COMMISSIONER OF INCOME TAX vs. M/S GYMKHANA CLUB

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ITA/277/2011HC Punjab & HaryanaPHHC01095606201105 December 2015Author: MR. JUSTICE SURINDER GUPTA,MRS JUSTICE DAYA CHAUDHARY3 pages

AI SummaryRemanded

What did the High Court hold?

The High Court noted that the matter was concluded by its own prior decision in the case of the assessee itself, Commissioner of Income Tax, Panchkula v. M/s Gymkhana Club, Panchkula, and other connected cases, decided on 30.11.2015. Therefore, the appeals were disposed of in the same terms as that earlier decision. The judgment does not explicitly detail the reasoning or findings on each specific issue as argued, but implies that the earlier decision addressed and resolved these points in favor of the assessee, leading to the dismissal of the revenue's appeals. The operative direction was to dispose of the appeals in terms of the prior judgment.

What were the facts?

The assessee, M/s Gymkhana Club, Panchkula, filed its return for assessment year 2007-08 declaring nil income, claiming to be a mutual concern. The Assessing Officer (AO) assessed the income at ` 28,78,817/-, including interest income of ` 1,79,395/-, holding that there was no complete identity between contributors and participants and thus it was not a mutual concern. The Commissioner of Income Tax (Appeals) [CIT(A)] allowed the assessee's appeal, treating the surplus as exempt. The revenue appealed to the Income Tax Appellate Tribunal (ITAT), which dismissed the revenue's appeal, following its earlier decision for assessment year 2004-05. The revenue has filed the present appeal before the High Court against the ITAT's order dated 28.2.2011.

What were the issues?

1. Whether, in the facts and circumstances, the ITAT was legally correct in holding the assessee club to be a mutual concern, disregarding the AO's finding that HUDA had financial and administrative control and that there was no identity between contributors and participants? (Section 260A of the Income Tax Act, 1961) 2. Whether, on the facts and circumstances, the ITAT was legally correct in treating charges received from non-member guests as not liable to tax? (Section 260A of the Income Tax Act, 1961) Assessee's contentions: The assessee claimed to be a mutual concern, implying its surplus income should be exempt. The ITAT had previously ruled in favor of the assessee for an earlier assessment year. Revenue's contentions: The revenue argued that the financial and administrative control of the club was with HUDA, and there was no identity between those contributing to the club and those participating in its activities, thus it was not a mutual concern. The revenue also questioned the taxability of charges from non-member guests.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 277 of 2011 (O&M) Date of Decision: 5.12.2015 Commissioner of Income Tax, Panchkula ....Appellant. Versus M/s Gymkhana Club, Panchkula ...Respondent.

Whether the Reporters of the local papers may be allowed to see the judgment?

To be referred to the Reporters or not?

Whether the judgment should be reported in the Digest? CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE RAMENDRA JAIN. PRESENT: Mr. Yogesh Putney, Advocate for the appellant. Mr. Rajiv Sharma, Advocate for the respondent. AJAY KUMAR MITTAL, J.

This order shall dispose of two appeals bearing ITA Nos. 277 and 278 of 2011 as according to learned counsel for the parties, common questions of law and facts are involved in the appeals. For brevity, the facts are being extracted from ITA No. 277 of 2011. 2. ITA No. 277 of 2011 has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 28.2.2011 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Chandigarh Bench “B”, Chandigarh (hereinafter referred to as “the Tribunal”) in ITA No. 1033/Chandi/2010 for the GURBACHAN SINGH 2016.01.13 10:16 I attest to the accuracy and authenticity of this document High Court Chandigarh -2- assessment year 2007-08. The appeals were admitted by this Court vide order dated 19.10.2011 for determination of the following substantial questions of law:- 1) Whether in the fact and circumstances of the case, the Ld. ITAT was right in law in holding that the assessee club is a mutual concern dis- regarding the finding of the A.O. that the financial and administrative control over the assessee club is in the hands of HUDA and that there is no identity between the contributors and the participants of the assessee club? 2) Whether on the facts and circumstances of the case, the Ld. ITAT was right in law in treating the charges received from non-member guests as not liable to tax?”

A few facts necessary for adjudication of the present appeal as narrated therein may be noticed. The assessee filed its return on 31.10.2007 for the assessment year 2007-08 declaring nil income being a mutual concern. As per income and expenditure account, the assessee had shown surplus of ` 28,78,817/- including interest income amounting to ` 1,79,395/-. The Assessing Officer vide assessment order dated 29.12.2009 (Annexure A-1) assessed the income of the assessee at ` 28,78,817/- holding that there was no complete identity between the contributors and the participants and, therefore, it was not a mutual concern. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [for brevity “the CIT(A)”]. The CIT(A) vide order dated 3.5.2010 (Annexure A-2) allowed the appeal and GURBACHAN SINGH 2016.01.13 10:16 I attest to the accuracy and authenticity of this document High Court Chandigarh -3- held the assessee to be a mutual concern. The excess of income over expenditure amounting to ` 28,78,817/- taxed by the Assessing Officer was directed to be treated as exempt. Against the order, Annexure A-2, the revenue filed an appeal before the Tribunal. The Tribunal vide common order dated 28.2.2011 (Annexure A-3) dismissed the appeals of the revenue for the different assessment years following its earlier decision in the case of the assessee for the assessment year 2004-05. Hence, the present appeals by the revenue.

We have heard learned counsel for the parties.

There was no dispute between the parties that the matter stands concluded by the decision of this Court in the case of the assessee itself in ITA No. 690 of 2005 (The Commissioner of Income Tax, Panchkula v. M/s Gymkhana Club, Panchkula) and other connected cases decided on 30.11.2015. 6. Disposed of in the same terms. (AJAY KUMAR MITTAL) JUDGE December 5, 2015 (RAMENDRA JAIN) gbs JUDGE GURBACHAN SINGH 2016.01.13 10:16 I attest to the accuracy and authenticity of this document High Court Chandigarh

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