ACIT, CIRCLE, PANCHKULA vs. M/S PANCHKULA GOLF CLUB, PANCHKULA

आदेश/Order PER DR. B.R.R. KUMAR, A.M:

The present appeal has been filed by the Revenue against the order of the Ld. CIT(A), Panchkula dt. 21/05/2018.

In the present appeal Revenue has raised the following grounds:

Brief facts of the case are that the assessee filed its return of income on 30.09.2014 declaring loss of (-) Rs.43,32,950/- and further revised its return of income by declaring loss of (-) Rs.75,37,125/-. The AO completed assessment u/s 143(3) on 01.09.2017 at an income of Rs. 18,45,350/-. During the assessment proceedings, the AO asked the assessee to show cause why the assessee be not treated as non-mutual concern and explain the claim about the club as a mutual concern. After considering the assessee's reply, the AO noted that the club is not a mutual concern as its governing body comprises of Chief Secretary, Government of Haryana as President, Principal Secretary to Chief Minster Haryana as Senior Vice President, Financial Commissioner, Town Country Planning, Government of Haryana as a vice president and Chief Administrator, HUDA as members and the other members are also nominated by the President. AO held that it indicates that the management & control over the assessee club was with the State Government. The club was not assessed as mutual concern in A.Y. 2007-08 as it failed to fulfill the three tests of mutuality as laid down by the Hon'ble Supreme Court in Chelmsford Club Vs. CIT 243 ITR 89 and in CIT Vs. Bankipur Club Ltd. 226 ITR 97. The claim of the assessee as a mutual concern was also not accepted as the assessee in the income tax return has no where stated that Panchkula Golf Club is a mutual concern. The Form used to file income tax return was not applicable in this case. Further, AO noted that the sum of Rs.94,62,549/- as one time entrance fee contribution from the members is a revenue receipt whereas the assessee has taken same as capital receipt on the basis of mutuality. Since, the

objective of mutual benefit is not fulfilled, therefore, contribution of Rs.94,62,549/- received by the assessee club from the members during the year was held to be the taxable income of the assessee.

During the proceedings before the Ld.CIT(A), the appellant submitted that the assessee club is a mutual concern and enjoying the benefit of mutuality since the impugned issue had already been settled by the Hon'ble Jurisdictional Bench in the assessee’s own case for the A.Y. 2008-09 as the Hon'ble ITAT in ITA No. 813/2013 dt. 06.05.2015 settled the controversy by allowing the claim of the appellant where it was held that the assessee is entitled to exemption under the concept of mutuality and the entrance fee has to be treated as capital fee.

The LD.CIT(A) has deleted addition based on the order of the ITAT in the case of the assessee’s own case for the A.Y. 2010-11 in Appeal No. 32/PKL/13-14 dated 01.09.2016.

For the sake of brevity , the operating part of the relevant order relied is as under:

"9. I have gone though the facts of the case and written submission filed by the appellant. It is noted that the AO has held the appellant club as non mutual concern on the ground that the appellant has not stated about being a mutual concern in its return of income which was filed in the form not applicable in the case of the appellant. Further, the AO has considered the decision in appellant's own case for A.Y. 2007-08 where it was not considered as mutual concern by applying the judgments of Hon'ble Supreme Court. Accordingly, the AO considered the contribution of Rs.84,65,816/- from members as income of the appellant. However, in the appellant's own case for A.Y. 2008-09, the Hon'ble ITAT, Chandigarh after considering the facts of the case gave the following decision :- "13. Though we have clearly held above that assessee is entitled to exemption under the concept of mutuality and the entrance fee has to be treated as capital fee but at the same time we find that it is not clear from record the nature of receipts received by the assessee whether the same is from members or not and these facts have not been examined by the Assessing Officer or the CIT(A), therefore, we set aside the order of Ld. CIT(A) and remit the matter back to the file of the Assessing Officer with a direction to verify the nature of receipt and if

same is from the members then allow the exemption under the concept of mutuality otherwise the case be decided in accordance with law. " 9.1 Therefore, in view of the decision of Hon 'ble IT AT, the appellant is entitled to exemption under the concept of mutuality and the entrance fee has to be treated as capital fee and the receipts from members have been allowed for exemption under the concept of mutuality. The AO has considered the contribution from members of Rs.84,65,816/- as taxable income. However, as per the decision in the appellant's own case, the contribution from members is exempted under the concept of mutuality. Therefore, the grounds of appeal are allowed. "

5.3 Considering the facts and circumstances of the case and since the material facts remain unchanged, we hereby decline to interfere in the order of the Ld.CIT(A).

Order pronounced in the open Court.

Sd/- Sd/- �दवा �संह डा. बी.आर.आर. कुमार, (DIVA SINGH) (Dr. B.R.R. KUMAR) �या�यक सद�य/ Judicial Member लेखा सद�य/ Accountant Member AG Date: 27/06/2019 आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH Guard File