TaxTMI 
TaxTMI 
2017 (9) TMI 725
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.... Membership Fee received to the tune of Rs. 9,73,800/- to the income of the Trust by treating the same as revenue receipt. 2. The Ld. CIT(A) has erred in confirming the action of A.O of adding Life Membership Fee of Rs. 9,73,800/- to the income of the Trust on the ground that the same is not corpus donations u/s 11 (1 )(d) as no documentary proof was submitted which was never asked for. 3. The Ld. CIT(A) has erred in confirming the action of A.O of adding Life Membership Fee of Rs. 9,73,800/- to the income of the Trust on the ground that justification about the non-applicability of Bombay high Court decision in the case of WIAA Club to the present case was not given though the same was never asked for. 3. Briefly the fa....
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.... (1) Life membership of Rs. 9,73,800/- received by the assessee is not corpus /Earmarked fund as the same is not voluntarily contribution for specific purpose which the assessee trust can claim exemption u/s.11(1)(d) of the Act. (2) Life membership is the tees charged by the trust and members get for future benefits, cannot be considered as voluntarily contribution for specific purpose. (3) Reliance is placed in the case of WJ.A.A Club Ltd v/s CIT {1979} 2 Taxman 57 (Bom), the Hon"ble Bombay High Court held that "it would be seen that the lump sum payment of Rs. 2,500/- in the case of life membership has two elements in it. A part is entrance fee and the other part is consolidated commuted payment in lieu of annual s....
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....on of Bombay HC in the case of W1AA Club has been quoted by the A.O, wherein part of life membership fee has been treated as revenue and a Dart of it is of capital nature. The accounting system followed by the appellant: trust has already taken care of the theory discussed in the said decision. iii. Appellant also submitted that, for earlier assessment year i.e. A.Y. 2011- 12, there was increase of Rs. 5,38,000/- towards life membership fund which was not routed through Income & Expenditure account. Despite this fact, no addition towards life membership fees was made in the assessment completed under 143(3) for the said year. Thus, the method consistently adopted by the appellant is accepted by the department. It is worth noting th....
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....in the case of M. M. Ipoh & Ors vs. CIT(SC) 67 ITR 106 Hon'ble Apex court has observed that res judicata is not applicable as each assessment year is a separate proceeding. Similar observations were made by Hon'ble Supreme Court in the case of New jehangir Vakil Mills Co Ltd Vs CIT(SC) 49 ITR 137, and Bharat Sanchar Nigam Ltd & Anr. Vs Union of India & Ors (SC) 282 ITK 273. Further in the case of CIT Vs Seshasayee Industries Ltd. (Madras) 242 2TR 691, it was held by the Hon'ble Madras High Court that the fact that if claim was not questioned in earlier years does not entitle the assessee to contend that the law would not be applied during the course of assessment year. Further, in the case under consideration, legal issue as reg....
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....eld that due regard to be given to the maintenance of uniformity. He further referred to couple of ITAT decision in favour of treating life membership fee as capital receipt. Ld. Counsel referred to the following case laws: 1. Radhasoami Satsang v. CIT [1992] 193 ITR 321 (SC) 2. CIT vs. Gopal Purohit in ITA No.1121 of 2009 dated 6.1.2010 3. Indian Society of Anaesthesiologists vs. ITO [2014] 47 taxmann.com 183 (Chennai - Trib.) 4. Janata Trust vs. ITO [1986] 16 ITD 147 (Bom) 9. Per Contra, the learned Departmental Representative (DR) submitted that the authorities below have decided the issue against the assessee by referring to and following a Hon'ble jurisdictional High Court decision which is ge....
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....solidation of a revenue receipt, and is taxable as income". 11. A reading of the above makes it clear that the lump sum payment was dissected into two parts. One being entrance fee and other part commuted payment in liew of annual subscriptions. It was expounded that the element of entrance fee was to maintain parity with ordinary members, and the same was of return for investing the right of membership and hence it was the capital receipt, the other element was the consolidation of the revenue receipt and hence taxable. From this it follows that treatment of life membership fee depends upon its objective/attribution. 12. Now I examine the present case on the touchstone of above said case law. I find that the assessee has made submiss....