IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. No: 2384/AHD/2013 (Assessment Year: 2010-11)

The DCIT Ahmedabad (Appellant)

Circle-4, V/S Karnavati Club Ltd. Sarkhej Gandhinagar Highway, Ahmedabad (Respondent)

PAN: AAACK7865Q

Appellant by Respondent by

: Shri R. N. Parbat, CIT/DR : Shri Sunil Talati, A.R. (आदे श)/ORDER

Date of hearing Date of Pronouncement

: 13 -10-2016 : 18 -10-2016

PER N.K. BILLAIYA, ACCOUNTANT MEMBER:

1. This appeal by the Revenue is directed against the order of Ld. CIT(A)-VIII, Ahmedabad dated 22.07.2013 pertaining to A.Y. 2010-11.

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ITA No. 2384/Ahd/2013 A.Y. 2010-11

2. The sole grievance of the revenue is that the ld. CIT(A) erred in deleting the disallowance of Rs. 15,76,21,000/- made by the A.O. on account of entrance fees treating the same as revenue receipt.

3. While scrutinizing the return of income, the A.O. noticed from the annual report that the assessee has received entrance fees of Rs. 15,76,21,000/which has been treated as capital receipt and not offered as income. The assessee was asked to show cause as to why the entrance fees received should not be treated as revenue receipt and added to the total income of the assessee.

4. Assessee filed a detailed reply claiming the entrance fees as a capital receipt. The detailed reply of the assessee did not find any favour with the A.O. who proceeded by treating the entrance fees as revenue receipt.

5. Assessee carried the matter before the ld. CIT(A) and reiterated its claim. It was brought to the notice of the ld. CIT(A) that the Tribunal in assessee’s own case has decided the issue in favour of the assessee and against the revenue. The ld. CIT(A) was convinced and held that the issue is covered in favour of the assessee and accordingly directed the A.O. to delete the addition.

6. Aggrieved by this, the revenue is before us. At the very outset, the ld. counsel for the assessee stated that the issue is now squarely covered in favour of the assessee by the judgment of the Hon’ble Jurisdictional High

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Court in assessee’s own case qua Tax Appeal No. 839 of 2007. The ld. D.R. was not in a position to point out any distinguishing feature, which may warrant a different view.

7. We have carefully perused the orders of the authorities below. We find force in the contention of the ld. counsel; the issue is squarely covered in favour of the assessee.

8. The Hon’ble Jurisdictional High Court was seized with the following substantial question of law. “Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) deleting the addition of Rs. 40,02,500/- being entrance fees received from the new members for life membership?”

9. The Hon’ble High Court considered the following facts and decided accordingly and the same reads as under:3. Briefly stated, the facts are that the assessee is a limited company running a club for its members, in this case, the assessment was completed vide order passed u/s. 143(3) of the Income-tax Act, 1961 dated 26.03.2001 determining the total income at Rs. 14,29, 220/- after making certain additions / disallowances, as against the return of income of RS. Nil. Being aggrieved by the said order, the assessee preferred appeal before the CIT(A), which came to be allowed, vide order dated 16.04.2002. Against the said order, the Department preferred appeal being ITA No.2337/Ahd/2002 before the income Tax Appellate Tribunal. The said appeal was dismissed by the Tribunal vide order dated 10.10.2006. Hence, these Tax Appeals. 4. At the outset, Mr. S.N. Soparkar, learned senior Advocate submitted that the controversy raised in these Appeals stands settled by a judgment of this court in

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the case of Junagadh Gymkhana v. income-tax officer, [2015] 56 taxmann.com 281 (Gujarat) wherein, it has been held that principle of mutuality would apply to a transaction between a Member and the club and therefore, "guest charge" received by club from its Members would not be liable to tax. 5. Learned Senior standing Counsel for the Revenue was not in a position to point out any distinguishing feature, which may warrant a different view. 6. In view of the above and for the reasons given in the afore-mentioned judgment, the question raised in these Tax Appeals are answered in favour of the assessee and against the Revenue. The appeals stand disposed of accordingly.

10.Respectfully following the decision of the Hon’ble Jurisdictional High Court (supra), we decline to interfere with the findings of the ld. CIT(A). Appeal filed by the Revenue is accordingly dismissed.

Order pronounced in Open Court on

Sd/(S. S. GODARA) JUDICIAL MEMBER Ahmedabad:

18 - 10- 2016.

Sd/(N. K. BILLAIYA) ACCOUNTANT MEMBER True Copy

Rajesh

Copy of the Order forwarded to:1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) – 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER

Deputy/Asstt.Registrar ITAT,Ahmedabad