The DCIT,(OSD), Circle-8,, Ahmedabad v. M/s. The Sports Club Of Gujarat Ltd., Ahmedabad

ITA 2166/AHD/2013 | 2010-2011
Pronouncement Date: 06-10-2016 | Result: Dismissed

Appeal Details

RSA Number 216620514 RSA 2013
Assessee PAN AAACT7280N
Bench Ahmedabad
Appeal Number ITA 2166/AHD/2013
Duration Of Justice 3 year(s) 1 month(s) 15 day(s)
Appellant The DCIT,(OSD), Circle-8,, Ahmedabad
Respondent M/s. The Sports Club Of Gujarat Ltd., Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 06-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 06-10-2016
Date Of Final Hearing 05-10-2016
Next Hearing Date 05-10-2016
Assessment Year 2010-2011
Appeal Filed On 22-08-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV JM & SHRI MANISH BORAD AM. ITA NO. 2166/AHD/2013 ALONG WITH C.O.NO.21/AHD/2014 ASST. YEAR:2010-11 DCIT(OSD) CIRCLE-8 AHMEDABAD. VS. M/S SPORTS CLUB OF GUJARAT LTD SARDAR PATEL STADIUM AHMEDABAD. APPELLANT RESPONDENT PAN AAACT 7280N APPELLANT BY SHRI JAMES KURIEN SR.DR RESPONDENT BY SHRI S. N. SOPARKAR & ANIL R. SHAH PARIN SHAH AR DATE OF HEARING: 5/10/2016 DATE OF PRONOUNCEMENT: 06/10/2016 O R D E R PER MANISH BORAD ACCOUNTANT MEMBER . THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY ASSESSEE FOR ASST. YEAR 2010-11 ARE DIRECTED AGAINS T THE ORDER OF LD. CIT(A) XIV AHMEDABAD DATED 7.6.2013 IN APPEAL NO. CIT(A) XIV/DCIT CIR.8(OSD)/80/2012-13 PASSED AGAINST ORDE R U/S 143(3) OF THE IT ACT 1961 (IN SHORT THE ACT) FRAMED ON 3/12/ 2012 BY DCIT (OSD) CIR.8 AHMEDABAD. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT ASSESS EE COMPANY IS A MUTUAL ASSOCIATION NOT ENGAGED IN ANY BUSINESS ACTI VITY AND RUNNING ITA NO. 2166/AHD/2013 ASST. YEAR 2010-11 2 A CLUB FOR ITS MEMBERS. RETURN OF INCOME WAS FILED ON 15.10.2010 DECLARING TOTAL INCOME AT RS..56 70 260/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143(2) OF THE AC T WAS ISSUED ON 21.9.2011 FOLLOWED BY NOTICE U/S 142(1) OF THE ACT. NECESSARY DETAILS WERE CALLED FOR AND DULY REPLIED BY THE LD. AR FURN ISHING VARIOUS DETAILS. ASSESSMENT WAS COMPLETED AT RS.1 93 98 290 /- AFTER MAKING ADDITION OF RS.1 31 17 183/- TOWARDS GUEST FEES H IRE CHARGES AND INCOME FROM ROOMS AND ALSO ADDITION BY WAY OF DISAL LOWANCE U/S 57(III) OF THE ACT AT RS.6 10 847/-. 3. AGGRIEVED ASSESSEE WENT IN APPEAL BEFORE LD. CI T(A) WHO DELETED THE IMPUGNED ADDITION OF RS.1 13 17 183/- A ND ADDITION OF RS.6 10 847/-. 4. AGGRIEVED REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 5. AT THE OUTSET THE LD. AR OF THE ASSESSEE SUBMITT ED THAT ALL THE GROUNDS TAKEN UP BY REVENUE ARE SIMILAR TO THE GROU NDS ADJUDICATED BY THE CO-ORDINATE BENCH IN PREVIOUS ASST. YEAR AND HAVE BEEN HELD IN FAVOUR OF THE ASSESSEE. LD. AR REFERRED TO THE D ECISION OF THE CO- ORDINATE BENCH IN THE CASE OF ASSESSEE FOR IMMEDIAT ELY PRECEDING YEAR I.E. ASST. YEAR 2009-10 VIDE ITA NO.1467/AHD/2 012 DATED 20.5.2016 & ITA NOS. 2121 & 2122/AHD/1972-73 FOR AS ST.1966-67 & 1967-68. 