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TMI Blog2019 (9) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of income tax [ 2014 (11) TMI 354 - DELHI HIGH COURT ] was decided as road was specifically considered as part of building in the part A of appendix 1 of The Income tax Rules 1962. Thus, the fact of that case is distinguishable. Further, it was not stated before us that revenue has not accepted the decision of the coordinate bench in DCIT vs. JP greens Ltd where golf course was held to be plant. Therefore, it stands concluded that golf course is a plant looking to the nature of business of the assessee. Further, the judicial precedents relied upon by the parties also only lays down the proposition established by the higher judicial forum supports the above view. In view of this, ground number 1 of the appeal of the assessee is allowed reversing the views of the lower authorities, holding that golf course is a plant on which assessee is entitled to the depreciation at the rate of 25% under the income tax act. Disallowing the expenses on account of golf course on repairs and maintenance - HELD THAT:- It is a fact that assessee has submitted the details of such expenses. The books of the accounts of the assessee are duly audited and the learned assessing officer has also not poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. Therefore, we direct the learned assessing officer to tax the above income as Income for the impugned assessment year to which it pertains to. Therefore, if the assessee has offered the income, to the year to which it pertains to, the addition is required to be deleted. Taxability of the security deposit against the golf course membership fee - HELD THAT:- The identical issue arose before the honourable Gujarat High Court in principal Commissioner of income tax vs. Gulmohar Green Golf and country club Ltd [ 2016 (12) TMI 1559 - GUJARAT HIGH COURT ] wherein it was been held that the security deposit recovered from the members at the time of their enrolment as a member is refundable on occurrence of the contingency mentioned in the rules and regulation and bylaws, therefore it is required to be treated as a deposit, thus, a capital receipt. Therefore, it was held that it is not an income of the assessee. As in the case of the assessee also the security deposit is refundable hence respectfully following the decision above, we also hold that the sum of refundable security deposit received from the members of the assessee is a capital receipt and cannot be charged to tax as income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of ownership of ITC Ltd - above addition has been made subject to the exact details of the date on acquisition cost of the land on protective basis and on substantive made a basis the addition has been made in assessment year 2001 02 and 2003 04 on the basis of agreement to sale dated 16th/2/2001 and 17/3/2003 - HELD THAT:- As the revenue could not point out that what is the trigger point of taxing the above amount in this year and further in which year the transfer of the capital asset has happened, the above addition has rightly been deleted by the learned CIT A. In view of this we do not find any infirmity in the order of the learned CIT A deleting the protective addition Addition on account of interest disallowances - HELD THAT:- No infirmity in the order of the learned CIT A wherein it has been held that that fresh borrowing of INR 7.75 crore were utilized for repayment of loan pertaining to earlier years and the purpose of the loan has been accepted by the learned assessing officer, the disallowance made by the learned assessing officer is not sustainable. We also do not find any infirmity in the order of the learned CIT A mentioning the reasons for deletion of the disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t classification of golf course could not be changed in subsequent year when claim of depreciation @ 25% on golf course as plant stood allowed/ accepted in the past assessment years, i.e., 1998-99 to 2000-01 and succeeding assessment years, i.e., 2006-07 to 2009-10. 1.2 That the CIT (A)/assessing officer erred on facts and circumstances of the case and in law in not appreciating that the classification of block of asset which has been allowed/accepted and merely carried forward from earlier years cannot be modified in current year 1.3 That the CIT(A) erred on facts and circumstances of the case and in law in holding that golf course has not manufactured or produced anything so as to classify it as a plant and machinery . 2. Without prejudice, if the golf course is treated as building , the assessing officer be directed to re-compute depreciation admissible under section 32(1) (ii) of the Act with reference to revised written down value of golf course in subsequent years. 3. The appellant is a company engaged, inter alia, in the business of running of golf course, construction of hotel and sale of merchandise. During the previous year relevant to the assessment year 2001-02, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us. 5. The ld AR submitted that aforesaid action of the assessing officer/CIT(A)in restricting the depreciation to 10% is bad in law and not sustainable for the reasons elaborated hereunder: a) Tribunal vide order dated 15.06.2016 merely remanded/remitted the matter to AO for fresh consideration i. As stated supra, in the first round of proceedings, the Hon ble Tribunal restored the issue whether depreciation is admissible @25% as plant or @10% as building, to the file of the assessing officer for de-novo consideration and to examine the details of construction on the 300 acres of land converting it into a golf course, which were not filed before the assessing officer in the first round of proceedings. The relevant extract of the findings of the Tribunal are reproduced hereunder: 45. In the second part of above operative para, the ld. CIT (A) held that the ratio of the decision of Hon'ble Supreme Court in the case of CIT Vs. Anand Theatre is not applicable and then jump to a conclusion that the business of the assessee is to invite players for playing the golf and charging the fee for that and thus the field so prepared was a business operated used by the assessee for car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may also point out that to support the case of the AO, the ld. CIT-DR has placed reliance on plethora of decisions including the decision of Hon'ble Supreme Court in the case of CIT Vs. Anand Theatre [supra], CIT Vs. Gwalior Rayon Silk Mfg. Mills 196 ITR 149 [SC] and decision of Hon'ble High Court of Delhi in the case of Moradabad Toll Road Co. Vs. ACIT [2014] 52 Taxmann.com 21 [Delhi] to establish that golf course is not a plant and machinery and it is to be categorized as a building and on the other hand, the ld. AR has placed reliance on the case of decision of Hon'ble Supreme Court in the case of CIT Vs. Karnataka Power Corpn. 