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TMI Blog2014 (1) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... pt based on the decision of the Hon'ble Jurisdictional High Court and such a claim has also been accepted by the Assessing Officer in scrutiny proceedings - Neither in the question nor in the answer thereto, there is any reference to any document or seized material, much less any incriminating material to show that the assessee's claim which was allowed by the Department has been negated - this claim is purely based on legal principle as upheld by the Hon'ble Jurisdictional High Court. The statement as such cannot be said to be incriminating material so as to infer that any addition is warranted on this issue while completing the assessment under section 153A, when the earlier assessments have attained finality at the time of search - the document does not show that the assessee's claim for capital receipts will automatically be inferred as revenue receipt - The period of membership of 25 years also is a part of the record and no new information or material can be said to have come into picture as a result of search - Thus, neither the statement recorded under section 132(4) nor the document mentioned at Annexure-B can be inferred as incriminating material for the purpose of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the members whereas the appellant has in fact charged uniform annual fees from all the members. (b) The learned CIT(A) erred in holding that the appellant has accepted consolidated subscription fees whereas the appellant has actually charged entrance fees and annual fee separately. (c) The learned CIT(A) erred in holding that the appellant has accepted in assessment year 2003-04 that the entrance fee is taxable income whereas in fact the appellant had flied a revised return of income considering the entrance fee as a capital receipt and the same has been accepted by the Assessing Officer while completing the original assessment under section 143(3) of the Act. 4. The learned CIT(A) erred in upholding the action of the Assessing Officer in rejecting the retraction by the appellant of the earlier offer made by it with regard to taxability of entrance fees and failed to appreciate that the earlier offer was made under utter stress and based on a wrong understanding / interpretation of the principle governing the taxability of the entrance fees. He ought to have held that there is no estoppel on a point of law such so called admission are not conclusive. 5. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(3) vide order dated 21st March 2006 at a loss of Rs. 4,16,25,646 Intimation under section 143(1) was processed on 21st November 2006 on the revised return of income 5. The Assessing Officer, while completing the original assessments in the aforesaid manner, in all the years, has followed the decision of the Hon'ble Jurisdictional High Court in CIT v/s Diners Business Services Pvt. Ltd., [2003] 263 ITR 001 (Bom.), for accepting the assessee's claim that one time membership entrance fee is a capital receipt. Thus, such a receipt was not subjected to tax. These assessments had attained finality. 6. Thereafter, a search and seizure action under section 132(1) was carried out by the investigation wing, Mumbai, in assessee's case on 23rd January 2007. Consequent to this search and seizure action, notice under section 153A(a) was issued for all the years under appeal on 6 th August 2007. The assessee, in response to the said notice, filed its return of income on 3rd September 2007 on the same income as were shown in the original return of income / revised return of income. During the course of search and seizure action, a statement on oath was recorded on 24th January ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the statement recorded under section 132(4) and withdrew his offer for taxation on the one time membership fee, on the ground that the assessee's claim was based on the decision of the Hon'ble Jurisdictional High Court in Diners Business Services Pvt. Ltd. (supra) and he has been duly advised that such a judgment is applicable in assessee's case also, wherein the High Court has clearly stated that entrance fee received from members is a capital receipt. 8. The Assessing Officer, however, brought the said amount of membership fee under tax by holding it as revenue receipt after observing and holding as under:- "3.3 I have considered the assesse's submission in this regard and I am of the view that the facts obtaining in the Diners Business Services Pvt. Ltd. and the assesse's case are different. In the case of Diners Club the membership fees was a 'ONE TIME PAYMENT' however in the present case it is to be paid every 'Twenty five year'. Thus in the present case it is not a 'ONE TIME PAYMENT' but only limited to a specific period. Secondly in the present case members do not get rights in the properties of the club but only use the services provided by the club. Hence it is an u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013] 259 CTR (Raj.) 281. On merits also, he placed detail submissions as to why such a receipt cannot be held to be revenue in nature. 11. On the other hand, the learned Departmental Representative submitted that during the course of search, statement of the Managing Director was recorded, who has clearly admitted that the membership fee collected can be taxed as revenue receipt though on deferred basis for the period of 25 years. This itself is an incriminating material. Besides this, a document was found wherein it was mentioned about the type of membership, duration for which membership was offered and the price of membership subscription. This means that there were some material found relating to membership fee, wherein the period of membership was given for 25 years. Once the membership fee is for a specific period i.e., for 25 years, then the decision of the Hon'ble Jurisdictional High Court will not apply. Therefore, not only the addition is justified under section 153A, but also the addition made by the Assessing Officer is legally covered on merits. On the merits of the addition, he strongly relied upon the findings of the learned Commissioner (Appeals) and the case laws ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - "The requirement of assessment or reassessment under the said section has to be read in the context of Sections 132 or 132A of the Act, inasmuch as, in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed. The underline purpose of making assessment of total income under Section 153A of the Act is, therefore, to assess income which was not disclosed or would not have been disclosed. The purpose of second proviso is also very clear, inasmuch as, once a assessment or reassessment is 'pending' on the date of initiation of search or requisition and in terms of Section 153A a return is filed and the AO is required to assess the same, there cannot be two assessment orders determining the total income of the assessee for the said assessment year and, therefore, the proviso provides for abatement of such pending assessment and reassessment proceedings and it is only the assessment made under Section 153A of the Act which would be the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on the decision of the Hon'ble Jurisdictional High Court and such a claim has also been accepted by the Assessing Officer in scrutiny proceedings. After having said that the assessee stated that membership is for 25 years, then 1/25th portion thereof can be charged to tax in every year. Neither in the question nor in the answer thereto, there is any reference to any document or seized material, much less any incriminating material to show that the assessee's claim which was allowed by the Department has been negated. Otherwise also, this claim is purely based on legal principle as upheld by the Hon'ble Jurisdictional High Court. Thus, the statement as such cannot be said to be incriminating material so as to infer that any addition is warranted on this issue while completing the assessment under section 153A, when the earlier assessments have attained finality at the time of search. Annexure-B also only gives the list of category of the membership and the fee charged. These details are already part of the record and the books of account which, has been subject matter of scrutiny under section 143(3) earlier. Moreover, this document does not show that the assessee's claim for ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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