Pr. Commissioner Of Income Tax -1 v. The Cricket Club Of India

(Private Secretary) IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J. INCOME TAX APPEAL NO. 653 OF 2017 Pr. Commissioner of Income Tax -1 Versus ..Appellant The Cricket Club of India ..Respondent ................... Mr. Suresh Kumar a/w Ms. Swapna Gokhale & Ms. SumandeviYadav for the AppellantMr. Suresh Kumar a/w Ms. Swapna Gokhale & Ms. SumandeviYadav for the Appellant Mr. R. Murlidharan i/by Mr. Atul Jasani for the Respondent ...................Mr. R. Murlidharan i/by Mr. Atul Jasani for the Respondent ................... CORAM : AKIL KURESHI & S.J. KATHAWALLA, JJ. DATE : JUNE 6, 2019. P.C.: 1.The Revenue is in the appeal against the judgment of the Income Tax Appellate Tribunal, Mumbai (“the Tribunal”for short) dated 21.3.2016. 2.The following questions are presented for ourconsideration:- (i) Whether on the facts and circumstances of the case and inlaw, the Tribunal was correct in deleting the disallowance ofRs. 71,83,168/- u/S. 14A, confirmed by the CIT(A) and holdingthat the Assessing Officer should examine the matter on thisissue on the assessee's point of view?law, the Tribunal was correct in deleting the disallowance ofRs. 71,83,168/- u/S. 14A, confirmed by the CIT(A) and holdingthat the Assessing Officer should examine the matter on thisissue on the assessee's point of view? (ii) Whether on the facts and circumstance of the case and in law,the Tribunal was correct in deleting the disallowance of Rs.7,98,051/- made on account of water charges paid to BMC,and not upholding the order of CIT(A) confirming the saiddisallowance, on the ground that the said expenditure wasallowable u/S. 23(1) being incurred for conducting specificevent?the Tribunal was correct in deleting the disallowance of Rs.7,98,051/- made on account of water charges paid to BMC,and not upholding the order of CIT(A) confirming the saiddisallowance, on the ground that the said expenditure wasallowable u/S. 23(1) being incurred for conducting specificevent? (iii) Whether on the facts and circumstances of the case and inlaw, the Tribunal was correct in upholding the order of CIT(A)in deleting the addition of Rs. 9,20,825/- made on account ofclub share income of assessee from caterer, on the groundthat the same was exempt under principle of mutuality? law, the Tribunal was correct in upholding the order of CIT(A)in deleting the addition of Rs. 9,20,825/- made on account ofclub share income of assessee from caterer, on the groundthat the same was exempt under principle of mutuality? 3. Question No. (i) pertains to disallowance under Section14A of the Income Tax Act, 1961 ("the Act" for short). TheTribunal has merely remanded the issue before theAssessing Officer for fresh consideration. We do not find anyerror. This question is, therefore, not entertained. 4.Question No. (ii) pertains to disallowance of sum of Rs.7.98 Lakhs claimed by way of expenditure by the assessee.The expenditure was towards water charges paid by theassessee to the Bombay Municipal Corporation in relation torented premises. The Assessing Officer was of the view that this did not form the part of the Corporation charges andtherefore was to be disallowed. Section 128A of theMaharashtra Municipal Corporation Act inter alia providesthat property tax leviable on buildings and lands under theAct shall include water tax, sewerage tax etc. Thus,statutorily water tax was a component of the property tax tobe paid to BMC. The Commissioner (Appeals) and theTribunal, therefore, committed no error in disallowing theclaim. 4.Question No. (ii) pertains to disallowance of sum of Rs.7.98 Lakhs claimed by way of expenditure by the assessee.The expenditure was towards water charges paid by theassessee to the Bombay Municipal Corporation in relation torented premises. The Assessing Officer was of the view that this did not form the part of the Corporation charges andtherefore was to be disallowed. Section 128A of theMaharashtra Municipal Corporation Act inter alia providesthat property tax leviable on buildings and lands under theAct shall include water tax, sewerage tax etc. Thus,statutorily water tax was a component of the property tax tobe paid to BMC. The Commissioner (Appeals) and theTribunal, therefore, committed no error in disallowing theclaim. 5.Last surviving question pertains to an addition of Rs.9.20 Lakhs made by the Assessing Officer on the ground thatthe said sum was received by the assessee from the catererwhose services the assessee - club had availed to providecatering services to the club members. The Commissioner ofIncome Tax, however, while deleting such disallowance cameto the conclusion that the club had collected money from themembers for food and refreshment out of which a sum of Rs.9.20 Lakhas was retained while releasing the payment infavour of the caterer. This was, thus, a sum collected fromthe members on the principle of mutuality. This amount was, therefore, not taxed. 6.It may be seen that while making payment to thecaterer from the amount collected from the members, theclub had retained a small portion to meet with itsadministrative expenses. We find no error in the view of theCommissioner as upheld by the Tribunal. 7.In the result, Income Tax Appeal is dismissed. [ S.J. KATHAWALLA, J. ] [ AKIL KURESHI, J ]