TMI Blog2015 (11) TMI 1512X X X X Extracts X X X X X X X X Extracts X X X X ..... (2004 (9) TMI 6 - SUPREME Court ) has held that these deposits are akin to transaction of loan. They are clearly liable to be excluded from taxable income. Therefore, respectfully following the judgement of the Hon’ble Apex Court in the case of Siddheshwar Sahakari Sakhar Karkhana Ltd., we are of the considered view that the security deposits as received by the assessee-club cannot be subjected to tax - Decided in favour of assessee - I.T.A.No.2337/Ahd/2011 & I.T.A.No.2054/Ahd/2011 - - - Dated:- 30-11-2015 - SHRI KUL BHARAT, JUDICIAL MEMBER And SHRI MANISH BORAD, ACCOUNTANT MEMBER Appellant by : Shri Narendra Singh, Sr.DR Respondent by : Shri S.N. Soparkar, AR ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER : The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-. The assessee being aggrieved by the assessment order, preferred an appeal before the ld.CIT(A), who after considering the submissions of the assessee partly allowed the appeal. Aggrieved by the order of the ld.CIT(A), now both the Revenue and Assessee have filed the crossappeals before us. 4. The effective ground (i.e.ground No.1) raised by the Revenue in this appeal is against deletion of addition of ₹ 1,75,15,680/- on account of membership fee income. The ld.Sr.DR Shri Narendra Singh vehemently argued that the ld.CIT(A) was not justified in deleting the addition. He supported the orders of the AO. He supported that the assessee has been accepting security deposits from its Members. Security deposits, however, are refundable b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders of the authorities below. The Revenue has not disputed that the security deposits were refundable to the Members. It is also not in dispute that in some of the cases the assessee-club has refunded the amount. Under these facts, we are unable to accept the finding of the AO that the amount would be subjected to income-tax and would partake the income of the assessee-club. We are of the considered view that every receipt cannot be termed as income unless it is satisfies the requirement of law. In the present case, the assessee-club had received refundable non-interest bearing security deposit would remain liability for the assessee-club. Member by giving security deposit entitles himself for the concessional rate services provided by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in law and on facts in confirming the view taken by AO pursuant to the directions of Addl.CIT u/s.144A of the Act that the interest free refundable security deposits was revenue in nature. Under the facts and the circumstances of the case, the lower authorities have erred in linking the long term refundable deposits with the existence of membership and thus holding security deposits as part of the membership fees and not capital receipts claimed by the appellant. The order of CIT(A) being erroneous and passed in total disregard of explanations, submissions and various case laws relied upon by the appellant deserves to be quashed. 2. The ld.CIT(A) erred in law and on facts in considering the security deposits as the membership fees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of penalty u/s.271(1)(c) of the Act is not justified. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 12. Ground Nos.1 to 3 are inter-connected which are against the security deposits treated as income. The respective representatives of the parties have adopted the arguments as were advanced in the ground No.1 of Revenue s appeal(supra),wherein we have rejected the Revenue s appeal by observing as under:- 5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The Revenue has not disputed that the security deposits were refundable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Hon ble Apex Court in the case of Siddheshwar Sahakari Sakhar Karkhana Ltd., we are of the considered view that the security deposits as received by the assessee-club cannot be subjected to tax. Accordingly, we find no merit in this ground of the Revenue s appeal, same is rejected. 12.1 Since we have held that the refundable security cannot be subjected to Income Tax, therefore the ground Nos.1 to 3 raised in the Assessee s appeal are allowed. 13. Ground No.4 is against confirming disallowance of ₹ 2,60,570/- made by AO applying provisions of section 14A of the Act. The ld.counsel for the assessee submitted that the AO was not justified in making the addition. 13.1. On the other hand, ld.Sr.DR supported the orders o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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