TMI Blog2004 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision for allowing the outsider to participate in the club function and affairs except in case of guest(s) of a member, who is solely responsible for making payment on behalf of the guests. In other words, the income of the club derived from the members and/or members of their family and the surplus of the receipts is being invested and/or reserved for the benefit of the members exclusively, no amount of excess is distributed among its members. In legal parlance the element of mutuality in the affairs and dealing of the club exists. The Club provides for various facilities and amenities including space as a venue for holding social, commercial and business functions, meetings and gatherings. 2. In 1994 by the aforesaid Act various services rendered by the traders and/or organizations were subjected to tax at a particular rate. In 1997 by way of amendment of the aforesaid Act the services rendered by 'mandap keeper' providing mandap to the clients were brought under exigibility to the Service Taxes. Pursuant to the aforesaid Act the petitioner got itself registered and filed returns. It is claimed that obtaining of registration followed by filing of returns under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Registration Certificate and submitted returns. It is further stated in the affidavit that the petitioner/club is offering its immovable property other assets and facilities for use and enjoyment of the outsider in the name of the guests for consideration. The members who are bringing the invitees could not be termed as guests within the meaning as defined in the bye-laws and rules of the petitioner. It is further stated in the affidavit that when a member of the petitioner holds any social gathering in the club premises and invite large number of people to attend such gathering, no individual guest charges is paid and further register is maintained, recording each and every invitee in name of guests. 7. Therefore, going by the definition of 'client' as mentioned in the said Act and having regard to the meaning of the word 'client' as mentioned in Webster's Encyclopaedic Unabridged dictionary of English language the Members and their guests who are using the club premises as an invitee for social function and gatherings can be treated to be client. 8. Having considered contention of the petitioner as well as the respondent the point in this case is whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s transaction of commercial character, rather trading. Similarly, from the definition of 'mandap keeper' it is clear that a person allows temporary occupation of a mandap for consideration, meaning thereby temporary parting with possession to third party for consideration. Therefore, it is obvious that legislature intended this transaction must be for commercial purposes. Again words 'provided to a client' used in the definition of taxable service in the said Act necessarily presupposes that the mandap keeper must be letting out to any person on consideration. Now it has to be examined in the context of the aforesaid reading and meaning of the three definitions, whether the petitioner/club does come within the purview of the same or not. 11. Undeniably and undisputedly the petitioner club has been formed by a number of individuals and for the purpose of attaching apparently independent legal entity this body individuals have got this club registered under the West Bengal Societies Registration Act, 1961. Under the said Act this club cannot have any juristic entity rather the office-bearer of the same as provided under Section 19 of the said Act. Therefore all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the rules of the club. They were entitled to accommodation also as of right. What is paid by the members for their accommodation cannot be treated as rent and that income cannot be regarded as income from house property under the I.T. Act. 13. In the decision of Supreme Court (226 ITR 97) it has been observed considering the large number of Indian and English decisions at page 110 that - .....the receipts for the various facilities extended by the clubs to their members, as stated hereinabove, as part of the usual privileges, advantages and conveniences, attached to the membership of the club, cannot be said to be a trading activity . The surplus - excess or receipts over the expenditure - as a result of mutual arrangement, cannot be said to be income for the purpose of the Act. 14. In the case of Chelmsford Club v. Commissioner of Income Tax (243 ITR 89) the Supreme Court while following the Bankipur Club case that it is not only the surplus from the activities of the business of the club that is excluded from the levy of income-tax even the annual value of the clubhouse as contemplated in Section 22 of the Act will be out side the purview of levy of in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
