TMI Blog2015 (11) TMI 1810X X X X Extracts X X X X X X X X Extracts X X X X ..... material was brought on record by the AO to hold that ₹ 50 lakhs was paid in addition to normal consideration so determined. Accordingly, we do not find any infirmity in the order of CIT(A) for deleting the addition of ₹ 50 lakhs - Appeal of revenue is dismissed. - ITA No.2146&2147/Mum/2009 And ITA No.2283/Mum/2011, ITA No.2986/Mum/2009 - - - Dated:- 20-11-2015 - Shri R.C.Sharma, AM And Shri Sandeep Gosain, JM Assessee by: Shri Madhur Agarwal Revenue by: Shri N.P.Singh ORDER R.C.Sharma (A.M): These are the appeals filed by the assessee and revenue against the order of CIT(A), Mumbai, for the assessment years 2006-07 to 2008-09. 2. In asessee s appeal (i.e. ITA Nos.2146 2147/Mum/09 2283/Mum/11), for all the years under consideration, the common grievance relates to taxing the entrance fees collected by the assessee which was capital in nature. 3. Rival contentions have been heard and record perused. Facts in brief for the A.Y.2006-07 are that a search and seizure action u/s 132 (1) was carried out at various premises of Natwar Pareekh Group on 23.1.2007. It was found that during this year the assessee company had received ₹ 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules and regulations of the club including on expiry of the term. The entrance fee collected by the appellant is one time fee to enable the members to be admitted as a member to the club. The members by making payment of the aforesaid fees acquire the right as an ordinary member. In lieu of this payment, the member does not get any return in the form of services or amenities. The member is entitled to enjoy the facilities in the club only after he makes payment of his annual subscription fees. The appellant receives separate amount from its members towards its annual subscription fees which has been considered by the appellant as its revenue receipt liable to tax whereas one time membership fees received from the members has been treated as capital receipt following the decision of the Bombay High Court in the case of Diners Business Services Pvt. Ltd. It is further stated that in this it was held that the entrance fee received from a member by the assessee therein was a capital receipt not liable to tax. While holding that the entrance fees are not liable to tax, the High court has relied on the earlier decision in the case of CIT Vs WIAA Club Ltd [136 ITR 569] where the entrance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, therefore, these are not taxable which was accepted by the Assessing Officer in the AY 2003-04 and 2004-05. The assessee further submitted that the aforesaid judgement has been accepted by the Department and no Special Leave Petition is pending/filed against the said order before the Supreme Court. Consequently, the aforesaid judgement has become final. As per ld. AR the decision given by High Court is binding on all the appellate authorities especially where the decision is given by the jurisdictional High court. 6. In respect of the retraction of statement recorded u/s.132(4) of the Act, the ld. AR contended that statement under section 132(4) of the Act was made under utter stress and on the assertion made by the officials from the tax department that the aforesaid judgement of the Bombay High Court would not apply to the case of the assessee since the facts in both cases were different, and therefore, it would be distinguishable from the above judgement. It is contented that the disclosure was made without having the benefit of legal advise at the relevant time, not appreciating the legal consequences of a disclosure or the legal ramifications thereof and without full a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt itself. As per ld. AR the fee so received was capital in nature as per decision of Dinners Business Services Pvt. Ltd., 263 ITR 1. We found that in case of Dinners Business Services Pvt. Ltd (supra) the membership so received was for whole-life and not for specified period of time, whereas in the instant case after expiry of 25 years, member was to again pay entrance fee, therefore, facts of the instant case are distinguishable from the case of Dinners Business Services Pvt. Ltd (supra). In case where onetime membership is received for a specified period of time, the issue has been dealt by the ITAT Special Bench in the case of Club Mahindra Holidays, 40 DTR 1, wherein after considering the decision of Hon ble Supreme Court in the case of E.D.Sasoon, 26 ITR 27, Madras Industrial Corporation Ltd., 225 ITR 802, Calcutta Co. Ltd. 37 ITR 1 and in the case of Rotork Controls India Pvt. Ltd., 314 ITR 62, it was held that membership fee received for 33/25 years was liable to spread over the period of time for which such fee is received. Respectfully following the same, we direct the AO to tax 1/25th share of fee in each year, rather than taxing the entire sum in the year of receipt it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal. The AO has been allowed opportunity in terms of rule 46A also. He has not found any infirmity in the confirmation of the recipient nor in the contentions of the appellant in the matter. The addition has been made purely on presumptions and surmises. Accordingly, it is held that there is no justification for the said addition which is accordingly deleted. 12. We have considered rival contentions, carefully gone through the orders of the authorities below and found that a categorical finding has been recorded by the CIT(A) to the effect that no additional amount was paid, the amount so paid was part and parcel of the total consideration paid to Shri Sujan Parikh. From the record we found that Mr. Sujan Parikh has received the consideration for transfer of shares of NPCL in direct proportion of the market value of the properties held by NPCL in the month of April 2006. There was no mention of any additional amount of ₹ 50 lakh. There was no other mention anywhere in the correspondence exchanged for family settlement which indicated that Mr. Sujan Parikh was paid ₹ 50 lakh extra over and above the consideration paid for sale of shares in the group companies. ..... 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