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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC-II’ NEW DELHI
Before: SMT DIVA SINGH
ORDER The present appeal has been filed by the assessee assailing the correctness of the order dated 16.02.2016 of CIT(A), Meerut pertaining to 2012–13 assessment year on the following grounds:-
“That each ground of appeal
is without prejudice to each other.
2. That the Ld. CIT was not correct and justified in sustaining the addition of Rs. 11,60,6647- on account of interest received by the assessee on its surplus fund kept as deposit with the bank on the basis of facts and circumstances of the case.
3. That the Ld. CIT was not correct and justified in sustaining the addition of Rs. 2,19,729/-on account of interest received by the assessee on its saving bank account from the bank on the basis of facts and circumstances of the case.
4. That the Ld. CIT was not correct and justified in sustaining the addition of Rs. 3,02,7767-on account of sponsorship fees received from its members and/or there associated firms/concerns on the basis of facts and circumstances of the case.
5. That the Ld. CIT was not correct and justified in sustaining the addition of Rs. 74,9607- on account of Tennis Coaching fees received from its members on the basis of facts and circumstances of the case.
6. That the Ld. CIT was not correct and justified in sustaining the addition of Rs. 57,5877- on account of Miscellaneous Receipts on the basis of facts and circumstances of the case.
7. That the appellant reserved the right to add amends, alter and/or delete any of the grounds of appeal.
8. That on the basis of facts of the case and in view of the circumstances it is prayed that either the additions sustained by the Ld. CIT may please be deleted or the matter may please be restore back to the file of Commissioner of Income Tax (Appeals) in the interest of natural justice.”
At the time of hearing, no one was present on behalf of the Revenue, however, an adjournment application was moved on behalf of the Revenue. Since, no one was present in support thereof, it was passed over. Even in the second round, the Revenue remained
I.T.A .No.-1537/Del/2016 ALEXANDER ATHLETIC CLUB vs ACIT
Page 2 of 4 unrepresented. Accordingly, considering the submissions of the Ld. AR and the material available on record, it was considered appropriate to reject the application and proceed with the present appeal ex-parte qua the Revenue respondent on merits.
The relevant facts of the case are that the assessee returned NIL income in the status of AOP. The said return was selected for scrutiny through CASS. After issuance of notice u/s 143(2) & 142(1) etc. alongwith detailed questionnaire u/s 142(1), the AO assessed the income of the assessee at Rs.27,37,841/-.
The issue travelled in appeal before the CIT(A) wherein partial relief was granted to the assessee. However, the grievance qua the following additions still remained:-
(i) Income on FDR : Rs.11,60,064/- (ii) Interest from Bank : Rs.2,19,729/- (iii) Tennis Coaching : Rs.74,960/- (iv) Sponsorship Fees : Rs.3,02,776/- (v) Miscellaneous receipts : Rs.57,587/-
The Ld.AR appearing on behalf of the assessee fairly submitted that the assessee would not be contesting the issue of interest income on FDRs as FDRs were admittedly maintained of surplus funds and in view of the decision of the Apex Court in the case of Banglore Club vs CIT [SC] (14.01.2013), the issue may be treated as not pressed.
5.1. However, qua the issues pertaining to interest on saving bank accounts; Tennis Coaching: sponsorship fees and miscellaneous fees; it was his submission that the specific club has been in existence since 1942 and never in the past such additions on same facts have been made.
5.2. Addressing the interest from saving bank account, it was submitted that the said account is used by the assessee for meeting its everyday transactions for maintaining and running the activities of the specific club. All expenses incurred for and by the club are met from this saving bank account. Accordingly the addition on facts has been wrongly sustained in the peculiar facts of the present case.
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Page 3 of 4 5.3. Addressing the addition sustained qua Tennis coaching, it was his submission that it is the members of the club who are being provided tennis coaching. The addition made is of the net amount which remains after meeting the costs of the facilities provided to the members as the expenditure involved has been incurred for paying the coaching training personnel etc. Accordingly, addition of the said amount it was submitted is covered under the principle of mutuality and in facts and law could not have been made or sustained. 5.4. Addressing the sponsorship fees, it was his submission that the said addition has been made on account of wrong nomenclature used by the accounting personnel and actually it covers the facilities provided to the club members. 5.5. Addressing the addition sustained which have been described as miscellaneous receipts, it was his submission that this consists of the payments made by members for breakage of crockery etc. and this is a normal collection from the members so as to ensure that the facilities of the club remain available uninterrupted.
5.6. Accordingly, it was his submission that either the additions made by the AO and sustained by the CIT(A) be deleted or the issue be restored to the AO directing him to consider the same on the basis of facts and past history on the issues as admittedly no discussion on the facts and past history has been made by the tax authorities. The club, it was submitted has been in existence from the pre-independent years and has a long and illustrious history.
Since the adjournment application moved on behalf of the Revenue, was rejected accordingly after hearing the Ld.AR and considering the peculiar facts and circumstances of the case, I find that in the absence of relevant factual discussion on the issues the impugned order deserves to be set aside. I find that no reference has been made by the AO or the CIT(A) to the past history of the said club stated to be in existence since 1942. The club is stated to be providing tennis coaching facilities from 1960. Similarly the submission that interest income earned from saving bank account is stated to be the regular savings bank I.T.A .No.-1537/Del/2016 ALEXANDER ATHLETIC CLUB vs ACIT
Page 4 of 4 account of the assessee from which day to day expenditures are met are all facts found not addressed in the respective orders of the tax authorities. Same is the position of the claim that sponsorship fees which is stated to cover the facilities made available to the members.
The miscellaneous receipts are stated to be consisting of collections from the members for breakage etc. of club crockery , all these issues it is seen on facts have not been addressed by the tax authorities. Accordingly, finding the orders to be deficient on the grounds of relevant discussion on the issue as per facts, the impugned order is set aside and the issue is restored back to the file of the AO with a direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. It goes without saying that the past history of the assessee on the issues needs to be taken into consideration alongwith relevant facts in the year under consideration need to be taken into consideration before arriving at a conclusion. However, the addition made by the AO on the interest income on FDR though challenged in the proceedings has been given up by the Ld.AR and the addition made by the AO is accordingly sustained to the said extent.