WILLINGDON SPORTS CLUB,MUMBAI vs. DCIT 19(3), MUMBAI

ITA 3479/MUM/2026Status: DisposedITAT Mumbai29 September 2026AY 2020-2111 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that the primary dispute concerns the applicability of Section 14A. It observed that the assessee claimed that as a mutual concern, no expenditure was incurred and claimed against exempt income, and that income was offered on a gross basis. The Tribunal referred to a coordinate Bench decision in ACIT vs. Bombay Gymkhana Ltd. (ITA No. 6410/Mum/2016), which dealt with identical facts and circumstances concerning a mutuality concern that did not claim any expenditure. In that case, the CIT(A) had deleted the disallowance, agreeing that when income is offered on a gross basis and no expenditure is claimed, the question of disallowance under Section 14A does not arise. However, in the present case, the Tribunal found a slight difference: it was admitted that at least 5% of expenses related to sponsorship income were claimed, and not the entire income was grossed up with no expenses. Therefore, the issue was set aside to the AO for verification of the claim that expenses related solely to sponsorship income and not to investments yielding exempted income. The AO was directed to restrict the disallowance accordingly. Regarding the contention of consistency in prior assessment orders, the Tribunal dismissed this ground, stating that the principle of res judicata is not applicable to income tax proceedings, and each year is a separate assessment event. The appeal was partly allowed for statistical purposes.

What were the facts?

The assessee, Willingdon Sports Club, a members' club and mutual association, filed its return of income for Assessment Year 2020-21 declaring an income of Rs. 11,04,48,990. The assessment was completed under Section 143(3) of the Income-tax Act, 1961, at Rs. 11,69,20,007 after the Assessing Officer (AO) disallowed Rs. 64,71,017 under Section 14A read with Rule 8D. This disallowance was made on account of exempt income earned from tax-free bonds and mutual fund units. The assessee appealed to the Commissioner of Income-tax (Appeals) [CIT(A)], who upheld the disallowance. The assessee is now appealing to the Income-tax Appellate Tribunal (ITAT). The assessee's contention is that it offered its entire income on a gross basis without claiming any expenses, except for direct expenses related to sponsorship income. It also argued that it voluntarily did not claim expenses far exceeding the disallowance, leading to a double disallowance.

What were the issues?

1. Whether the learned CIT(A) erred in upholding the disallowance of Rs. 64,71,017 under Section 14A read with Rule 8D, particularly when the assessee, a mutual association, offered income on a gross basis without claiming expenses, and had voluntarily not claimed a significant portion of its total expenses? Assessee's contentions: - Section 14A cannot be invoked when income is offered to tax on a gross basis and no expenses have been claimed. Reliance was placed on ACIT vs. Bombay Gymkhana Ltd. and Wodehouse Gymkhana Ltd. vs. ITO. - The CIT(A) failed to address or rebut the assessee's submissions, including the fact that 95% of total expenses were voluntarily not claimed, leading to impermissible double disallowance. - The CIT(A) erred in ignoring binding jurisdictional precedents and the principle of consistency, as no disallowance was made in prior scrutiny assessments (AYs 2012-13 and 2017-18) on identical facts. - The CIT(A) erroneously relied on CBDT Circular No. 5/2014 and decisions like Rajendra Prasad Moody, Punjab Tractors Ltd., and EL. Smidth (P) Ltd., which are distinguishable as they involved taxpayers who had claimed expenditure. Revenue's contentions: - The learned Departmental Representative (DR) relied on the orders of the authorities below.

Which sections of the Income-tax Act were involved?

Section 14A,Section 143(3),Section 10(15),Section 154

AI-generated summary — verify with the full judgment below

Before: HON’BLE JUSTICE (RETD.) C. V. BHADANG & SHRI PRABHASH SHANKAR

For Appellant: Ms. Vinita Nara, ARs
For Respondent: Shri Rajgopal K. Parthsarthy, Sr. DR
Hearing: 01.09.2026Pronounced: 29.09.2026

PER PRABHASH SHANKAR [A.M.] :- The instant appeal emanating from the appellate order dated 23.02.2026 is preferred by the Assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 08.09.2022 for the Assessment Year [A.Y.] 2020-21. P a g e | 2 A.Y. 2020-21 Willingdon Sports Club 2. The grounds of appeal are as under:- Ground 1: The learned C

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →