Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 1262 - AT - Income TaxValidity of reassessment proceedings - fresh tangible information - Change of opinion - HELD THAT:- It cannot be said that there is any tangible information which came into possession of the Assessing Officer enabling him to form an opinion that the income had escaped assessment. Thus very factual premises on which the reassessment proceedings were initiated is mistaken of acts. Therefore, in such circumstances, the reassessment proceedings cannot be said to be validly assumed as held in the recent judgement of the Hon’ble Bombay High Court in the case of Raimaladitya Textile Pvt. Ltd. [2022 (3) TMI 1414 - BOMBAY HIGH COURT] held mistake certainly not to be reason to believe that income escaped assessment. Further, in the absence of any tangible material, it cannot be said that there exist the reasons to believe that the income chargeable to tax had escaped assessment. Thus, it is settled position of law that the Assessing Officer had no power to revise assessment which has been concluded and no assessment can be reopened on the mere change of opinion in the case of CIT vs. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT]. Thus, we are of the considered opinion that the Assessing Officer had failed to satisfy necessary ingredients before invoking the jurisdiction u/s 147 of the Act and, therefore, the reassessment proceedings are not valid in law. Accordingly, we quash the reassessment proceedings. Expenditure at the rate of 7.5% of the interest income claimed - HELD THAT:- Admittedly, there is no specific expenditure incurred to earn the interest income. However, incurring of sum indirect expenditure cannot be ruled out. It is trite law that what can be taxed is only real income not hypothetical income, when the specific expenditure cannot be identified, it is appropriate to estimate certain amount of expenditure. We allow 7.5% of the interest income as allowable expenditure. The ratio of the decision of the Hon’ble Supreme Court in the case of Bangalore Club [2013 (1) TMI 343 - SUPREME COURT] has no application in deciding the issue of allowability of expenditure. The issue in the said decision is in relation to the taxability of interest income received from corporate members invoking the principle of mutuality, whereas, in the present case, it is a question of allowability of expenditure against the interest income, therefore, the decision of Hon’ble Supreme Court in the case of Bangalore Club (supra) has no application to the instant case. Accordingly, the ground of appeal no.3 raised by the assessee stands allowed. Certain percentage of expenditure against the receipts from the members’ guest on account of venue charges from members’ guest, dinner receipts from members’ guest, receipts from cricket ground books from members’ guest - HELD THAT:- Admittedly, this issue was squarely covered by the decision of the Hon’ble ITAT in assessee’s own case in earlier years and the decision of the Hon’ble Supreme Court in the case of Bangalore club [2013 (1) TMI 343 - SUPREME COURT] have no application, inasmuch as, the issue before the Hon’ble Supreme Court in the said case relates to the taxability of the interest earned on FDs from the corporate members on the principle of mutuality. Admittedly, in the present case, the assessee club has not sought exemption of income earned from the above activities but only sought the deduction of expenditure as certain percentage of the receipts. It was rightly allowed by the ld. CIT(A) following the decision of the Hon’ble ITAT in assessee’s own case in earlier years. Therefore, we do not find any merit in the grounds of appeal raised by the Revenue Nature of receipts - entrance fees received from the corporate members, NRI receipts - revenue or capital receipts - HELD THAT:- Whether the entrance fee is as revenue account or capital account is no more res-integra as the issue was decided by the Hon’ble Bombay High Court in the case of CIT vs. W.I.A.A. Club Ltd. [1979 (1) TMI 5 - BOMBAY HIGH COURT] we hold that the entrance fee received from the corporate members is capital in nature and uphold the order of the ld. CIT(A). The decision relied upon by the Assessing Officer have no application to the issue. Hence, the ground of appeal no.5 and 6 raised by the Revenue stands dismissed.
|