MUMBAI Vs. WILLINGDON SPORTS CLUB

JUDGEMENT

(1.) REVENUE has preferred this appeal on the following substantial questions of law:

(2.) IN an appeal preferred by the Assessee, the commissioner (Appeals) noting the two distinct kind of members, held that the first category of members who were not allowed to vote during the general body meeting were also not eligible to participate or share in the surplus of the club on its winding up and relying on the judgment of this court in CIT Vs. WIAA Club Ltd. Mumbai, 136 ITR 159 held that entrance fees and commutation of fees both has to be taken as revenue receipt dismissed the appeals. In regard to income from house property held the principle of mutality will not apply and that annual letting value would be taxable. as such the principle of mutuality does not apply and the surplus is subject to income tax. The matter was referred to the A. O. for fresh asesssment de novo.

(3.) THE Assessee aggrieved by the order of 27. 03. 1997 of the Commissioner (Appeals) filed an appeal before the I. T. A. T. I. T. A. T. by its order dated 24. 6. 2004 partly allowed the appeal filed by the Assesseee. In so far as income from house property, I. T. A. T. relied on the judgment of the supreme Court in Chelmsford Club Vs. C. I. T. (2000)243 ITR 89 holding that the annual letting value of the club was not assessable to income tax under the head "income from house property". The tribunal in its order recorded a finding of fact that as per the objective of the club, it was not formed for the purpose of earning profit or for the purposes of earning profit or for the purposes of trading with the members and making a profit. In the matter of entrance fees and commutation fees the learned tribunal held that the entrance fees received by the assesses is capital receipt not chargeable to tax in view of the decision in the case of CIT Vs. WIAA club Ltd. 136 ITR 569 which has been followed by this court in CIT Vs. Diners Business Services Pvt. Ltd. (2003) 263 ITR 139. The appeal preferred by the Assessee was therefore, allowed and hence, the question is framed.