INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SMT BEENA PILLAI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA Nos. Assessment Year 4536/Del/2009 2005-06 4560/Del/2011 2005-06 653/Del/2011 2007-08 4098/Del/2011 2008-09 1516/Del/2014 2009-10 4998/Del/2015 2010-11 4999/Del/2015 2011-12 Landbase India Ltd, Deputy Commissioner of Vs. 25, Basant Lok, Community Income Tax, Centre, Vasant Vihar, New Delhi Circle-4(1), PAN: AAACI0053F New Delhi (Appellant) (Respondent) ITA No. Assessment Year 5582/Del/2010 2004-05 4721/Del/2009 2005-06 Deputy Commissioner of Landbase India Ltd, Vs. Income Tax, 25, Basant Lok, Community Circle-4(1), Centre, Vasant Vihar, New Delhi New Delhi PAN: AAACI0053F Page | 1 (Appellant) (Respondent) ITA No. Assessment Year 1030/Del/2019 2001-02 1031/Del/2019 2003-04 138/Del/2016 2012-13 Landbase India Ltd, Assistant Commissioner Vs. 25, Basant Lok, Community of Income Tax Centre, Vasant Vihar, New Delhi Circle-15(1), PAN: AAACL0053F New Delhi (Appellant) (Respondent) ITA No. 4849/Del/2011 (Assessment Year: 2005-06) Assistant Commissioner of Landbase India Ltd, Vs. Income Tax, 25, Basant Lok, Community Circle-15(1), Centre, Vasant Vihar, New New Delhi Delhi PAN: AAACL0053F (Appellant) (Respondent) Assessee by : Shri Rohit Jain, Adv Ms. Tejasvi Jain, CA Ms Somya Jain, CA Revenue by: Shri J. K. Mishra, CIT DR Smt Naina Soin Kapil, Sr. DR Date of Hearing 28/05/2019 Date of pronouncement 26/08/2019 Page | 2 ORDER PER BENCH. 1. These are appeals in case of Landbase India Limited (Assessee) for AY 2001-02 to AY 2011-12 involving some common issues. These appeals were argued together and therefore they are disposed of by this common order. 2. assessee has raised following grounds of appeal in ITA No. 1030/Del/2019 for Assessment Year 2001-02 against order of Commissioner Of Income Tax (Appeals) 5, New Delhi [CIT (A)] dated 31/12/2018- 1. That CIT(A) erred on facts and circumstances of case and in law in upholding action of assessing officer in making addition of Rs. 1,37,71,043 on account of allowance of depreciation on golf- course as building as against same being considered as plant and machinery by appellant. 1.1 That CIT (A)/assessing officer erred on facts and circumstances of case and in law in not appreciating that classification of golf course could not be changed in subsequent year when claim of depreciation @ 25% on golf course as plant stood allowed/ accepted in past assessment years, i.e., 1998-99 to 2000-01 and succeeding assessment years, i.e., 2006-07 to 2009-10. 1.2 That CIT (A)/assessing officer erred on facts and circumstances of case and in law in not appreciating that classification of block of asset which has been allowed/accepted and merely carried forward from earlier years cannot be modified in current year 1.3 That CIT(A) erred on facts and circumstances of case and in law in holding that golf course has not manufactured or produced anything so as to classify it as plant and machinery . 2. Without prejudice, if golf course is treated as building , assessing officer be directed to re-compute depreciation admissible under section 32(1) (ii) of Act with reference to revised written down value of golf course in subsequent years. Page | 3 3. appellant is company engaged, inter alia, in business of running of golf course, construction of hotel and sale of merchandise. During previous year relevant to assessment year 2001-02, appellant filed return of income on 30.10.2001 declaring loss of Rs. 20,72,84,983/-. appellant derived substantial income from operating and running of golf course. Assessment was originally completed under section 143(3) of Income Tax Act, 1961 ( Act ) vide order dated 29.03.2004 assessing loss of appellant at Rs. 20,71,55,977/- after making certain disallowances. Thereafter, reassessment proceedings were initiated under section 147, vide notice dated 30.10.2006, issued under section 148, purportedly on basis of certain audit objection, which was completed vide order dated 24.12.2007 passed under section 148 r.w.s 143(3) after making further disallowances. On further appeal, Commissioner of Income-Tax(Appeals) [ CIT(A) ], vide order dated 22.05.2009, after rejecting grounds challenging validity of reassessment proceedings, was pleased to allow appeal in favour of appellant on merits. Against aforesaid order of LD CIT (A), Department preferred further appeal before Income Tax Appellate Tribunal, Delhi. appellant also challenged action of LD CIT (A) in upholding validity of reassessment proceedings. ITAT , vide order dated 