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TMI Blog2020 (5) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... n income of the assessee. As in the case of the assessee also the security deposit is refundable hence respectfully following the decision of GULMOHAR GREEN GOLF AND COUNTRY CLUB LTD.[ 2016 (12) TMI 1559 - GUJARAT HIGH COURT] 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. Accordingly, we direct the learned assessing officer to delete the addition to the extent of refundable deposit received from the members. Addition on account of security deposit and membership fees received. - ITA No. 7269 to 7271/Del/2019 - - - Dated:- 14-5-2020 - Ms Sushma Chowla, Hon Ble Vice President And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Rohit Jain, Adv., Ms. Somiya Jain, CA For the Revenue : Shri Amit Jain, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. All these three appeals filed by the assessee for three different Assessment Years related to the single issue largely and therefore, they are heard together and disposed of by this common order. 2. The lead first assessment year involved in this appeal is Assessment Year 2013-14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee in certain assessment years under section 143 (3) of the income tax act the claim of the depreciation holding the golf course as plant has been accepted by revenue and in subsequent years in assessment year 2006 - 07 to 2009 - 10 also the claim of the assessee is accepted. In fact the claim of depreciation on golf course as a plant stands accepted in assessment year 98 - 99 to assessment year 2000 - 01, 2002 - 03 and 2006 - 07 to 2009 -10. Even otherwise, coordinate bench in case of Deputy Commissioner of Income Tax vs. JP greens Ltd in ITA number 3545-3547/Del/2009 , on identical facts and circumstances considered golf course as plant and depreciation at the rate of 25% was allowed holding that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded 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 receipt but are revenue receipts and are taxable as income of the appellant. He further held that nature of such security deposit is whether refundable or non-refundable is immaterial. He further noted that though the assessee has offered the golf course membership fees of INR 3 528 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 of the assessee that subsequently such income has already been offered for taxation therefore for the year to which it pertains. Therefore, we direct the learned assessing officer to tax the above income of INR 3 5288416 as Income for the impugned assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch and respectfully following the same, we direct the ld AO to delete the addition of ₹ 1300016/- on account of security deposit and membership fees received. Accordingly, ground No. 2 of the appeal for Assessment Year 2013-14 is allowed. 11. Accordingly, appeal of the assessee for AY 2013-14 is allowed. 12. Coming to the appeal of the assessee for Assessment Year 2014-15, which involves the only issue of allowability of depreciation on golf course, which has been decided by us, as per ground No. 1 of the appeal of the assessee for Assessment Year 2013-14. Therefore, for the similar reasons, we allow only ground of appeal no 1 of appeal of the assessee for Assessment Year 2014-15. 13. Thus, the appeal of the assessee for Assessment Year 2014-15 is allowed. 14. Now, We come to the appeal of the assessee for Assessment Year 2016-17. 15. Ground No. 1 of appeal is with respect to depreciation on account of golf course. For the reason given by us, while allowing ground No. 1 of the appeal of the assessee for Assessment Year 2013-14, we direct the ld AO to allow depreciation on cost of gold course developed on the land considering the same as plant and machinery . T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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