THE M.P.C. GYMKHANA,,BARODA vs. THE INCOME TAX OFFICER, WARD-5(1),, BARODA

Ground No. 1 to 5 is general in nature needs no separate adjudication and hence dismissed.

The facts in brief are that the case of the assessee was selected for scrutiny assessment and the assessment u/s. 143(3) of the Income Tax Act, 1961 hereinafter referred to as the (the Act) was framed vide order dated 13.03.2013. The AO while framing the assessment withdraw claim of exemption u/s. 11 of the Act and thereby made addition of surplus of income and expenditure of RS. 24,82,968/- disallowance of capital loss, disallowance of income tax of earlier years and disallowance of terminated members dues written off thus assessed income as Rs. 34,54,290/-, against the nil income as claimed by the assessee.

Aggrieved, by the assessee preferred an appeal before Ld. CIT(A) who after considering the submissions dismissed the appeal. Now, the assessee is in further appeal before the tribunal.

Ground No. 1 is against confirming addition of Rs. 24,82,968/- being surplus as per income and expenditure account by denying exemption u/s. 11 of the Act. Ld. Counsel for the assessee submitted that the authorities below were not justified in making addition and confirming the same. Ld. Counsel submitted that the basis of withdrawing the exemption is contrary to the binding precedents. Ld. Counsel placed reliance on the decision of the Kolkata Bench of the Tribunal rendered in the case of Calcutta Cricket & Football Club vs. Income-tax Officer, Exemption-I, Kolkata (2017) 88 taxmann.com 384 (Kolkata – Trib.). Ld. Counsel for the assessee further submitted that the authorities below grossly erred in construing sec. 2(15) of the Act. The assessee had been providing coaching to the members in respect of the games which essentially an educational and charitable. He, therefore, submitted that under the facts of present case the learned authorities ought to have allowed the claim of the assessee.

Per contra Ld. DR supporting the orders of the authorities below and submitted that there is no illegality in the order of the authorities below. He further submitted that decision of the Kolkata Bench of ITAT as relied by the Ld. Counsel for the assessee is not applicable on the facts of the present case. As in the present case the assessee has provided facilities to non-members and has also charged for providing of the facilities.

We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The only basis of denying the exemption by the authorities below is that the assessee has not been carrying out charitable activities as such the

We find that the authorities below have not pointed out specific instances where the club facilities were provided to the non-members on commercial basis. The assessee has also not provided the details as to how the lawn of club was used by the non-members. Therefore, this aspect requires re-consideration. The issue is therefore set aside to AO for decision afresh.

Ground No. 3 is against the confirming disallowance of Rs. 2,45,375/- being loss claimed on destruction of certain assets due to fire during the year. Ld. Counsel for the assessee submitted that the authorities below are not justified in not allowing the claim. It is submitted that the loss is allowable as it is a business loss to the assessee.

On the contrary, the Ld. DR opposed the submissions. He submitted that there is no material on record suggesting that the assessee suffered loss which is allowable as the business loss at the most it could be a capital loss.

We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. During the course of the hearing a query was raised to the assessee whether any insurance claim has been made. Ld. Counsel could not reply in affirmative. Therefore, considering the fact that there is no dispute with regard to fire. The assessee is required to demonstrate that

Ground No. 4 is against dues written off. Ld. Counsel for the assessee vehemently argues that the authorities below are not justified in rejecting the claim of assessee. He submitted that there is no dispute that dues are related to and are raised during the course of rendering services to its members. The reasoning as adopted by the AO and affirmed by the Ld. CIT(A) is contrary to law. Per contra Ld. DR opposed these submissions and submitted that the assessee could very well recover these dues from the security deposits. He submitted that the purpose of security deposit is to address such circumstances. We have heard the rival submissions so far the claim of assessee is concerned he is required to demonstrate that dues have become bad and are not recoverable. It is not clear as to how much security deposit was available with assessee in respect of members whose dues were outstanding. We, therefore, set aside the orders of authorities below and restore the issue to the file of AO to verify how much security deposits related to the members was available with the assessee and decide it afresh.

In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in Court on the date mentioned hereinabove at caption page Sd/- Sd/- (AMARJIT SINGH) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 26/ 04 /2019 TANMAY TRUE COPY आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent.

संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-III, Baroda �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad