ACIT, Circle, Panchkula V. M/s Panchkula Golf Club, Panchkula

ITA 994/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9699 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-04-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 20-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Capital receipt; Set aside
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH !, ' # $ , . .. . & , '( # BEFORE: SMT. DIVA SINGH, JM & DR. B.R.R. KUMAR , A M ./ ITA NO. 994/CHD/2018 / ASSESSMENT YEAR : 2015-16 THE ACIT CIRCLE, PANCHKULA HARYANA M/S PANCHKULA GOLF CLUB SECTOR-3, PANCHKULA HARYANA ./ PAN NO: AAAAP5757C / APPELLANT / RESPONDENT ! ' / ASSESSEE BY : SHRI. MANOJ KUMAR, CA # ! ' / REVENUE BY : SHRI. MANJIT SINGH, CIT DR $ % ! &/ DATE OF HEARING : 30/04/2019 '()* ! &/ DATE OF PRONOUNCEMENT : 27/06/2019 ')/ ORDER PER DR. B.R.R. KUMAR, A.M: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE LD. CIT(A), PANCHKULA DT. 21/05/2018. IN THE PRESENT APPEAL REVENUE HAS RAISED THE FOLLOW ING GROUNDS: 1. WHETHER ON THE FACTS & CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED IN LAW IN TREATING THE ASSESSEE AS MUTUAL CON CERN AND ALLOWING THE APPEAL OF ASSESSEE BY DELETING THE ADDITION OF RS. 94,62,549/- MADE BY THE AO ON ACCOUNT OF TREATING THE ASSESSEE AS NON-M UTUAL CONCERN 2. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SE T-ASIDE AND THAT OF THE A.O. BE RESTORED. 2 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2014 DECLARING LOSS OF (-) RS.43,32,950/- AND FURTHER REVISED ITS RETURN OF INCOME BY DECLARING LOSS OF (-) RS.75,37,125/-. THE AO COMPLETED ASSESSMENT U/S 143(3) ON 01.09.2017 AT AN INCOME OF RS. 18,45,350/ -. DURING THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO SHOW CAUSE WHY THE ASSESSEE BE NOT TREATED AS NON-MUTUAL CONCERN AND EXPLAIN THE CLAIM ABOUT THE CLUB AS A MUTUAL CONCERN. AFTER CON SIDERING THE ASSESSEE'S REPLY, THE AO NOTED THAT THE CLUB IS NOT A MUTUAL C ONCERN AS ITS GOVERNING BODY COMPRISES OF CHIEF SECRETARY, GOVERNMENT OF HARYANA AS PRESIDENT, PRINCIPAL SECRETARY TO CHIEF MINSTER HARYANA AS SENIOR VICE P RESIDENT, FINANCIAL COMMISSIONER, TOWN COUNTRY PLANNING, GOVERNMENT OF HARYANA AS A VICE PRESIDENT AND CHIEF ADMINISTRATOR, HUDA AS MEMBERS AND THE OTHER MEMBERS ARE ALSO NOMINATED BY THE PRESIDENT. AO HELD THAT I T INDICATES THAT THE MANAGEMENT & CONTROL OVER THE ASSESSEE CLUB WAS WIT H THE STATE GOVERNMENT. THE CLUB WAS NOT ASSESSED AS MUTUAL CONCERN IN A.Y. 2007-08 AS IT FAILED TO FULFILL THE THREE TESTS OF MUTUALITY AS LAID DOWN BY THE HO N'BLE SUPREME COURT IN CHELMSFORD CLUB VS. CIT 243 ITR 89 AND IN CIT VS. B ANKIPUR CLUB LTD. 226 ITR 97. THE CLAIM OF THE ASSESSEE AS A MUTUAL CONCERN WAS A LSO NOT ACCEPTED AS THE ASSESSEE IN THE INCOME TAX RETURN HAS NO WHERE STAT ED THAT PANCHKULA GOLF CLUB IS A MUTUAL CONCERN. THE FORM USED TO FILE INCOME T AX RETURN WAS NOT APPLICABLE IN THIS CASE. FURTHER, AO NOTED THAT THE SUM OF RS. 94,62,549/- AS ONE TIME ENTRANCE FEE CONTRIBUTION FROM THE MEMBERS IS A REV ENUE RECEIPT WHEREAS THE ASSESSEE HAS TAKEN SAME AS CAPITAL RECEIPT ON THE B ASIS OF MUTUALITY. SINCE, THE 3 OBJECTIVE OF MUTUAL BENEFIT IS NOT FULFILLED, THERE FORE, CONTRIBUTION OF RS.94,62,549/- RECEIVED BY THE ASSESSEE CLUB FROM T HE MEMBERS DURING THE YEAR WAS HELD TO BE THE