6. LD. DR COULD NOT CONTROVERT THE SUBMISSIONS OF L D. AR. ITA NO. 2166/AHD/2013 ASST. YEAR 2010-11 3 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THIS APPEAL REVENUE HAS RAI SED TWO GROUNDS AGAINST THE ORDER OF LD. CIT(A) DELETING THE ADDITI ON OF RS.1 31 17 183/- MADE ON ACCOUNT OF GUEST FEES AND HIRE CHARGES AND THE OTHER GROUND AGAINST DELETION OF RS.6 10 84 7/- WHICH WAS MADE ON ACCOUNT OF DEDUCTION CLAIMED FROM INCOME FR OM OTHER SOURCES U/S 57(III) OF THE ACT. FURTHER GOING THRO UGH THE DECISION OF THE CO-ORDINATE BENCH IN ITA NO.1467/AHD/2012 FOR A Y 2009-10 & ITA NOS. 2121 & 2122/AHD/1972-73 FOR ASST.1966-67 & 1967-68 IN ASSESSEES OWN CASE WE FIND THAT SIMILAR ISSUES CAME UP BEFORE THE CO-ORDINATE BENCH. WE WILL TAKE UP EACH GROUND SEPARATELY. 8. GROUND NO.1 READS AS UNDER - 1) THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1 31 17 183/- MADE ON ACCOUNT OF GUEST FEES HIRE OF ROOMS AND HIRE CH ARGES IN RESPECT OF CLUB PROPERTIES. THE ADDITION OF RS.1 31 17 183/- WAS MADE ON ACCOU NT OF GUEST FEES FROM MEMBERS AT RS.807541/- HIRE CHARGES FROM MEMB ERS IN RESPECT OF CLUB PROPERTY AT RS.1264218/- AND INCOME FROM RO OM S AT RS.11045424/-. THE ABOVE ISSUE WAS ADJUDICATED BY T HE CO-ORDINATE BENCH FOR ASST. YEAR 2009-10 IN ITA NO.1467/AHD/201 2 BY OBSERVING AS BELOW :- 6. WE 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 JUDGEMENT/DECISION RELIED UPON BY THE PARTIES. THE ISSUE IN THE PRESENT ITA NO. 2166/AHD/2013 ASST. YEAR 2010-11 4 CASE IS WHETHER THE RECEIPTS FROM GUEST FEES INCOM E FROM HIRE OF ROOMS HIRE CHARGES IN RESPECT OF CLUB LAWN IS TO BE CONSIDERED EXEMPT BY FOLLOWING PRINCIPAL OF MUTUALITY. WE FIND THAT THE LD.CIT(A) FOLLOWING THE TRIBUNALS ORDER IN ASSESSEES OWN CASE IN EARLIER YEARS HELD THAT THE ASSESSEE WAS ENTITLED FOR THE BENEFIT ON THE BASIS OF DOCTRINE O F MUTUALITY. WE FURTHER FIND THAT THE COORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2006- 07 VIDE ORDER DATED 11/01/2013 HAD DECIDED THE ISSU E IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER:- 2. THE ONLY GROUND IN THIS APPEAL IS AGAINST THE D ISALLOWANCE OF RS.52 95 900/-MADE BY THE A.O. ON ACCOUNT OF GUEST FEES ROOM CHARGES AND HIRE CHARGES IN RESPECT OF CLUB LAWN COLLECTION FROM NON-MEMBERS BY HOLDING THAT THE INCOME EARNED FROM THE PERSONS WHO WERE NOT REGULAR MEMBERS OF THE CLUB WAS NOT OFFERED THOUGH IT WAS O UT OF PURVIEW OF MUTUALITY. LD. CIT(A) HAS DELETED THIS ADDITION BY OBSERVING AS UNDER:- 'I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE A.R. ALONG WITH THE CASE LAWS AS RELIED UPON I AM INCLINED TO ACCEPT THE CONTENTION OF THE APPELLA NT SUPPORTED BY VARIOUS DECISIONS IN FAVOUR OF APPELLANT IN EARLIE R YEARS BY VARIOUS APPELLANT AUTHORITIES ON THE SAME ISSUE. EVEN BY SU BMISSION DATED 13-11-09 APPELLANT SUBMITTED LATEST DECISION OF TH E HON'BLE ITAT 'B' BENCH AHMEDABAD IN THE CASE OF APPELLANT ITSELF FOR A. Y. 03-04 AND A. Y. 04-05 (ITA NO.2793/AHD/2006 AND 1398/AHD/ 2007) WHEREIN HON'BLE ITAT VIDE ITS ORDER DT:30-10-2009 C ONSIDERED THE SIMILAR DISALLOWANCE AND ADDITION IN RESPECTIVE YEA RS AND AFTER TAKING INTO ACCOUNT THE FACTUAL AND LEGAL POSITION AS WELL AS EARLIER YEAR'S APPELLATE ORDER IN THE CASE OF APPELLANT AS WELL A S THE HON'BLE ITAT AHMEDABAD D BENCH DECISION DT:23-02-07 PASSED IN TH E CASE OF RAJPATH CLUB LTD. IN ITA NO.2830/AHD/2006 RELATING TO A.Y. 03-04 ALLOWED THE APPEAL OF