15.06.2016, inter-alia, restored issue whether depreciation is admissible @25% as plant or @10% as building, to file of assessing officer for de-novo consideration and to examine details of construction on 300 acres of land converting it into golf course, which were not filed before assessing officer in first round of proceedings 4. Pursuant to aforesaid order, LD assessing officer passed order dated 29.12.2017 under section 254/148/143(3) of Act giving effect to said order of Tribunal. In said order, assessing officer, after considering entire material available on record, reiterated findings given in original assessment and allowed depreciation on golf course @ 10% by treating same as building . On further appeal against said order, ld CIT(A), vide order dated 31.12.2018 upheld order of ld assessing officer restricting depreciation on golf course @ 10%. CIT(A) held that no doubt assessee is generating revenue from players for Page | 4 playing golf and allowing its golf course, but it cannot be said that assessee has manufactured or produced anything. Thus, assessee is in appeal before us. 5. ld AR submitted that aforesaid action of assessing officer/CIT(A)in restricting depreciation to 10% is bad in law and not sustainable for reasons elaborated hereunder: a) Tribunal vide order dated 15.06.2016 merely remanded/remitted matter to AO for fresh consideration i. As stated supra, in first round of proceedings, Hon ble Tribunal restored issue whether depreciation is admissible @25% as plant or @10% as building, to file of assessing officer for de-novo consideration and to examine details of construction on 300 acres of land converting it into golf course, which were not filed before assessing officer in first round of proceedings. relevant extract of findings of Tribunal are reproduced hereunder: 45. In second part of above operative para, ld. CIT (A) held that ratio of decision of Hon'ble Supreme Court in case of CIT Vs. Anand Theatre is not applicable and then jump to conclusion that business of assessee is to invite players for playing golf and charging fee for that and thus field so prepared was business operated used by assessee for carrying on its business of playing golf. In last lines, without specifically pointing out as to whether golf course that is piece of land with many levels of undulation, holes, small ponds etc can be categorized as plant and machinery and not as building. ld. CIT (A) jumped to conclusion that assessee's claim of depreciation @ 25% is allowed which is not proper and justified approach for quasi-judicial authority. We may point out that golf course has not been categorized in schedule of depreciation and main dispute between assessee and revenue is that Page | 5 assessee is seeking to place golf course in category of plant and machinery whereas Revenue wants to treat same as building. 46. At this juncture, we may point out that we are not in agreement with conclusion drawn by ld. CIT(A) that piece of land having some landscaping for playing golf such as various level undulation, holes, small ponds etc construed super structure which can be categorized as plant and machinery. If this view is accepted then every landscaping having some special features for purpose of its intended use would become plant and machinery and every construction of building for purpose of sports would be converted into plant and machinery. It is pertinent to note that for creation of golf course, landscaping is done for in various levels and some holes, ponds and walking path is created but in our humble understanding this kind of piece of land converted into golf course by creating some specialized facilities for playing golf cannot be put in category of plant and machinery. 47. In view of above, we have no hesitation to hold that ld. CIT (A) granted relief to assessee without any basis and without arriving to conclusion as to whether golf course is plant and machinery or building. Therefore, conclusion of ld. CIT (A) is not sustainable as we are unable to see any basis for factual observations noted by ld. CIT (A) for putting golf course in category of plant. Since issue has not been adjudicated by ld. CIT(A) in proper manner, therefore, this issue is restored to file of AO for fresh adjudication after affording due opportunity of being heard to assessee and without being prejudiced from earlier orders and our observations in this order. Page | 6 48. We may also point out that to support case of AO, ld. CIT-DR has placed reliance on plethora of decisions including decision of Hon'ble Supreme Court in case of CIT Vs. Anand Theatre [supra], CIT Vs. Gwalior Rayon Silk Mfg. Mills 196 ITR 149 [SC] and decision of Hon'ble High Court of Delhi in case of Moradabad Toll Road Co. Vs. ACIT [2014] 52 Taxmann.com 21 [Delhi] to establish that golf course is not plant and machinery and it is to be categorized as building and on other hand, ld. AR has placed reliance on case of decision of Hon'ble Supreme Court in case of CIT Vs. Karnataka Power Corpn. 