TAXABLE INCOME OF THE ASSESSEE. DURING THE PROCEEDINGS BEFORE THE LD.CIT(A), THE AP PELLANT SUBMITTED THAT THE ASSESSEE CLUB IS A MUTUAL CONCERN AND ENJOYING THE BENEFIT OF MUTUALITY SINCE THE IMPUGNED ISSUE HAD ALREADY BEEN SETTLED BY THE HON'BLE JURISDICTIONAL BENCH IN THE ASSESSEES OWN CASE FOR THE A.Y. 2008- 09 AS THE HON'BLE ITAT IN ITA NO. 813/2013 DT. 06.05.2015 SETTLED THE CONTROVERSY BY ALLOWING THE CLAIM OF THE APPELLANT WHERE IT WAS HELD THAT THE ASSESSEE IS EN TITLED TO EXEMPTION UNDER THE CONCEPT OF MUTUALITY AND THE ENTRANCE FEE HAS TO BE TREATED AS CAPITAL FEE. THE LD.CIT(A) HAS DELETED ADDITION BASED ON THE ORD ER OF THE ITAT IN THE CASE OF THE ASSESSEES OWN CASE FOR THE A.Y. 2010-11 IN APP EAL NO. 32/PKL/13-14 DATED 01.09.2016. FOR THE SAKE OF BREVITY , THE OPERATING PART OF THE RELEVANT ORDER RELIED IS AS UNDER: '9. I HAVE GONE THOUGH THE FACTS OF THE CASE AND WR ITTEN SUBMISSION FILED BY THE APPELLANT. IT IS NOTED THAT THE AO HAS HELD THE APPE LLANT CLUB AS NON MUTUAL CONCERN ON THE GROUND THAT THE APPELLANT HAS NOT ST ATED ABOUT BEING A MUTUAL CONCERN IN ITS RETURN OF INCOME WHICH WAS FILED IN THE FORM NOT APPLICABLE IN THE CASE OF THE APPELLANT. FURTHER, THE AO HAS CONSIDERE D THE DECISION IN APPELLANT'S OWN CASE FOR A.Y. 2007-08 WHERE IT WAS NOT CONSIDER ED AS MUTUAL CONCERN BY APPLYING THE JUDGMENTS OF HON'BLE SUPREME COURT. AC CORDINGLY, THE AO CONSIDERED THE CONTRIBUTION OF RS.84,65,816/- FROM MEMBERS AS INCOME OF THE APPELLANT. HOWEVER, IN THE APPELLANT'S OWN CASE FOR A.Y. 2008-09, THE HON'BLE ITAT, CHANDIGARH AFTER CONSIDERING THE FACTS OF THE CASE GAVE THE FOLLOWING DECISION :- '13. THOUGH WE HAVE CLEARLY HELD ABOVE THAT ASSESSE E IS ENTITLED TO EXEMPTION UNDER THE CONCEPT OF MUTUALITY AND THE ENTRANCE FEE HAS TO BE TREATED AS CAPITAL FEE BUT AT THE SAME TIME WE FIND THAT IT IS NOT CLEAR FROM RECORD THE NATURE OF RECEIPTS RECEIVED BY THE ASSESSEE WHETHER THE SA ME IS FROM MEMBERS OR NOT AND THESE FACTS HAVE NOT BEEN EXAMINED BY THE ASSES SING OFFICER OR THE CIT(A), THEREFORE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VE RIFY THE NATURE OF RECEIPT AND IF 4 SAME IS FROM THE MEMBERS THEN ALLOW THE EXEMPTION U NDER THE CONCEPT OF MUTUALITY OTHERWISE THE CASE BE DECIDED IN ACCORDANCE WITH LAW. ' 9.1 THEREFORE, IN VIEW OF THE DECISION OF HON 'BLE IT AT, THE APPELLANT IS ENTITLED TO EXEMPTION UNDER THE CONCEPT OF MUTUALITY AND THE EN TRANCE FEE HAS TO BE TREATED AS CAPITAL FEE AND THE RECEIPTS FROM MEMBER S HAVE BEEN ALLOWED FOR EXEMPTION UNDER THE CONCEPT OF MUTUALITY. THE AO HA S CONSIDERED THE CONTRIBUTION FROM MEMBERS OF RS.84,65,816/- AS TAXA BLE INCOME. HOWEVER, AS PER THE DECISION IN THE APPELLANT'S OWN CASE, THE CONTR IBUTION FROM MEMBERS IS EXEMPTED UNDER THE CONCEPT OF MUTUALITY. THEREFORE, THE GROUNDS OF APPEAL ARE ALLOWED. ' 5.3 CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND SINCE THE MATERIAL FACTS REMAIN UNCHANGED, WE HEREBY DECLINE TO INTERF ERE IN THE ORDER OF THE LD.CIT(A). 6. IN RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ! . .. . & , (DIVA SINGH) (DR. B.R.R. KUMAR) ' #/ JUDICIAL MEMBER '( #/ ACCOUNTANT MEMBER AG DATE: 27/06/2019 (+ ! ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ / / CIT 4. $ / ()/ THE CIT(A) 5. -23 4, & 4, 67839/ DR, ITAT, CHANDIGARH GUARD FILE