TMI Blog2008 (5) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... S.V. Road, Goregaon, Mumbai, in the name and style of "Kamat Club". The AO during the course of assessment proceedings observed that the assessee has debited an amount of Rs. 5,44,968 under the head "Deferred revenue expenditure write off" in the P L a/c. In response to the query raised by the AO, the assessee explained that the firm had incurred expenditure totalling to Rs. 42,43,452 under the various heads during the finance year 1998-99 to raise refundable club membership deposits under the scheme "New KKG Club Membership" and the same was deferred and spread over a period of 10 years during which the members are eligible to avail the club facilities. Accordingly, during the year Rs. 4,24,345 being 1/l0th of Rs. 42,43,452 has been charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 992 and collected membership deposits of Rs. 1.78 crores. It incurred revenue expenditure of Rs. 14.89 lakhs and as against these expenses besides interest free refundable membership deposits, the firm also earned membership card renewal fees for the first year amounting to Rs. 1,63,250 which was credited to its P L a/c. It was explained that in accordance with the accounting principles followed, the expenses for enrolling the members were debited to deferred revenue expenditure in its books of accounts and 1/10th of the said expenses was charged as expenses of the current year. The balance unamortized deferred revenue expenditures were carried forward to the balance sheet. In the asst. yr. 1994-95 the same policy was followed. It was furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "deferred revenue expenditure" claimed by the assessee. He submitted that for other years although there was no scrutiny assessment the same were allowed in summary assessment. He accordingly submitted that the expenses which have been amortized by the assessee for a period of 10 years and which are business in nature should be allowed as deduction. 7.1 The learned Departmental Representative, on the other hand, strongly relied on the orders of the lower authorities. 8. We have considered the rival submissions made by both the sides, perused the orders of the authorities below and the paper book filed on behalf of the assessee. The genuineness of the expenditure is not disputed by the Revenue. We find that the AO in scrutiny assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a reference of the Full Bench decision of the Madras High Court wherein the fundamental reasons have been given for not deviating the stand in different assessment years. The observation extracted by the Hon'ble Supreme Court in this judgment and appearing at p. 328 of the journal reads as under: "A Full Bench of the Madras High Court considered this question in T.M.M. Sankaralinga Nadar Bros. vs. CIT (1929) 4 ITC 226 (Mad)(FB). After dealing with the contention, the Full Bench expressed the following opinion: 'The principle to be deduced from these two cases is that where the question relating to assessment does not vary with the income every year but depends on the nature of the property or any other question on which the rights o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. (2000) 245 ITR 492 (Del) found that if rental income from the factory building assessed as business income for earlier assessment years consistently and there is no material change in facts then AO is not supposed to assess such income all of a sudden as income from house property in one of the years in isolation. 10. Considering the totality of the facts of the case and considering the fact that for other years the Department has allowed the "deferred revenue expenditure" claimed by the assessee in scrutiny as well as summary assessments and relying on the decisions cited above, and following the rule of consistency we are of the considered opinion that the expenditure claimed by the assessee has to be allowed as a deduction. We ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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