247 ITR 268 [SC], Scientific Engineering House P. Ltd Vs. CIT 157 ITR 86 [SC] and decision in case of Victory ITA No. 3549 & 4847/Del/2009 CO No. 328/Del/2009 & 111/2010 Aqua Farm Ltd 61 Taxmann.com 166 [SC] and plethora of decision to support case of assessee that golf course is plant and machinery and it is not building. Interestingly, no cited decision relied by both parties are related to golf course. Therefore, facts regarding this issue have to be dealt in respect to golf course of 300 acres land and how it became plant and machinery attracting 25% depreciation. AO has to examine these details to ascertain issue between parties as stated above. We also note that assessee in its written submissions before authorities below as well as before Tribunal has submitted details of construction on 300 acres of land converting it into golf course, but these details have not been submitted before AO and AO could not get opportunity to verify and examine same. Therefore, in our considered opinion, this issue requires detailed verification and examination at end of AO after affording due opportunity of hearing to assessee and without being prejudiced from earlier Page | 7 assessment and first appellate order. Needless to say that AO would examine all material facts on this issue and ITA No. 3549 & 4847/Del/2009 CO No. 328/Del/2009 & 111/2010 after considering mandate of relevant provisions of Act as well as ratio of decisions relied upon by both parties shall decide issue afresh in accordance with law. Consequently, Ground No 4 and 4.1 for A.Y 2001-02 and Ground No. 3 & 3.1 for A.Y 2003-04 of Revenue are allowed for statistical purposes by restoring same to file of AO. (Emphasis supplied) ii. He further submitted that on perusal of aforesaid, it will kindly be appreciated that Tribunal, vide para 47, merely restored issue of depreciation on golf course as plant or building to file of assessing officer for fresh adjudication. Tribunal categorically observed, .this issue is restored to file of AO for fresh adjudication after affording due opportunity of being heard to assessee and without being prejudiced from earlier orders and our observations in this order . iii. This was done considering fact that details of construction of golf course were not considered by assessing officer in first round. He submitted that Tribunal simply set-aside/ remitted issue to file of assessing officer to decide it afresh. In these circumstances, any prima-facie observation/finding recorded by Tribunal in earlier para, which was, in fact, based on limited examination of details of construction of golf-course, it is respectfully submitted, stood obliterated for all intents and purposes. He placed reliance in this regard is placed on judgment of Hon ble Supreme Court in case of Hukam Singh v. State of Haryana and Another: 2019 SCC Online SC 159, wherein Apex Court clarified similar issue and held that once matter is remanded for fresh consideration, any observation in Page | 8 judgment stands obliterated and authorities are required to consider issue afresh. In that case, review petition was filed before Hon ble Court called upon it to clarify meaning and purport of following passage from its earlier ruling in case of Haryana State Industrial Development Corporation Ltd. vs. UDAL (2013) 14 SCC 506: 32. We also find merit in argument of learned counsel for landowners that while fixing market value of acquired land learned Single Judge committed serious error by not considering important piece of evidence i.e. Ext. PW 9/A dated 23-11- 1999 vide which HSIIDC had allotted land to M/s. Honda Motorcycles and Scooters India (P) Ltd. At rate of Rs. 1254.18 per square yard. Although, this document was produced before Reference Court but same was not taken into consideration while determining amount of compensation. same error has been repeated in impugned judgment. If this document were taken into consideration, then market value of acquired land would come to Rs. 60, 69,360 per acre. By making deduction of 50% towards development cost and granting annual increase of 12/15% (cumulative), market value of land will be much higher than Rs. 37, 40,000 per acre. 33. In view of above conclusions, we do not consider it necessary to deal with other points argued by learned counsel for parties/interveners and feel that ends of justice will be served by setting aside impugned judgment and remitting matters to High Court for fresh disposal of appeals and cross- objections filed by parties subject to rider that State Government/HSIIDC shall pay balance of Rs. Page | 9 37,40,000 to landowners along with other statutory benefits. 