ISLAM GYMKHANA,MUMBAI vs. DCIT CIRCLE - 23(1), MUMBAI

ITA 6369/MUM/2025Status: DisposedITAT Mumbai25 September 2026AY 2017-189 pages
AI SummaryAllowed

What were the facts?

The assessee, Islam Gymkhana, an Association of Persons, appealed against an order dated 30.09.2024 passed by the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2017-18. There was a delay of 312 days in filing the appeal, which was condoned by the Tribunal due to reasonable cause. The assessee, primarily a mutual concern, offered receipts from non-members for using its ground and canteen as income after claiming proportionate expenses. The Assessing Officer (AO) disallowed these expenses, stating they were not wholly and exclusively for earning non-member income, bringing the entire Rs. 2,85,07,481/- to tax. The first appellate authority allowed expenses on an estimated basis, limiting claims to 40% for canteen and 20% for ground royalty. The assessee also contested the classification of Rs. 11,47,781/- as income from other sources instead of income from house property, relating to leasing space for a mobile tower.

What did the Tribunal hold?

The Tribunal decided the issues as follows: 1. The additional ground regarding the invalidity of the notice u/s. 143(2) was dismissed, following the ITAT Special Bench decision in M/s. M.D. Sons. 2. Regarding the disallowance of expenses against non-member receipts, the Tribunal found the AO's reasoning unsustainable as the first appellate authority had accepted part of the expenses. However, the ad-hoc approach of the first appellate authority, with no basis for specific percentage restrictions, was also disagreed with. Considering the assessee's consistent method of allocation and the partial acceptance by the CIT(A), the Tribunal held that the assessee's method of allocation should not have been disturbed without valid reason and cogent material. Accordingly, the disallowance was deleted. 3. On the classification of income from the mobile tower, the Tribunal followed the ratio laid down in the ITAT decision in Kohinoor Industrial Premises Co-operative Society Ltd. vs. ITO. It held that the income received from letting out space on the terrace for a mobile tower should be treated as income from house property, and the total income should be computed after allowing statutory deductions. The order of the AO was modified accordingly. No issue was expressly left undecided.

What were the issues?

1. Whether the assessment order is bad in law due to an invalid jurisdictional notice issued u/s. 143(2) of the Income Tax Act, 1961, not in the manner prescribed by CBDT Instruction F.No.225/157/2017/ITA-II dated 23.06.2017? 2. Whether the disallowance of expenses claimed against receipts from non-members is justified, and if not, what is the extent of allowable expenses? 3. Whether income from leasing space for a mobile tower should be treated as income from house property or income from other sources? Assessee's arguments: For issue 1, the assessee conceded that the issue should be decided against it in view of the ITAT Special Bench decision in M/s. M.D. Sons. For issue 2, the assessee argued that its method of allocating expenses proportionately between members and non-members was scientific and should not have been disturbed, as it was consistently followed. The ad-hoc disallowance by the first appellate authority was irrational and without basis. For issue 3, the assessee relied on the ITAT decision in Kohinoor Industrial Premises Co-operative Society Ltd. vs. ITO, arguing that the income should be treated as income from house property. Revenue's arguments: For issue 1, the revenue relied on the ITAT Special Bench decision. For issue 2, the revenue relied on the observations of the AO and the first appellate authority. For issue 3, no specific argument was recorded for the revenue.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 57,Section 24(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI GIRISH AGRAWAL

For Respondent: Shri Ajay Soneji Sr. DR
Pronounced: 25.09.2026

PER SAKTIJIT DEY, VICE PRESIDENT:

Captioned appeal of the assessee arises out of order dated 30.09.2024, passed by National Faceless Appeal Centre (‘NFAC’ for short), Delhi pertaining to the Assessment Year (‘A.Y.’ for short) 2017-18. 2. There is a delay of 312 days in filing the appeal. The assessee has filed an application seeking condonation of delay, supported by an affidavit.

ITA 6369/MUM/2025 ISLAM GYMKHANA

3.

Having appreciated the reason shown for the delay, we are of the view that the delay in filing the appeal was

The order continues below.

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