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TMI Blog2017 (10) TMI 1092X X X X Extracts X X X X X X X X Extracts X X X X ..... making the assessment order, it is the satisfaction of the Assessing Officer who made the enquiry and it should be touchstone of assessment order passed by him. No cogent material or evidence was brought to our knowledge by the Ld. DR which may prove that view taken by the Assessing Officer in the case of the assessee was unsustainable in law. Therefore, we are of the view that the order passed by the CIT is illegal and without jurisdiction. - Decided in favour of assessee. - ITA No.444 /Mum/2014 - - - Dated:- 24-10-2017 - Shri P K Bansal, Vice President And Shri Pawan Singh, Judicial Member For The Appellant : Shri Madhur Agarwal For The Respondent : Shri Anand Mohan ORDER Per P.K. Bansal, Vice President This appeal has been filed by the Revenue against the order of the CIT, Central-IV, Mumbai passed under section 263 dated 19.11.2013 for A.Y. 2009-10 by which the assessee has challenged the validity of the order by taking as many as six grounds of appeal but the only issue involved in all these grounds is whether invoking of jurisdiction under section 263 of the Income Tax Act under the facts and circumstances of the case is valid or not? 2. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue has not been examined by him. In response thereto the assessee submitted that there is no error in the order passed under section 263. The issue involved is covered by the decision of the Hon ble Jurisdictional High Court in the case of Diners Business Services Pvt. Ltd. 263 ITR 1 in which it was held that the entrance fees are not liable to be taxed. It was further submitted that for A.Y. 2003-04 one time nonrefundable fees was offered to tax but a revised return was filed contending the same to be non-taxable capital receipts on the basis of the judgement of the Hon ble Bombay High Court. This contention was accepted by the AO for assessment years 2003-04 and 2004-05. Subsequent to statement recorded of the Managing Director in a search action, though later retracted, the AO subjected such fees to tax for assessment years 2003-04 to 2008-09. When the matter went before the CIT, the CIT, on the basis of the decision in the case of CIT vs. WIAA, 136 ITR 569 held that part of the entrance fees partake the nature of annual subscription and part as capital receipts. The Revenue therefore accepted for assessment years 2003-04 and 2004-05 that nonrefundable entrance fees ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007-08 and 2008-09 one time membership entrance fees was treated as revenue receipts and same was brought to tax and was subsequently upheld by CIT(A). There is no change in the facts and circumstances in A.Y. 2009-10. On perusal of the records, it is seen that no enquiry has been made by the AO on this issue and this issue has not been examined by him. 2. I am therefore of the view that assessment order passed by the Assessing Officer requires to be set aside, so that, he may carry out requisite inquiries as deemed necessary before a correct assessment order is passed under I T act at subsequent date. Before doing so, I hereby give you an opportunity to show cause as to why an order relating to the aforesaid assessment order dated 30-12-2011 should not be passed in revision u/s 263 of the Act. . From the show cause notice it is apparent that the CIT has invoked jurisdiction under section 263 as he was of the opinion that the AO has not made any enquiry on the issue whether one time membership and entrance fees received by the assessee is a revenue receipt. 4. The learned A.R. in this regard vehemently contended and drawn our attention to the notice issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the assessee for assessment years 2006-07 to 2008-09 in which the Tribunal with regard to the treatment of the one time membership fees took the view following the decision of the ITAT Special Bench in the case of Club Mahindra Holidays 40 DTR 1, the membership fees received by the assessee was liable to be spread over the period of time for which such fees is received and therefore treated 1/25th share of fees in each year to be revenue receipt. Now the question before us is whether the view taken by the AO can be a possible view or not? Can it be said under the facts that the AO has not made any enquiry while passing the order under section 143(3)? We noted that the Hon ble Supreme Court in the case of Malabar Industries Co. vs. CIT 243 ITR 83 has held as under: - A bare reading of provisions of Section 263 makes it clear that the prerequisite to exercise of jurisdiction by the CIT suo moto under it, is that the order of the ITO is erroneous in so far as it is prejudicial to the interest of the revenue. The CIT has to be satisfied of twin conditions, namely, (I) the order of the A.O. sought to be revised is erroneous; and (ii) it is prejudicial to the interests ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. This decision of the Income-tax Officer could not be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income-tax Officer to re-examine the matter. That was not permissible. The Tribunal was justified in setting aside the order passed by the Commissioner of Income-tax under section 263. Similar view has been taken by the Hon ble Allahabad High Court in the case of CIT vs. Mahender Kumar Bansal, 297 ITR 0099 in which respectfully following the decision of Allahabad High Court in the case of CIT vs. Goyal Private Family Specific Trust, 171 ITR 698 (Alld.) has held under para No.12 as under :- As held by this Court in the case of Goyal Private Family Specific Trust (supra,) we are of the considered opinion that m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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