34. In result, appeals are allowed, impugned judgment is set aside and matter is remitted to High Court for fresh disposal of appeals filed by parties under Section 54 of Act as also cross-objections. parties shall be free to urge all points in support of their respective cause and High Court shall decide matter uninfluenced by observations contained in this judgment. (Emphasis supplied) iv. He further submitted that Apex Court, while clarifying afore-extracted observations made in its earlier judgment, negated submission of applicant that in line with observations made at paragraph 32 of judgment in case of Haryana State Industrial Development Corpn (supra), market value of land ought to be higher than Rs. 37,40,000 per acre . Court held that since matter had been remitted to High Court for fresh adjudication of appeals/ cross- objections with specific direction that High Court shall not be influenced by observations made by Supreme Court, such passing observation at paragraph 32 could not be held as binding. Court observed that: 8. As regards last submission, paragraph 32 of decision in Haryana State Industrial Development Corporation Ltd.2 recorded submission of learned counsel that on basis of sale deed Ext.PW 9/A, value ought to be higher than Rs. 37,40,000/- per acre. matter was not finally decided by this Court and was remitted in paragraph 34 for fresh consideration uninfluenced by observations contained in this Page | 10 judgment . We do not agree with submission that landowners were assured of minimum compensation at level of Rs. 37,40,000/- per acre. In fact, in tune with observation that fresh consideration is uninfluenced by any of observations contained in judgment, matter was left open and assessment had to be done de novo. We, therefore, reject submission. (Emphasis supplied) v. Similarly, Hon ble Supreme Court in case of Kanaklata v. State (NCT of Delhi) and Others: 6 SCC 617, held that if order passed by court is set aside, observations and findings recorded therein also get obliterated for all intents and purposes. Court further held that in some cases, Court makes position clear by stating that any such observation shall not influence court concerned while making fresh order same to put matter beyond pale of any controversy. Court held as under: 5. We have heard learned counsel for parties at some length. It is true that trial court had while discharging accused persons under Special Act mentioned above, made certain observations about alleged misuse of provisions of said Act by unscrupulous elements and also certain suggestions for remedying that situation. It is also true that trial court had come to conclusion that there is no real basis for it to frame any charge against accused persons under said Act. But it is equally true that while setting aside that order and directing fresh order on question of charge, High Court has clearly mentioned that trial court shall remain uninfluenced by observation made in its earlier order. That observation is, in opinion of Page | 11 High Court, sufficient safeguard against any possible prejudice to complainant appellant herein making transfer of case from Court at Rohini to any other court unnecessary. 6. Now in ordinary course if order passed by court is set aside, observations and findings recorded therein also get obliterated for all intents and purposes. So also if High Court makes position clear that any such observation shall not influence court concerned while making fresh order same should ordinarily put matter beyond pale of any controversy. Having said that, there may still be situations where nature of observations made by court concerned create reasonable apprehension in mind of litigant that court has so committed itself to given approach or thought process that it may not be possible for it to retrace its steps to take fair and non-partisan view in matter 7. present appears to be one such case where despite safeguards provided by High Court's observations, apprehension of complainant continues to subsist. We