Commissioner Of Income Tax 24-Versus-M/S Sportsfiled Amusements v. And A. A. Sayed, Jj

sbw *1* IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1388 OF 2012 Commissioner of Income Tax 24-Versus-M/s Sportsfiled Amusements ..Appellant ..Respondent ........... Mr. Arvind Pinto for the Appellant.Mr. F. V. Irani with Mr. A.K. Jasani for the Respondent. ........... CORAM: S.C. DHARMADHIKARI AND A. A. SAYED, JJ. DATE :- 7[th] NOVEMBER, 2014 P.C.: In challenging the order passed by the Income Tax Appellate Tribunal, Mumbai Bench, rendered in Income Tax Appeal No.3980/Mum/2007 for assessment year 2003-04 dated 16[th] March, 2012, the Revenue raised two questions of law and terms them as substantial. 2]The first relates to the non-refundable fees collected from members, namely, questions at para 6.3 and 6.4. Those are in relation to income by way of non-refundable deposits collected from members. The Revenue would urge that the Tribunal has failed to note that there is no 1/5 *2* 909.itxa1388.12 liability to refund these deposits. Therefore, they could not have been allowed to be spread over or income spread over, as in the manner done and following its Special Bench decision in the case of Mahindra Holidays. The finding of the Tribunal, therefore, and relying upon the order of the Special Bench of Income Tax Appellate Tribunal, Chennai, in the case of Mahindra Holidays (Income Tax Appeal Nos.2412 to 2416/Mds/2005 dated 26[th] May, 2010) would raise these substantial questions of law. 3]The other question and which is said to be arising from the very order is formulated at para 6.1, 6.2. 4]Mr. Pinto appearing on behalf of the Revenue in support of this Appeal submits that if the deposit is non-refundable and the same has been forfeited completely after its receipt in a given year, then, the spread over of that income was impermissible in law. In so far as the question at 6.1, 6.2, the Tribunal should not have allowed the deduction when the Assessee firm was not a party to the consent terms in the High Court Suit. Similarly, the deduction of the arrears of rent or dues of the premises and equipment could not have been permitted in the absence of a lease document and specifically executed in favour of the Assessee firm. 5]Mr. Irani appearing on behalf of the Assessee on the other hand, would submit that none of the findings on both set of questions can be termed as perverse or vitiated by any error of law apparent on the face of the record. Once the admitted facts are noticed by the Tribunal in taking the view, then, the order of the Tribunal cannot be termed as perverse. The Tribunal has not rendered any conclusions and which would give rise to any substantial question of law. It has merely applied the settled principles to the admitted facts. Therefore, the Appeal be dismissed. 6]With the assistance of Mr. Pinto and Mr. Irani, we have perused the relevant part of the Appeal paper book including the Tribunal order, we have found that the admitted facts are noted at page 26 and 27 of the statement of facts, forming part of the memorandum of Appeal before the Commissioner of Income Tax (Appeals). 7]If the admitted facts are that there was a partnership constituted in 1991 between two groups, one of which brought in as its share, the lease hold rights in the premises/immovable property and the other shared benefits of the lease and agreed to share the burden, then, merely because a suit was filed by the landlord Indo French Time Industries Ltd. against one of the partners and which resulted in a compromise between them and with a liability to pay a specified sum, that specified sum having been paid, the deduction could have been claimed by the Assessee. The 7]If the admitted facts are that there was a partnership constituted in 1991 between two groups, one of which brought in as its share, the lease hold rights in the premises/immovable property and the other shared benefits of the lease and agreed to share the burden, then, merely because a suit was filed by the landlord Indo French Time Industries Ltd. against one of the partners and which resulted in a compromise between them and with a liability to pay a specified sum, that specified sum having been paid, the deduction could have been claimed by the Assessee. The deduction, therefore, was claimed on the understanding that it also had to bear the burden and not just enjoy the benefit. The leasehold rights were, then, forming part of the assets of the firm. Those having been terminated resulting in legal proceedings only against one of the partners does not mean that the payment having been made by the firm that the deduction was not liable to be allowed. It is this understanding of the Tribunal and which enabled it to reverse the order passed by the Assessing Officer and the Commissioner. The reasoning in para 9 at running page 54 to 56 in the order of the Tribunal, therefore, is totally based on this admitted factual position. The conclusion reached that the deduction was allowable is, thus, not perverse nor it can be termed as vitiated by any error of law apparent on the face of the record. 8]Even in relation to non-refundable membership what the Tribunal has noted is that the membership deposit from club members is operational for a period of 10 years with a rider that the liability attached to pay the membership fee was for 10 years. In relation to such a stipulation that the Tribunal holds that the deposits were spread over for a period of 10 years from their recognition as income. The Tribunal in relation to that relied upon a similar view taken by its Special Bench. We do not think that in following that ratio and applying it to the facts and *5* 909.itxa1388.12 circumstances which are identical to the present Assessee’s case, the Tribunal acted perversely. The larger question or wider controversy need not be gone into simply because the view taken by the Tribunal can be said to be a possible and plausible one. When it is taken in peculiar facts and circumstances and identical to another Assessee, then, equally two remaining questions (6.3 and 6.4) cannot be termed as substantial questions of law. The Appeal, therefore, fails and is dismissed. No costs. (A. A. SAYED, J.) (S.C. DHARMADHIKARI, J.) wadhwa 5/5