247 ITR 268 [SC], Scientific Engineering House P. Ltd Vs. CIT 157 ITR 86 [SC] and decision in the case of Victory ITA No. 3549 4847/Del/2009 CO No. 328/Del/2009 111/2010 Aqua Farm Ltd 61 Taxmann.com 166 [SC] and plethora of decision to support the case of the assessee that golf course is a plant and machinery and it is not a building. Interestingly, no cited decision relied by both the parties are related to golf course. Therefore, facts regarding this issue have to be dealt in respect to golf course of 300 acres land and how it became plant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Supreme Court in the case of Hukam Singh v. State of Haryana and Another: 2019 SCC Online SC 159, wherein the Apex Court clarified similar issue and held that once the matter is remanded for fresh consideration, any observation in the judgment stands obliterated and the authorities are required to consider the issue afresh. In that case, review petition was filed before the Hon ble Court called upon it to clarify the meaning and purport of the following passage from its earlier ruling in the case of Haryana State Industrial Development Corporation Ltd. vs. UDAL (2013) 14 SCC 506: 32. We also find merit in the argument of the learned counsel for the landowners that while fixing market value of the acquired land the learned Single Judge committed serious error by not considering an important piece of evidence i.e. Ext. PW 9/A dated 23-11- 1999 vide which HSIIDC had allotted land to M/s. Honda Motorcycles and Scooters India (P) Ltd. At the rate of ₹ 1254.18 per square yard. Although, this document was produced before the Reference Court but the same was not taken into consideration while determining the amount of compensation. The same error has been repeated in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luenced by the observations contained in this judgment . We do not agree with the submission that the landowners were assured of minimum compensation at the level of ₹ 37,40,000/- per acre. In fact, in tune with the observation that fresh consideration is uninfluenced by any of the observations contained in the judgment, the matter was left open and the assessment had to be done de novo. We, therefore, reject the submission. (Emphasis supplied) v. Similarly, the Hon ble Supreme Court in the case of Kanaklata v. State (NCT of Delhi) and Others: 6 SCC 617, held that if an order passed by the court is set aside, the observations and findings recorded therein also get obliterated for all intents and purposes. The Court further held that in some cases, the Court makes the position clear by stating that any such observation shall not influence the court concerned while making a fresh order the same to put the matter beyond the pale of any controversy. The Court held as under: 5. We have heard the learned counsel for the parties at some length. It is true that the trial court had while discharging the accused persons under the Special Act mentioned above, made certain observations a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nant is reasonable for us to direct a transfer. Justice must not only be done but must seem to have been done. A lurking suspicion in the mind of the complainant will leave him with a brooding sense of having suffered injustice not because he had no case, but because the Presiding Officer had a preconceived notion about it. On that test we consider the present to be a case where the High Court ought to have directed a transfer. Inasmuch as it did not do so, we have no option but to interfere and direct transfer of the case to another court . (emphasis supplied) vi. Similarly, in the present case, the Tribunal, he submitted, simply set-aside/ remitted the issue to the file of the assessing officer for fresh consideration and thus, any prima-facie observation/finding recorded by the Tribunal based on limited examination of details of construction of golf course, stood obliterated for all intents and purposes. The Tribunal, in para 47, in fact, clarified the position to put the matter beyond any doubt by observing, ...without being prejudiced from earlier orders and our observations in this order . b) Classification as plant accepted in initial year(s) AO had no jurisdiction to subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with reference to the entire block. In view of the above, he submitted that depreciation is to be allowed on the block of asset at specified percentage on the written down value of the block of asset. The written down value of the block of asset is the value of block of asset at the beginning of the previous year as increased or decreased by the addition or deletion in the previous year. Hence, once an asset goes into the block of asset and the same is allowed by the assessing officer in the previous year, the asset loses its individual identity and become part of the block. In the succeeding years, the assessing officer has to allow depreciation on the block of asset as being brought forward. c) Golf course accepted as plant in earlier years not permissible to change block in current year He submitted that the golf course, was constructed in previous year relevant to assessment year 1998-99, wherein total cost of ₹ 20,57,09,950 (excluding cost of land) was capitalized and depreciation was claimed thereon @25% under section 32(1) of the Act. Further, expenditure on its improvement was incurred in subsequent assessment years and the total cost of the golf course amounted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) dated 28.2.2006 6th year of claim. The case was re-opened and the issue was set aside by the Tribunal vide order dated 15.6.2016 for denovo consideration. He further submitted that , in regular assessment under section 143(3) vide order dated 29.03.2004 for assessment year 2001-02, the claim of depreciation was accepted after duly considering the replies dated February 2004 and 15.3.2004 filed by the appellant. He submitted that vide letter filed in February 2004, the appellant furnished detailed break-up of additions to golf course (refer pages 112-118 of Paper book Vol I). He referred that Vide letter dated 15th March 2004, the appellant certified that no depreciation has been claimed on the value of land on which golf course has been constructed (refer page 119-122 of the Paper book Vol I); he also referred to Opinion dated 22.4.2002 was filed during the assessment proceedings in support of claim of depreciation on golf course (refer pages 71-73 of paper book Vol I). He therefore submitted that on n perusal of the aforesaid details/ documents, it will, be appreciated that the assessing officer, after due application of mind and after duly considering the exhaustive detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ater Noida on which the assessee claimed depreciation @ 25%. The assessing officer held that golf course and also hospitality services is not covered in the block of 'plant', but it is covered in the asset 'building' which is used by the hotels for hospitality services on which the depreciation @20% is allowable. Hence, the assessing officer rejected the assessee's claim of depreciation @25% for assessment year 2002-03 and 2003-04 and substituted it for 20%. For assessment year 2005-06, the AO allowed depreciation applicable for the cost of building @10% and rejected the claim of @25%. On further appeal, the CIT(A) decided the issue in favour of the assessee holding as under: 2.3 .Rival contentions have carefully been considered. ... The second question arises is if the Golf Course in itself can be treated as a 'plant' or not. In this regard, I agree with the ld. AR of the appellant that the Golf course is a specialized superstructure constructed on the land with various levels of undulation, hotels, small ponds, etc., which have been created as per the rules of the game of the Golf . It is certainly a specialized professional requirement for playing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any reason to disturb the rate to 20% as applied by the AO. Accordingly, we uphold the order of the ld. CIT(A) to allow the depreciation @25%. 2.6 In the result, all the revenue's appeals are dismissed. (Emphasis supplied) ii. He further placed reliance in this regard on the decision of the Delhi Bench of the Tribunal in the case of ACIT v. CLC Global Ltd. : ITA No. 2288/Del/2008, wherein it has been held that once the assessing officer has, on exactly similar facts, allowed depreciation on goodwill in the immediately preceding year, there is no reason to take a different stand for the succeeding year and to disallow the depreciation claimed [refer pages 39-46 of case laws paper book]. f) It is further respectfully submitted that though the principles of res judicata are not applicable to income tax proceedings, it does not mean that it is open for the assessing officer to come to a different conclusion on similar facts and circumstances. He relied up on Radhasoami Satsang vs. CIT: 193 ITR 321 CIT vs. Neo Polypack (P) Ltd: 245 ITR 492, CIT vs Excel Industries Ltd.: 358 ITR 295 (SC) , DIT (E) V. Apparel Export Promotion Council: 244 ITR 734 (Del), CIT V. Dalmial Promoters Devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on business and it is not necessarily confined to an apparatus which is used for mechanical operations or processes or is employed in mechanical or industrial business; (c) In order to qualify as plant, the article must have some degree of durability. The Court, thus, summed up by holding that test is whether the article is a tool of trade with which assessee carries on his business and if the answer is in the affirmative, it will be a plant . He submitted that applying the aforesaid tests, the Golf course constructed by the appellant, it is submitted, qualifies as plant and is eligible for depreciation @ 25% for the following reasons: a) The Golf course constructed by the appellant, it is submitted, is a highly specialized structure built on land. Constructing/ developing/ maintaining golf course is a highly skilled and experience-oriented job wherein specific sophisticated machinery and wide range machinery is required to be employed. In order to construct/ develop Golf Course, the appellant had to engage highly reputed international designer Jack Nicklaus for designing the Golf course. It may be pertinent to mention here that following are important, essential and integral part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as plant and is, therefore, entitled to deprecation @ 25% as applicable to plant , more particularly in the light of the legal position discussed herein. e) Similarly, in the present case, in the business of Golf course, developing a golf course, for running the business of operating a golf course is, it is submitted, an essential/ indispensable part of/ and is used as a tool of business. Therefore, applying the functional test laid down in various decisions, Golf Course expense has to be, and it is submitted, regarded as `plant f) Attention is also invited to the decision of the Supreme Court in the case of ACIT v. Victory Aqua Farm Ltd: 379 ITR 335, wherein the assessee was engaged in business of Aqua Culture and growing prawns in specially designed ponds. In the income tax return, the assessee claimed depreciation in respect of the ponds by treating the same to be plant within the meaning of section 32 of the Act. The assessing officer disallowed the claim of the assessee. The apex court held that since the ponds were specially designed for rearing/ breeding of the prawns, thus, they have to be treated as tools of the business of the assessee and therefore, such ponds wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 460 (Bom.) and swimming pool of a caravan park operator in the case of Cooke V. Beach Station Caravans Limited: (1974) 3 All ER 159 have been held to be plant . In the case of Shyam Enterprises v CIT: 349 ITR 418 (All), the High Court, applying the functional test, had held that the building of special cooling chambers in a cold storage plant, being constructed in a specific process and manner, is eligible for depreciation as applicable on a plant . definition of plant, The High Court further held that section 43(3) of the Act, providing the excludes general buildings but not buildings of a special nature. In the case of Niko Resources Ltd. vs. ACIT: 395 ITR 301 (Guj), the High Court treated mineral oil wells as plant for the purpose of applying depreciation under section 32 of the Act In the case of Airports Authority of India v. CIT: 134 ITD 34 (Delhi), the Delhi Bench of the Tribunal had held that, terminal building of the assessee used as a tool of business for regulation of air traffic and communicational and navigational control was to be treated as plant for the purposes of claiming depreciation under the relevant provisions of the Act. In the case of Serum Institute of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset as plant . So long as functional test of a plant is satisfied, the asset would qualify as plant. Further, reliance placed by the CIT(A) on the decision in the case of CIT v. Anand Theatres: 244 ITR 192 (SC) is, it is submitted, totally misplaced since the Supreme Court in the later case in CIT V. Karnataka Power Corporation: 247 ITR 268 (SC) clarified that the decision and observation in Anand Theatres (supra) was limited to buildings used for purposes of hotels or cinema theatres and will not apply otherwise. Moreover, the Supreme Court in the latest case of Victory Aqua Farm (supra), re-emphasized the concept of functional test to determine whether a particular asset is to be treated as plant under section 32 of the Act. 6. Based on the above stated submission he prayed that for the aforesaid cumulative reasons, it is respectfully submitted that the assessee has rightly claimed depreciation on golf course as plant . 7. The LD DR vehemently supported the orders of the lower authorities. The main contention of the learned departmental representative was that AO has correctly allowed the depreciation considering the golf course as a building. It was stated that golf course is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... golf course treating the same as plant or not. He therefore submitted that the ratio of said decision does not apply to the facts of the case. He further submitted that in case of the assessee itself the coordinate bench restore the issue of depreciation of golf course to the AO to examine the facts which were not produced before the AO including details of construction on 300 acres of land et cetera. He therefore submitted that the learned assessing officer has correctly granted the depreciation on golf course considering it as a building and not plant. 8. We have carefully considered the rival contention and perused orders of the lower authorities. The only issue involved in this appeal is whether the golf course constructed by the assessee is a plant or building. According to the revenue authorities, it is a building and not a plant whereas the assessee contends that it is a plant. The learned CIT (A) has dealt with the whole issue considering the direction of ITAT and view of the AO thereon as under :- 6.1 I have carefully considered the assessment order under appeal and earlier orders, submissions by the appellant, other materials on record and the case laws relied upon. 6.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng for the purpose of sports would be converted into plant and machinery. It is pertinent to note that for creation of golf course, landscaping is done for in various levels and some holes, ponds and walking path is created but in our humble understanding this kind of piece of land converted into a golf course by creating some specialized facilities for playing golf cannot be put in the category of plant and machinery. 47. In view of above, we have no hesitation to hold that the Id. CIT(A) granted relief to the assessee without any basis and without arriving to a conclusion as to whether golf course is a plant and machinery or building. Therefore, conclusion of the Id. CIT(A) is not sustainable as we are unable to see any basis for the factual observations noted by the Id. CIT(A) for putting the golf course in the category of plant. Since the issue has not been adjudicated by the Id. CIT(A) in a proper manner, therefore, this issue is restored to the file of the AO for a fresh adjudication after affording due opportunity of being heard to the assessee and without being prejudiced from earlier orders and our observations in this order. 48. We may also point out that to support the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not able to justify as to how these expenses make Golf Course a Plant. These are simple expenses related to landscaping and construction. If the argument of the assessee is accepted, then every land with some kind of landscaping or every building used for some king of sports activity would be converted into Plant Machinery. Further, simply because some special controlling equipment are attached, it will not take out of the category of building. The golden rule of interpretation is that if some structure / entity are more near to one category than by stretching it should not be considered to fall in a category, which is far off. 5.5 Assessee in its responses have submitted that Golf Course, which includes various plants and equipment, falls under the definition of term 'Plant' as per the provisions of the Act and is eligible for depreciation @ 25%. However, during set-aside proceedings, the assessee could not justify as to what are these plants and equipment used in Golf Course, which fall under the head of 'Plant and Machinery'. Moreover, assessee is already separately claiming depreciation on sporting items like Golf Carts, Pull Carts etc. 5.6 The Hon'ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided looking to the fact and circumstances of this case only. Accordingly, this has to be examined with reference to the activities of the appellant company. 6.6 The golf course is a playground with various equipments such as sprinklers, holes, ponds and other add-ons incorporated therein to facilitate the sports of golf. It is stated to be highly sophisticated and value added equipments have been installed. No doubt that appellant is generating the revenue from the players for playing golf and allowing its golf course but it cannot be said that it has manufactured or produced anything as a creation of asset akin to plant and machinery. In common parlance the plant or machinery is such to become a tool for production of the commercial goods, generally tangible in nature. This also finds support from the various judgments wherein it is held that the functional test is required to understand and consider whether it is a plant or an asset specially for the case of appellant. In the case of appellant, the golf course has been created as sports facility to facilitate and provide entertainment to its clients who are either residents of the hotel run by appellant or members. There is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e structuring and fixtures done over land for the purpose of the sports to lure the client where no_ product is also demonstrated to have been manufactured but only facility is provided, this cannot be considered as plant and machinery. Accordingly, the appellant is not entitled for depreciation @ 25% but only treated as building as this is a super structure on the land, which is being used for the purpose of business. 6.13 Therefore, I have no reason to differ with the findings of AO and thus the addition is confirmed in the case of appellant. 9. It is an admitted fact that assessee is a company engaged in the business of inviting membership and then allowing those members to play golf on the golf course constructed by it. It is also apparent that the assessee is engaged in the business of running of the golf course and also earning revenue from apartments. It has constructed golf course at the total cost of ₹ 225728037 as on 31st of March 2001. Its main source of income is membership fees. The golf course constructed comprised of various equipments and items of plant and machinery like irrigation system, water tanks including water sprinklers, technical know-how, bunkers et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Tribunal as also the assessment order that the assessee s nursing home is equipped to enable the sterilization of surgical instruments and bandages to be carried on. It is reasonable to assume in the circumstances, particularly having regard to the Tribunal s order, which states that the sterilization room covers about 250 sq. ft. that the nursing home is also equipped with an operation theatre. In the circumstance, we think that the finding of the High Court should be accepted. We would, however, add that in a case such as this, the Tribunal should proceed upon material placed by the assessee which establishes that the building is specially equipped as a plant for the assessee s business. 10. In SCIENTIFIC ENGINEERING HOUSE (PVT.) LTD. v. COMMISSIONER OF INCOME TAX, ANDHRA PRADESH [1986] 157 ITR 86X (SC) Honorable Supreme court has held that that plant was not necessarily confined to an apparatus, which was used for mechanical operations or process or was employed in mechanical or industrial business. But in order to qualify as plant , the particular article had to have some degree of durability. The test to be applied was : Did the article fulfill the function o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the mineral oil wells as buildings for applying rate of depreciation under section 32 of the Act. The mineral oil wells constituted plant for purposes of section 32. 13. In the present case also before us, the golf course owned and used by the assessee for the purpose of the business as a tool of the business of the assessee. It is functioning like a plant in case of the assessee. Further, it is not the case of the revenue that assessee has claimed any depreciation on the land. It is similar to the depreciation on pond allowed in the case of an aquaculture company by the honourable Supreme Court in 379 ITR 335 and honourable Gujarat High Court holding that mineral oil well also constitute a plant. The learned CIT A is not correct in saying that playing equipments, creating landscaping, holes, ponds and others are being done in the regular course to facilitate the game of golf and not into any production of goods and services. In fact, by creating these facilities, the assessee has created a service facility for its members and it produces revenue for the assessee. It is not always necessary that each plant should produce certain other tangible goods. Further, in case of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (appeals) 5, New Delhi dated 31/12/2018:- 1. That the CIT(A) erred on facts and circumstances of the case and in law in upholding the action of assessing officer in making addition of ₹ 60,54,840 on account of allowance of depreciation on golf-course as building as against the same being considered as plant and machinery by the appellant. 1.1 That the CIT(A)/assessing officer erred on facts and circumstances of the case and in law in not appreciating that classification of golf course could not be changed in subsequent year when claim of depreciation @ 25% on golf course as plant stood allowed/ accepted in the past assessment years, i.e., 1998-99 to 2000-01 and succeeding assessment years, i.e., 2006-07 to 2009-10. 1.2 That the CIT (A)/assessing officer erred on facts and circumstances of the case and in law in not appreciating that the classification of block of asset, which has been allowed/accepted and merely carried forward from earlier years, cannot be modified in current year 1.3 That the CIT(A) erred on facts and circumstances of the case and in law in holding that golf course has not manufactured or produced anything so as to classify it as a plant and machinery . 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umber 2 of the appeal along with ground number 2.1 is with respect to the direction of the learned CIT A to the learned assessing officer to allow depreciation on golf course at the rate of 15% considering it is planned against the depreciation at the rate of 10% allowed by the learned assessing officer considering it as a building. This issue has already been decided by us in appeal for assessment year 2001 02 in case of the assessee wherein we have held that the golf course is a plant, for the similar reasons, we hold that there is no infirmity in the order of the learned CIT A for this year. Accordingly, ground number 2 of the appeal of the revenue is dismissed. 22. Ground number 3 of the appeal is against the order of the learned CIT A in deleting the addition of INR 5,500,000 made by the AO disallowing the expenses on account of golf course on repairs and maintenance. The learned assessing officer found that assessee has debited a sum of INR 5 002703/ on golf course maintenance and further INR 8 280468/ on repairs and maintenance stop the learned assessing officer disallowed INR 3,000,000 out of general repairs and maintenance and INR 2,500,000 out of thus ₹ 55,00,000 we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture compared to the golf course income the disallowance cannot be made. Further the assessing officer has also not established that those expenditure have not been incurred wholly and exclusively for the purposes of the business. In view of this we do not find any infirmity in the order of the learned CIT A in deleting the above disallowance. Accordingly, ground number 3 of the appeal of the learned assessing officer is dismissed. 26. Accordingly, ITA number 5582/del/2010 filed by the learned assessing officer for assessment year 2004 05 is dismissed. Assessment year 2005-06 27. For assessment year 2005 06, assessee as well as the learned assessing officer has preferred appeals against the order of the Commissioner of income tax (appeals) VII, New Delhi dated 27/10/2009. 28. The assessee has raised the following grounds of appeal in ITA No. 4536/Del/2009 for the Assessment Year 2005-06:- 1. That the CIT(Appeals) erred on facts and in law in confirming addition to the extent of ₹ 20,41,449 out of total addition of ₹ 84,16,051 made by the assessing officer under section 41(1) of the Income Tax Act, 1961 (The Act ). 2. That the CIT(Appeals) erred on facts and in law in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of land. 3.1. The Ld. CIT (A) ignored the fact that the AO has made addition on basis of sale consideration received by the assessee in earlier years on similar property. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 49,71,84,511/- made by the AO being the Long Term Capital Gain on transfer of ownership to M/s. ITC Ltd. 4.1. The Ld. CIT (A) ignored the fact that the LTG has arrived at by AO on the basis of the agreement to sell in favour of ITC Ltd. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of ₹ 20,31,305/- made by AO on account of interest disallowed as having been paid for non-business activities. 5.1 The Ld. CIT (A) ignored the fact that the assessee utilized 64% of the borrowed sum during the year for repayment of term loans. 6. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of ₹ 51,08,772/- made by AO on account of excess depreciation claimed. 6.1. The Ld. CIT (A) ignored the fact that Golf Course is entitled for depreciation of 10% i.e. for buildi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the computation of income for assessment year 2000 1, 2001 02 and 2003 04 he noted that INR 6 374602/ was already added back by the assessee of to its total income in earlier years. Therefore he deleted the above amount from the deduction and sustained the balance addition of INR 2 041449/ . Therefore, against the order of the learned CIT A assessee is in appeal as per ground number 1 of the appeal and the revenue is in appeal as per ground number 2. Both these grounds of appeal being interconnected are taken together. 32. The learned authorised representative supported the order of the learned CIT A the deletion of the disallowance is concerned and with respect to the addition sustained is submitted that the same logic which has been given by the learned CIT A for deleting the addition applies to the extent of the additions sustained by him as the learned assessing officer has failed to bring on record any material that these expenditure have been allowed to the assessee in earlier years. He submitted that in absence of this the learned CIT A should have deleted the whole disallowance. 33. The learned CIT DR vehemently supported the order of the learned assessing officer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to pay security deposit, membership entrance fee, advance membership fee, subscription fee, etc. A corporate member is, however, not required to pay any security deposit. In the audited financial statements for the year ended 31.03.2005 (the year under consideration), the appellant had, in `Schedule 12 thereto under the heading Current Liabilities , disclosed/ shown `Other liabilities of ₹ 34,05,42,851 as under:- Payment received against Golf course membership ₹ 3,52,88,416 Security Deposit against Golf Course membership ₹ 31,14,60,578 Total ₹ 34,67,48,994 Less: Membership subscription receivable ₹ 62,06,143 Net Amount ₹ 34,05,42,851 In the assessment order, the assessing officer held the aforesaid amount of ₹ 34,05,42,851 to be in the nature of trading receipt taxable under the provisions of the Act. On appeal, the said addition made by the assessing officer was upheld by the CIT(A). Therefore, assessee is in appeal before us. 36. The learned authorised representative vehemently contested the orders of the lower authorities. He submitted a detailed note as under :- ₹ 34,05,42,851 includes `Payment received against Golf cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he has acquired a right to receive the income or that income has accrued to him ... But in order that the income can be said to have accrued to or earned by the assessee it is not only necessary that the assessee must have contributed to its accruing or arising by rendering services or otherwise but he must have created a debt in his favour. A debt must have come into existence and he must have acquired a right to receive the payment The mere expression earned in the sense of rendering the service etc. by itself is of no avail. (Emphasis supplied) In view of the above observation, it is clear that for the accrual of income two conditions are cumulatively required to be satisfied, i.e. (a) the assessee must have contributed to accruing or arising of income by rendering services or otherwise; and (b) a debt must be created in the favour of the assessee. One of the necessary conditions of accrual, thus, is that a debt must have come into existence and the assessee must have acquired a right to receive the payment. Unless and until his contribution or parenthood is effective in bringing into existence a debt or a right to receive the payment or in other words, debitum in praesenti, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of the assessee in the year in which they received. He therefore submitted that there is no infirmity in the order of the lower authorities. 38. We have carefully considered the rival contention and perused the orders of the lower authorities on the issue. The learned CIT A has decided the whole issue as per paragraph number 7.1 7.7 of his order. Undisputedly the assessee is running a golf course and making the revenue collection by way of refundable security deposit and membership fees from the members. This indicates that the assets are fully operation and the members are deriving a benefit from the use of the assets. As such, it is not in dispute that appellant is carrying on the business of running of golf course. Facts shows that the assessee has received certain security deposits and membership fees collected by the appellant from the members along with the borrowed funds were utilized for the creation of the fixed assets by the assessee. The learned CIT A following the decision of the honourable Supreme Court income Calcutta stock exchange Association Ltd and Delhi stock exchange Association Ltd held that the security deposit received from the members are not capital rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, income/expenses of the assessee are also required to be recorded as income only based on accrual system. Thus, whenever the Income accrues to the assessee irrespective of the time of receipt of such income is taxable as business income. Under the mercantile system of accounting, the assessee has an option to account for any income either on accrual or after accrual, on the basis of method of accounting regularly followed by it . So far as the issue of the entrance fee and membership fees received by the assessee, we are of the opinion that it should be accounted for as income only when it accrues to the assessee. Merely because the income, which is pertaining to subsequent years, is received by the assessee in earlier years does not become the income of the earlier years under section 5 of the income tax act in case of either business income or u/s 28. Hence, according to us, the membership fee income of the assessee should be chargeable to tax in the year to which it pertains. Therefore, we reverse the finding of the learned CIT A in holding that that a sum of INR 3 5288416 received as golf course membership fee is chargeable to tax as income. As such, it is the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refundable deposit received from the members. Accordingly, ground number 2 and 3 of the appeal of the assessee is partly allowed. 41. Now we come to ground number 4 of the appeal of the assessee wherein the learned CIT A has upheld the disallowance of INR 7 229915/ on account of bad debt/advances written off in the normal course of the business. During the relevant assessment year under consideration, the appellant claimed deduction of bad debts/advances written off aggregating to ₹ 72,29,903, since there was no possibility of any recovery against the said debts/advances. Details of the bad debts/advances written off are placed at pages 98-103 of the paper book. The assessing officer, in the assessment order, proceeded to disallow the claim of bad debts written off by the appellant by holding that the appellant had not been able to furnish the details of exact nature of debt, the year of its approval, the reasons of dispute, etc., to establish the genuineness of the debt. On appeal, the aforesaid disallowance was affirmed in appeal by the CIT(A) on the ground that the same comprises of bad debts written off amounting to ₹ 12,86,282 and advances written off amounting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business activities of the assessee. The learned CIT(Appeals) was not justified in observing that the amount of advance was not a trading loss. After seeing the details of amounts, it is observed that the assessee was not required to take a lengthy litigation for recovering the small amounts. In our opinion, therefore, the approach of the learned CIT(A) is not justified. (Emphasis supplied) Reliance in this regard is also placed on the following decisions: CIT v. Mysore Sugar Co. Ltd.: 46 ITR 549 (SC) CIT v. Triveni Engg. Industries Ltd.: 343 ITR 245 (Del) Mohan Meakin Ltd. v. CIT: 348 ITR 109 (Del) Kwality Fun Foods and Restaurants (P.) Ltd. v. DCIT: 356 ITR 170 (Mad) Devi Films Private Ltd. vs. CIT: 75 ITR 301 (Mad.) CIT v. Inden Biselers: 181 ITR 69 (Mad.) P. Satyanarayana v. CIT: 116 ITR 803 (AP) CIT v. H. P. Lohia: 77 Taxman 476 (Cal) CIT v. Gillanders Arbuthnot Co. Ltd.: 9 Taxman 76 (Cal.) CIT v. Sethu Film Distributors: 212 ITR 620(Mad) CIT v. Abdul Razak Co.: 136 ITR 825(Guj) Salora International Ltd. v. JCIT: 129 Taxman 68 (Del.) CIT V. Shreyans Industries Limited: 207 CTR 281 (P H) DCIT vs. M/s Edelweiss Capital Ltd.: ITA No: 3971/Mum/2009 (Mum ITAT) CIT v. Claridges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proves that the assessee has incurred the loss by writing of these advances during the year, it cannot be allowed. Further, the writing of advance is a loss, which has to be on revenue account. Even under section 28, the loss, which is of capital nature, is not at all allowable. He therefore submitted that the advances written off by the assessee for purchase of capital asset is not an allowable loss or expenditure under the income tax act. 44. We have carefully considered the rival contentions and perused the orders of the lower authorities. The assessee has placed the details of bad debts, loans etc written off during the year under consideration at page number 98 103 of the paper book. On careful verification of these details, it is found that the expenses incurred by the assessee in the form of advances to various parties are for various expenditure of revenue nature. Certain advances were also given for material which if would have purchased would have been fallen in the category of repairs and maintenance. Certain amount of advances and security deposit is given to various parties are also for the purposes of pity services. However a sum of INR 3 47700 was also provided for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmity in the order of the learned CIT A, in principle, that the advances given for the purchase of capital goods he further written off in this year is a capital expenditure. With respect to the allowability of bad debts, there is no infirmity in the order of the learned CIT A mentioned in para number 10.2 of his order that such advances should have been shown as income in the earlier years. In view of this, we dismiss ground number 4 of the appeal of the assessee. 45. In the result ITA number 4536/Del/2009 for assessment year 2005 06 filed by the assessee is partly allowed. 46. Now we come to the appeal filed by the learned assessing officer in ITA number 4721/Del/2009 for assessment year 2005 06. 47. The first ground of appeal is general in nature and therefore it is dismissed. 48. The second ground of appeal is related to ground number 1 of the appeal of the assessee. This ground has already been decided while deciding the ground number 1 of the appeal of the assessee wherein we have held that there is no infirmity in the order of the learned CIT A in deleting the disallowance of INR 6 374602/ . Hence, this ground of appeal is dismissed. 49. The ground number 3 is with respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of suppression of the sale consideration from sale of land. He submitted that there is no evidence available with the learned assessing officer that the actual sale consideration received is not the real consideration received by the assessee and assessee has received much more than whatever is stated in the sale deed. He further stated that in absence of any evidence of actual receipt of sale consideration outside the books of accounts unless brought on record by the learned assessing officer no addition should have been made under the provisions of the law. He further stated that the full value of the consideration received has been shown which cannot be construed as the market value but must be taken to be the price bargained by the parties to the sale. He referred and relied upon the decision of the honourable Supreme Court in 66 ITR 622/ and 131 ITR 597. He further referred to the decision of the honourable Delhi High Court in 309 ITR 233 (Del) wherein it has been categorically held that the provisions of section 48 of the act does not have any reference to the market value but only to the consideration referred to in the sale deed as the sale price of the assets which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ari Corpn. Ltd. (1993) 200 ITR 567 (SC ), wherein it has been held that unless there is evidence that more than what was stated was received, no higher price or value can be taken to be the basis for computation of capital gains. Reliance is also placed on the decisions of the jurisdictional High Court of Delhi in CIT V. Gulshan Kumar (Deed.) (2002) 257 ITR 703 (Del.) CIT V. Naresh Khattar HUF (2003) 261 ITR 664 (Delhi), CIT V. Sm. Sushila Devi (2002) 256 ITR 179 (Delhi) and CIT v. Smt. Nilofer I. Singh (2009) 221 CTR 277/ (2009)176 Taxman 252/(2008)14 DTR 108. These decisions make it more than clear that the expression the full value of consideration as contemplated in section 48 of the Act does not have any reference to the market value but only to the consideration referred to in the sale deeds or other supporting evidences as the sale price of the assets which have been transferred. 6.2 In the instant case, no material has been confronted by the department, so as to suggest that the assessee paid consideration of ₹ 23,59,50,000/- i.e. ₹ 7.26 crores per acre multiplied by 3.25 acres in place of ₹ 4,00,00,000/- . In the instant case, all that the A.O. has done i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of K.P. Varghese v. ITO: 131 ITR 597 has held that : .. If, therefore, the revenue seeks to bring a case within sub-s. (2), it must show not only that the fair market value of the capital asset as on the date of the transfer exceeds the full value of the consideration declared by the assessee by not less than 15% of the value so declared, but also that the consideration has been understated and the assessee has actually received more than what is declared by him . ... The revenue must go further and prove that the second condition is also satisfied. Merely by showing that the first condition is satisfied, the revenue cannot ask the court to presume that the second condition too is fulfilled, because even in a case where the first condition of 15% difference is satisfied, the transaction may be a perfectly honest and bona fide transaction and there may be no understatement of the consideration. The fulfillment of the second condition has, therefore, to be established independently of the first condition and merely because the first condition is satisfied, no inference can necessarily follow that the second condition is also fulfilled. Each condition has got to be viewed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned CIT A and deleting the above addition which is made purely on the basis of the conjectures and surmises. Accordingly, ground number 3 of the appeal of the revenue is dismissed. 54. Now we come to ground number 4 of the appeal of the assessee where the learned CIT A has deleted the addition of ₹ 497184511/ made by the learned assessing officer being the long-term capital gain on transfer of ownership of ITC Ltd. The above addition has been made subject to the exact details of the date on acquisition cost of the land on protective basis and on substantive made a basis the addition has been made in assessment year 2001 02 and 2003 04 on the basis of agreement to sale dated 16th/2/2001 and 17/3/2003. The brief fact shows that assessee owns 238.25 acres of land in Haryana. Out of which the assessee on 16/02/2001 entered into an agreement to sale for sale of about 22.691 of land to ITC Ltd for a consideration of INR 450,000,000. Further, on 17/03/2003, the assessee further entered into an agreement to sale of 4.43 acres of land with ITC Ltd for a consideration of INR 90,000,000. Thus out of the total consideration of INR 5 4 crores the assessee only received 53,50,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt still occupies and uses the aforesaid land for its business activities. During the year under consideration neither any sale agreement and /or any sale deed was executed nor was possession handed over to the party who has paid the sale consideration in A.Y.2001-02 and 2003-04. In view of the aforesaid, it can be safely concluded that the transfer of the land has not taken place during the year under appeal and therefore, the question regarding the taxability of the transfer of the impugned land under Capital Gains does not arise during the year under consideration. As already mentioned above, the identical issue in the appellant s own case was decided in its favour by my predecessor-in- office in A. Y. 2001-02. As the facts and circumstances of the case are pari materia with the case of. The appellant in A.Y. 2001-02, for the reasons as discussed in the aforesaid order of my predecessor-in-office, this ground of appeal is allowed. 56. As the revenue could not point out that what is the trigger point of taxing the above amount in this year and further in which year the transfer of the capital asset has happened, the above addition has rightly been deleted by the learned CIT A. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal of AO is dismissed. 60. The ground number 6 is against the deletion of the addition of INR 5 108772/ made on account of the excess depreciation claimed on the golf course holding that golf course is a plant and machinery and not the building as claimed by the learned assessing officer. The above issue has been squarely dealt with by us in the appeal of the assessee for assessment year 2001 02 wherein we have held that the golf course is a plant and not a building. For the same reasons given therein, we dismiss the ground number 6 of the appeal of the AO. 61. In view of this appeal number 4721/del/2009 for assessment year 2005 06 preferred by the learned assessing officer is dismissed. Penalty appeals u/s 271 (1) (c) for A Y 2005-06 Assessee and AO 62. For assessment year 2005 06, the penalty proceedings were initiated by the learned assessing officer u/s 271 (1) (C) of the act on completion of the assessment proceedings as well as before the first appellate authority. The learned AO levied the penalty u/s 271 (1) ( c) of the act as per the order dated 14/3/2011 of INR 1 28005767/ on several additions made by the learned assessing officer as under:- a. provision no longer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f addition of provision written back by the appellant amounting to ₹ 20,41,449 out of total provision of ₹ 84,16,051 for alleged furnishing of inaccurate particulars of income. 2.1 That the CIT(A) has failed to appreciate that the claim made by the appellant was a bonafide claim, which is clearly evident form the fact that: (a) out of total provision of Rs.'84,16,051, provision of ₹ 63,74,602 was allowed by the CIT(A), and (b) the provision of ₹ 20.41,449 was sustained only due to non-availability of old records. 2.2 That the CIT (A) erred in holding that the appellant filed to prove the genuineness of its claim in respect of ₹ 20,41.449. 3. That the CIT(A) has erred on facts and in law in confirming the penalty imposed without appreciating that the appellant has been consistently incurring huge losses and has not been able to claim the set off of the said losses even till date, which clearly establishes the bonafide of the appellant. 67. The brief fact shows that the learned assessing officer levied the penalty of INR 128010000/ on all the additions made in the case of the assessee for assessment year 2005 06, the learned CIT A on the issue of a. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance, which is supported by the several judicial precedents. It was further stated that it is a bona fide claim and therefore penalty should not be levied. However the learned CIT A confirmed the penalty vide para number 6.2 of his order as he held that the default on the part of the assessee in not disclosing full particulars was attributable to reasonable clause. 70. With respect to the taxability of sum of INR 2 041449/ u/s 41 (1) (a) of the act which was claimed to be because of the non availability of the documentary evidences, it was submitted that the above sum was part of the liabilities returned back and the provision is no longer required of INR 8 752240/ . The learned assessing officer disallowed the same whereas the learned CIT A upheld the disallowance of INR 2 041449/ holding that the balance sum of INR 6 374602/ was already disallowed by the assessee in the earlier assessment year and therefore the provisions of section 41 of the income tax act does not apply. Thus disallowance of INR 2 041449 was upheld. The same was also upheld by the coordinate bench. Therefore the levy of the penalty was contested before the learned CIT AO in para number 7.1 of his o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-statutory notice, which has been referred by the learned authorised representative. 76. We have carefully considered the rival contention and perused the orders of the lower authorities. We have also carefully considered the notice issued by the learned assessing officer, which is placed at page number 64 of the paper book wherein none of the twin charges have been struck off by the learned assessing officer in notice dated 18/05/2007. Therefore, the issue squarely covered in favour of the assessee by the decision of the Karnataka High Court against which the special petition has been dismissed in 242 taxman 180 by the honourable Supreme Court. Further recently the honourable Delhi High Court in [ITA number 475/2019 dated 2/8/2019] as per paragraph number 21 of that order has also upheld the view of the coordinate bench that notice issued by the learned assessing officer would be bad in Law if it did not specify under which limb of section 271 (1) (c), penalty proceedings had been initiated. In view of this, we allow the ground number 4 of the appeal of the assessee and direct the learned AO to delete the penalty u/s 271 (1) (c) of the act. 77. Accordingly we allow ITA number 456 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable income of the assessee. On appeal before the learned CIT A, he confirmed the addition of INR 3 648552/ holding that membership fees on refundable security deposit received by the assessee during the assessment year 2007 08 is income of the assessee. Therefore, the assessee is aggrieved with the order of the learned CIT A has preferred this appeal. The assessee has raised the following grounds of appeal in ITA No. 653/Del/2011 for the Assessment Year 2007-08:- 1. That the CIT(A) erred on facts and in law in confirming the addition of ₹ 36,48,552 on account of membership fees and refundable security deposit received during the assessment year 2007-08. 1.1 That the CIT(A) erred on facts and in law in confirming the action of the assessing officer without appreciating that ₹ 33,81,750 was received as advance membership fees and was offered for tax on mercantile basis by the appellant in the subsequent year(s) to which the same relates. 1.2 That the CIT(A) failed to appreciate that the ₹ 2,66,762 was amount received on account of refundable security deposit owed by the appellant to its individual members and the same could not, therefore, be regarded as taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 3,65,667, was received on account of refundable security deposit owed by the appellant to its members and the same could not, therefore, be regarded as taxable income of the appellant. 1.3 That the CIT(A) erred in not adjudicating the alternative ground taken by the appellant to the effect that the assessing officer having assessed membership fees in the earlier assessment years, ought to have excluded the very same amount from the taxable income of the appellant for the year under appeal. 86. Identical issue has been dealt with by us in the appeal of the assessee for assessment year 2005 06 wherein we have held that membership fees received in advance by the assessee is chargeable to tax on the accrual basis to which it pertains to and the non-refundable security deposit received by the assessee is a capital receipt not chargeable to tax as income in the hands of the assessee. This is decided as per ground number 2 and 3 of the appeal of the assessee for that year. Both the parties confirmed that there is no change in the facts and circumstances of the case. Therefore, for the similar reasons we also hold that membership fees received in advance by the assessee is not an income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) erred on facts and in law in upholding the action of assessing officer in making an addition of ₹ 56,78,661/- on account of security deposits and membership fees received during the relevant assessment year. 1.1 That the CIT(A) erred on facts and in law in not appreciating that the amount received on account of refundable security deposit was amount owed to the members and the same could not, therefore, be regarded as taxable income of the appellant. 1.2 Without prejudice, the CIT(A) erred on facts and in law not excluding membership fees already taxed in assessment for the earlier year(s) from the taxable income of the appellant for the year under consideration. 92. Identical issue has been dealt with by us in the appeal of the assessee for assessment year 2005 06 wherein we have held that membership fees received in advance by the assessee is chargeable to tax on the accrual basis to which it pertains to and the non-refundable security deposit received by the assessee is a capital receipt not chargeable to tax as income in the hands of the assessee. This is decided as per ground number 2 and 3 of the appeal of the assessee for that year. Both the parties confirmed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment Year 2012-13 97. The assessee has raised the following grounds of appeal in ITA No. 138/Del/2016 for the Assessment Year 2012-13:- 1. That the CIT (A) erred on facts and in law in upholding the action of assessing officer in making an addition of ₹ 16,10,000/- on account of security deposits received from members during the relevant assessment year. 1.1 That the CIT(A) erred on facts and in law in not appreciating that the amount received on account of refundable security deposit was amount owed to the members and the same could not, therefore, be regarded as taxable income of the appellant. 98. Identical issue has been dealt with by us in the appeal of the assessee for assessment year 2005 06 wherein we have held that membership fees received in advance by the assessee is chargeable to tax on the accrual basis to which it pertains to and the non-refundable security deposit received by the assessee is a capital receipt not chargeable to tax as income in the hands of the assessee. This is decided as per ground number 2 and 3 of the appeal of the assessee for that year. Both the parties confirmed that there is no change in the facts and circumstances of the case. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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