THE APPELLANT FOR DELETING SU CH ADDITIONS. IT IS THEREFORE RESPECTFULLY FOLLOWING SUCH DECISION TH E ADDITION SO MADE IS DIRECTED TO BE DELETED. THE APPELLANT GETS A REL IEF OF RS. 52 95 900/-.' ITA NO. 2166/AHD/2013 ASST. YEAR 2010-11 5 3. SINCE ID. CIT(A) HAS GIVEN RELIEF TO THE ASSESSE E BY PLACING RELIANCE ON THE DECISION OF HON'BLE ITAT IN ASSESSEE'S OWN CASE FOR THE A.Y. 2003-04 AND 2004-05 WE FEEL NO NEED TO INTERFERE WITH THE ORDER PASSED BY ID. CIT(A) AND THE SAME IS HEREBY UPHELD. 6.1. BEFORE US REVENUE HAS NOT BROUGHT ANY CONTRAR Y BINDING DECISION IN ITS SUPPORT NOR HAS PLACED ANY MATERIAL ON RECORD T O DEMONSTRATE THAT THE DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASE FO R AY 200-07 HAS BEEN SET ASIDE BY HONBLE JURISDICTIONAL HIGH COURT. WE FUR THER FIND THAT RELIANCE PLACED BY THE REVENUE IN THE CASE OF SPORTS CLUB OF GUJARAT LTD. VS. CIT(SUPRA) ARE ON DIFFERENT FACTS AND THEREFORE T HE RATIO OF THE JUDGEMENT IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. I N VIEW OF THE AFORESAID FACTS WE FIND NO REASON TO INTERFERE WITH THE ORDER OF TH E LD.CIT(A) AND THUS THE GROUND OF REVENUE IS DISMISSED. 6.2. THUS APPEAL OF THE REVENUE FOR AY 2008-09 I S DISMISSED. 9. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-OR DINATE BENCH FOR ASST. YEAR 2009-10 WE FIND THAT THE ISSUE RAISE D IN THIS APPEAL IS SIMILAR TO THE ONE ADJUDICATED BY THE CO-ORDINATE B ENCH IN ITA NO.1467/AHD/12 IN FAVOUR OF ASSESSEE. WE DISMISS T HE GROUND OF REVENUE. 10. NOW WE TAKE UP GROUND NO.2 WHICH READS AS UNDER :- 2) THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XLV AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWA NCE OF RS.6 10 847/- MADE ON ACCOUNT OF 'INCOME FROM OTHER SOURCES' U/S 57 OF THE ACT WHICH ASSESSEE FAILED TO PROVE TO HAVE BEEN INCURRED WHOL LY & EXCLUSIVELY FOR THE PURPOSE OF EARNING SUCH INTEREST INCOME. ITA NO. 2166/AHD/2013 ASST. YEAR 2010-11 6 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD . ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS CLAIMED 10% OF I NTEREST INCOME AT RS.6 10 847/- AS DEDUCTION U/S 57(III) OF THE AC T. WHEN ASSESSING OFFICER RAISED QUESTION FOR THIS DEDUCTION ASSESSEE REPLIED THAT THEY HAVE BEEN CONSISTENTLY ALLOWED 10% AS DEDUCTION OUT OF TAXABLE INCOME WHICH IS NOT ARISING ON PRINCIPLES OF MUTUAL CONSENT. THIS HAS BEEN ESTABLISHED AND ALLOWED BY THE TRIBUNAL SINCE ASST. YEAR 1966- 67 ONWARDS. HOWEVER THE LD. AO DENIED THIS CLAIM. 12. WE OBSERVE THAT IN APPEAL BEFORE LD. CIT(A) THE ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE BY LD. CIT(A) OBSERV ING AS BELOW :- 3.3 DECISION: I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND T HE SUBMISSIONS GIVEN BY THE APPELLANT. THE LAST CONTROVERSY ON THIS TOPIC HAD A RISEN IN A. Y. 1987-88. THE SAME ISSUE WAS DECIDED BY C1T( A)- 111 AHMEDABAD V IDE ORDER DATED 17/06/1991 WHICH READS AS UNDER: : . : . 