Bombay High Court
Pr. Commissioner Of Income Tax-8 vs M/S. Royal Western India Turf Club ... on 22 December, 2021
Bench: K.R. Sriram, Amit B. Borkar
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PURTI
PRASAD
PARAB
Digitally signed by
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
PURTI PRASAD PARAB
Date: 2021.12.23
ORDINARY ORIGINAL CIVIL JURISDICTION
17:49:50 +0530
INCOME TAX APPEAL NO. 26 OF 2018
Pr. Commissioner of Income Tax - 8 ....Appellant
V/s.
M/s. Royal Western India Turf
Club Ltd. ...Respondent
----
Mr. Suresh Kumar for Appellant.
Mr. Jitendra Singh for Respondent.
----
CORAM : K.R. SHRIRAM &
AMIT B. BORKAR, JJ.
DATED : 22nd DECEMBER, 2021
P.C. :
1. The appellant has proposed following question of law.
1. Whether on the facts and in the circumstances of the case
and in law, the Hon'ble Tribunal was justified in treating the
entrance fees amounting to Rs.7,51,05,500/- received from its
member as capital receipts as against revenue receipts ignoring
the facts that facilities that are made available to the members are
done in normal course of its business as the assessee is engaged in
the business of race course?
2. The assessee is the Royal Western India Turf Club Ltd., which
runs the race course at Bombay. During the assessment year 2009-10 and in
the years prior thereto, the assessee used to receive entrance fee amounts
from Life Members, Club and Stand Members, Service Members and Local
Members. In the year in question, it was found that the assessee has
credited an amount of Rs.7,51,05,500/- to the General Reserves and had not
offered the same for taxation claiming it to be a capital receipt. The
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Assessing Officer disallowed the same and added it to the heads of income
as revenue receipts. This was impugned in Appeal before the CIT (Appeals)
who in his order dated 6th July, 2012 stated as under :
2.0 Ground No.2 : (Addition of Rs.7,51,05,500/- on account of
entrance fees treating the same as Revenue Receipts):
2.1 This ground of appeal has been disposed off by the Office
of the undersigned in the Appellate order for A.Y. 2005-06
wherein it has been Held that entrance fees received is a
Capital Receipt.
2.2 Since the facts and circumstances remain the same,
following the principle of judicial consistency, this ground of
appeal is allowed.
3. Revenue impugned the said order before the Income Tax
Appellate Tribunal (ITAT) which by an order dated 27th July, 2016 dismissed
the appeal of the Revenue. The ITAT held that there is no dispute to the fact
that right from practically the date of incorporation i.e., 1925 onwards, the
entrance fee from the members was treated as capital in nature and
majority of these orders were passed under Section 143(3) of the Income
Tax Act, 1961 (the Act). The ITAT also relied upon the judgment of this
court in CIT vs. Diners Business Services Pvt. Ltd. 1 and held that any sum
paid by a member to acquire the rights of a club is a capital receipt. The
ITAT has relied upon various receipts and loopholes that the view of the
Assessing Officer to treat the entrance fee as revenue receipt and not capital
receipt was incorrect.
4. In our view, the Tribunal has not committed any perversity or
applied incorrect principles to the given facts and when the facts and
1 263 ITR 1 (Bom.)
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circumstances are properly analysed and correct test is applied to decide the
issue at hand, then, we do not think that question as pressed raises any
substantial question of law.
The appeal is devoid of merits and it is dismissed with no order
as to costs.
(AMIT B. BORKAR, J.) (K.R. SHRIRAM, J.)
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