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2013 (12) TMI 302 - AT - Income TaxApplicability of principle of mutuality – The assessee is a sports club registered under section 12A – The facilities provided by the club are for its members only - The banquet hall/ground are given only to the members of the club and their families - Only the members or their families and guests are allowed to participate in the club activities - Some professionals/contractors are engaged in organising the club activities from whom the club derives royalty/commission at fixed rate 20 per cent on total receipts - Held that:- Following CIT v. Bankipur Club Ltd. [1997 (5) TMI 392 - SUPREME Court] - the receipts for the various facilities extended by the clubs to its members, as part of the usual privileges, advantages and conveniences, attached to the membership of the club, could not be said to be 'a trading activity'. The surplus-excess of receipts over the expenditure as a result of mutual arrangement, could not be said to be 'income' for the purpose of the Act" – Decided against Revenue. Applicability of section 11 to 13 – Held that:- Following Chembur Gymkhana [2009 (8) TMI 839 - ITAT MUMBAI] - The appellant is holding a valid registration under section 12A - None of the terms of the registration is violated – The assessee is entitled for exemption in respect of donation, annual subscription and entrance fees from the members under the provisions of sections 11 to 13 subject to compliance of other requirements – Decided against Revenue. Disallowance of provision for expenses – The assessee has made provision of Rs.77,209/- for payment of expenses – Held that:- The provision was made on the basis of actual liability and not on the estimation of unascertained liability – The assessee has also produced the ledger accounts and vouchers clearly showing that the expenses of Rs. 74,509/- has actually been paid in next month – Disallowance was restricted to Rs. 2700 - Decided against Revenue.
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