'THE ALTERNATIVE PLEA OF THE APPELLANT THAT 10% OF THE I NCOME .. SHOULD BE ALLOWED AS EXPENSES IS ACCEPTED FN VIEW OF A NOTICE UNDER SECTION 263 DT. 04/09/1986 FOR ASSESSMENT YEAR 1985-86 --- WHERE IT HAS BEEN PROPOSED THAT THE INCOME FROM BANK DEPOSIT SHOULD BE INCLUDED AFT ER ALLOWING EXPENSES THEREFROM AT 10%. I : THEREFORE DIRECT THE ASSESSING OFFICER TO ALIOW THE EXPENSES AT 10% IN RESPECT OF BANK DEPOSITS ALSO.' THEREAFTER FROM A. Y. 1989-90 ONWARDS THE ISSUE H AD BECOME SETTLED I.E. THE INTEREST INCOME WOULD BE CHARGED AS INCOME FROM OTH ER SOURCES AND 10% OF THE SAME WOULD BE ALLOWED AS DEDUCTION FOR CONCERNED EX PENSES. IN THE A. Y. 2010- 11 THE AO IS RAKING UP THE CONTROVERSY AFTER 20 YE ARS ON THE ISSUE WHICH HAS NOT BEEN AGITATED BY EITHER OF THE SIDE. THIS IS NOT TH E NEW ISSUE TO MY MIND THEREFORE THE PRINCIPLE OF CONSISTENCY REQUIRED TO BE FOLLOWED AS HAS BEEN HELD IN VARIOUS BELOW MENTIONED CASE LAWS: (I) DCIT VS. SULABH INTERNATIONAL SOCIA L SERVICE ORGANISATION [350 ITR 189 (PATNA)] ITA NO. 2166/AHD/2013 ASST. YEAR 2010-11 7 (II) CITVS. RANGANATHAR & CO. [316 ITR 252 (MAD)] ( III) GOPAL PUROHIT VS. JT. CIT [334 ITR 308 (SC)] THE FACTS OF THE CASE ARE ALSO SIMILAR IN THIS YEAR AND THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE DEPARTMENT UP TO A. Y . 2009-10 THE DISALLOWANCE MADE BY THE A. O. IS HEREBY DELETED. THE GROUND OF APPEAL IS THEREFORE ALLOWED. 13. WE FURTHER OBSERVE THAT THE CO-ORDINATE BENCH I N ITA NOS.2121 & 2122/AHD/1972-73 FOR ASST. YEARS 1966-67 & 1967-6 8 HAS DECIDED THIS ISSUE FOR THE FIRST TIME AND DECIDED BY OBSERV ING AS UNDER :- 10. THIS BRINGS US TO CONSIDER THE OTHER ASPECT OF THE MATTER. VIZ. WHETHER ANY DEDUCTION WOULD BE PERMISSIBLE IN COMPUTING THE INC OME FROM INTEREST. SECTION 57(III) PERMITS DEDUCTION OF EXPENDITURE OTHER THAN CAPITAL EXPENDITURE LAID DOWN OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING THE INCOME FROM OTHER SOURCES WHICH IN THE INTEREST C ASE IS INCOME FROM INTEREST. THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION OF A RE ASONABLE EXPENDITURE FOR EARNING THE SAID INCOME. HAVING REGARD TO THE FACTS OF THE CASE WE THINK THAT 10% OF THE GROSS RECEIPTS FROM INTEREST SHOULD BE A LLOWED AS REASONABLE EXPENDITURE U/S 57(III) OF THE ACT IN COMPUTING TH E INCOME FROM INTEREST FOR ALL THE YEAR UNDER APPEAL. 14. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-O RDINATE BENCH AND LOOKING TO THE FACTS OF THE PRESENT CASE WE FIN D THAT ASSESSEE HAS BEEN CLAIMING 10% OF THE INTEREST INCOME AND THE SA ME HAS BEEN CONSISTENTLY ALLOWED FOR LAST SO MANY YEARS. THEREF ORE WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). W E UPHOLD THE SAME. THIS GROUND OF REVENUE IS ALSO DISMISSED. ITA NO. 2166/AHD/2013 ASST. YEAR 2010-11 8 15. OTHER GROUNDS OF THE APPEAL ARE OF GENERAL NATU RE WHICH NEED NO ADJUDICATION. 16. CROSS OBJECTION BY THE ASSESSEE HAS NOT BEEN PR ESSED AND THEREFORE THE SAME IS DISMISSED AS NOT PRESSED. 17. IN THE RESULT APPEAL OF THE REVENUE AND THE C. O. BY ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH OCTOBER 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 06/10/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR ITAT AHMEDABAD ITA NO. 2166/AHD/2013 ASST. YEAR 2010-11 9 1. DATE OF DICTATION: 5/10/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 6/10/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7/10/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: