME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YS. 2007-08 T O 2008-09 AND THE ITA NO.5569 & 5570/MUM/2015 ROYAL WESTERN INDIA TURF CLUB LTD. 3 TRIBUNAL VIDE ITS ORDER DATED 27.07.2016 IN ITA NO. 6335, 4235 & 6336/MUM/2012 DISMISSED THE APPEAL OF THE REVENUE O BSERVING AS UNDER: 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDE R, CONCLUSION DRAWN IN THE IMPUGNED ORDER, ASSERTION MADE BY THE ID. RESPECTIVE COUNSEL AND THE MATERIAL FACTS AVAILABLE ON RECORD, IF KEPT IN JUXTAPOSITION AND ANALYZED, THERE IS NO DISPUTE TO THE FACT THAT RIGHT FROM PRACTICALLY THE DATE OF INCORPORATION I.E. 192 5 ONWARDS, THE ENTRANCE FEE FROM THE MEMBERS WAS TREATED AS CAPITA L IN NATURE. AS EXPLAINED BY THE LD. COUNSEL THAT MAJORITY OF THE O RDERS WERE PASSED U/S 143(3) OF THE ACT. WE HAVE NOTED THE FAC TS OF ASSESSMENT YEAR 2005-06, THE ORDER PASSED B Y THE LD. COMMISSIONER OF INCOME TAX (APPEALS), WHEREIN, VIDE GROUND NO.2(PAGE-2 ONWARDS), ENTRANCE FEE, RECEIVED FROM I TS MEMBERS HELD THAT THE ONETIME ENTRANCE FEES, RECEIVED FROM ITS MEMBERS IS IN THE NATURE OF LIFETIME MEMBERSHIP FEES, HENCE IT CANNOT BE TREATED AS ANNUAL SUBSCRIPTION AS THE SAME IS COLLE CTED ONCE IN LIFETIME, THEREFORE, IT IS A CAPITAL RECEIPT. THE H ONBLE JURISDICTIONAL HIGH COURT IN CIT VS DINERS BUSINESS SERVICES PVT. LTD. 263 ITR 1(BOM.) HELD THAT ANY SUM PAID BY A MEMBER TO ACQUI RE THE RIGHTS OF A CLUB IS A CAPITAL RECEIPT. WE FURTHER NOTE THA T FOR ASSESSMENT YEAR 2003-04, WHILE FRAMING THE ASSESSMENT U/S 143( 3) OF THE ACT AND ALSO FOR ASSESSMENT YEAR 2001-02, IDENTICALLY T HE CLAIM OF THE ASSESSEE WAS ALLOWED. NO CONTRARY MATERIAL WAS BROU GHT TO OUR NOTICE. IT IS ALSO NOTED THAT EVEN REVISIONAL JURIS DICTION U/S 263 WAS INVOKED BY THE DEPARTMENT AND FINALLY THE ENTRANCE FEES WAS TREATED AS CAPITAL RECEIPT, THEREFORE, WE FIND FORC E IN THE CONTENTION OF THE ASSESSEE. 2.4. IF THIS ISSUE IS ANALYZED ON THE PRINCIPLE OF CONSISTENCY, WE NOTE THAT IN EARLIER YEARS, IDENTICALLY 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 REVENUE , NO U-TURN IS PERMISSIBLE. THE LEARNED ASSESSING OFFICER IS BOUND BY RULE OF CONSISTENCY. THE FOLLOWING CASES SUPPORT THE CASE O F THE ASSESSEE: - I. PARSHURAM POTTERY WORKS LTD. VS ITO 106 ITR 1 ( SC) II. SECURITY PRINTERS 264 ITR 276(DEL.) III. CIT VS NEO POLYPACK PVT. LTD. 245 ITR 492 (DE L.) IV CWT VS ALLIED FINANCE PVT. LTD. 289 ITR 318 (DE L.) ITA NO.5569 & 5570/MUM/2015 ROYAL WESTERN INDIA TURF CLUB LTD. 4 V. BERGER PAINTS INDIA LTD. VS CIT 266 ITR 99 (SC) VI. DCIT VS UNITED VANASPATI (275 ITR 124) AT) (CHA NDIGARH ITAT) VII. UNION OF INDIA VS KUMUDINI N. DALAI 249 ITR 21 9 (SC) 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 2 35 (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 C ONTRARY MATERIAL, NO CONTRARY VIEW IS TO BE TAKEN AS FINALITY TO THE LITIGATION IS ALSO A PRINCIPLE WHICH HAS TO BE FOLLOWED. BEFORE US, NO C ONTRARY FACTS OR ANY ADVERSE MATERIAL WAS' BROUGHT ON RECORD BY THE REVENUE, THEREFORE, ON THE PRINCIPLE OF CONSISTENCY ALSO, TH E ASSESSEE IS HAVING A GOOD CASE IN ITS FAVOUR, THUS, CONSIDERING THE TOTALITY OF FACTS, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL). 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 THE RESULT, THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DAY OF SEPTEMBER, 2017. SD/- SD/- (N K PRADHAN ) (D T GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 22 ND SEPTEMBER, 2017 SA ITA NO.5569 & 5570/MUM/2015 ROYAL WESTERN INDIA TURF CLUB LTD. 5 COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, D BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI