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TMI Blog2015 (11) TMI 1810X X X X Extracts X X X X X X X X Extracts X X X X ..... life members of the club for 25 years. During search, the Managing Director Shri Apurva Parikh in the statement recorded on 24.01.2007, under section 132(4) of the Act had admitted that such receipts from AY 2003-04 to 2007-09 aggregating to Rs. 5,43,73,232/- were revenue receipts and not capital, as claimed in the return so filed. It was also admitted that the decision in the case of Diners Business Services Pvt Ltd was not applicable to the facts of the case. Accordingly, he offered additional income to the extent of 1/25th of receipts pertaining to such years and also offered to pay the taxes due. But the said statement was later on retracted by him stating that this claim for exemption of one time membership fees was based on the Bombay High Court judgment in the case of Diner's Business Services, Pvt. Ltd. (supra) wherein the High court has held that entrance fees received from the members as capital receipt and hence, was not chargeable to tax. The Assessing Officer, however, rejected the contentions of the assessee by observing that the facts obtaining in the Diners Business Services Pvt. Ltd. and the assessee's case were different. In the latter, the membership fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court is directly applicable to its case. The amount received by the assessee as one time entrance fee is in entirety the amount paid for vesting right of membership in the members and to acquire right to avail of the services and facilities extended by the club. The member by making this payment is not entitled to enjoy the facilities and amenities provided by the club but is only entitled to the right of membership in the club which the court has categorically held that such a receipt is in the nature of capital receipt. It was further contended that assessee club charges its members (after they have been elected as members) an annual subscription fees to be entitled to avail of the services. These fees are considered as revenue receipt and subjected to tax. The members of the appellant club would be entitled to enjoy the benefits of the facilities of the club only upon separate payment of the same. It is further contented that the finding of the Assessing Officer that in the case of the assessee the payment of the entrance fees is not a one time payment and is required to be paid every 25th year has no relevance with regard to deciding whether the said fees are taxable as c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of law requiring legal interpretation and understanding of the decision of the court. At the time of the search proceedings, a person cannot be in a position to make a correct or a conscious discourse in the statement, especially if the issue involved was matter of legal interpretation. In this connection, reliance was placed on the decision in the case of Kailashben Manharlal Chosksi v. CIT [(2008) 174 Taxman 466 (Guj)] wherein a similar issue was involved and the assessee who had made a disclosure in the statement under section 132(4) retracted the statement after a period of two months. The court held such a retraction to be valid and held that the addition made was not justified. It has also relied upon Circular bearing F.No 286/2/2003/1T (Inv) issued by the Central Board of Direct tax dated March 10, 2003 where the Board has clarified that where there are confessions made which are subsequently retracted, if such confessions are not based on credible evidence, such confession during the search operations do not serve any useful purpose. Without prejudice to such contentions, it was further submitted that even assuming that the retraction is not valid, an item which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for deleting the addition of Rs. 50 lakhs made by the AO on account of payment made by assessee company to Shri Sujan Parik. 10. Rival contentions have been heard and record perused. Facts in brief are that certain loose papers were found at assessee's premises on the basis of which the AO inferred that assessee had given Rs. 50 lakhs to Sujan Parikh group. Accordingly same was added in asessee's income. The contention of assessee was that this amount was already included in the total payment of Rs. 19.02 cr. made by the assessee to Sujan A. Parikh Group for buying back his group's shares by the assessee and there was no separate unaccounted payment and accordingly, no disallowance was called for. According to the assessment order, certain loose papers as per Sr.No 90 to 92 of Annexure A-1 seized from the premises at Asian House, 2nd (Floor, R Kamani Marg, Ballard Estate, being the office of NPIL was a copy of letter dated 15.1.2007 from Wadia Ghandy & Co., the solicitors of the ANP (Apurva) Group addressed to the Solicitors of SAP (Sujan) group in which it was mentioned that Sujan Parikh had been paid a sum of Rs. 50 lakh on the condition that he and his chartered accountant wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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