do not think that such apprehension is wholly misconceived nor can it be dubbed as forum shopping in disguise. earlier order passed by trial court is so strongly worded that it could in all likelihood give rise to reasonable apprehension in mind of complainant which cannot be lightly brushed aside. We must hasten to add that we are not in least suggesting that Presiding Officer of trial court is totally incapable of adopting fair approach while passing fresh order but then question is not whether Judge is biased or incapable of rising above earlier observations made by her. question is whether apprehension of Page | 12 complainant is reasonable for us to direct transfer. Justice must not only be done but must seem to have been done. lurking suspicion in mind of complainant will leave him with brooding sense of having suffered injustice not because he had no case, but because Presiding Officer had preconceived notion about it. On that test we consider present to be case where High Court ought to have directed transfer. Inasmuch as it did not do so, we have no option but to interfere and direct transfer of case to another court . (emphasis supplied) vi. Similarly, in present case, Tribunal, he submitted, simply set-aside/ remitted issue to file of assessing officer for fresh consideration and thus, any prima-facie observation/finding recorded by Tribunal based on limited examination of details of construction of golf course, stood obliterated for all intents and purposes. Tribunal, in para 47, in fact, clarified position to put matter beyond any doubt by observing, ...without being prejudiced from earlier orders and our observations in this order . b) Classification as plant accepted in initial year(s) AO had no jurisdiction to subsequently change classification He submitted that next issue that arises in present appeal is whether amount spent on construction of golf course is to be, for purpose of depreciation, regarded as plant , as contended by appellant or as building , as contended by Revenue. It is, at outset, fundamental submission of appellant that classification and acceptance of golf course as plant in initial year(s) operates as res-judicata and binds both assessee and Revenue and consequently, assessing officer had no jurisdiction, whatsoever, to change classification in subsequent year(s), including year under Page | 13 consideration. He furthered his arguments in terms of section 32(1) (ii) of Act, depreciation is allowed on written down value of any block of assets . expression block of assets is defined in section 2(11) of Act to mean group of assets falling within class of assets in respect of which same percentage of depreciation is admissible. expression written down value is defined in section 43(6) (c) of Act to mean actual cost in year of acquisition. For every subsequent year(s), written down value at beginning of previous year, increased by actual cost of assets acquired during year and reduced by consideration received on transfer of asset during year. He submitted that under section 43(6)(c) of Act, in all subsequent year(s), subsequent to year of acquisition of asset, written down value necessarily means written down value of block at beginning of previous year, i.e., at closing of immediately earlier year. Once asset enters particular block, neither assessee nor Revenue has any mandate/ authority to subsequently, remove asset from particular block and reclassify/ re- enter same in some other block. To put it simply, once asset is classified as block of plant , then, in subsequent year, same asset cannot be classified as building or vice versa. Pertinently, block concept of depreciation was introduced by Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986 with effect from 1-4-1988. Circular No. 469 dated 23 September 1986: 162 ITR (St) 21 explained scheme of depreciation on block of assets. It was clarified that in block concept, individual identity of asset is lost, and depreciation is allowed with reference to entire block. In view of above, he submitted that depreciation is to be allowed on block of asset at specified percentage on written down value of block of asset. written down value of block of asset is value of block of asset at beginning of previous year as increased or decreased by addition or Page | 14 deletion in previous year. Hence, once asset goes into block of asset and same is allowed by assessing officer in previous year, asset loses its individual identity and become part of block. In succeeding years, assessing officer has to allow depreciation on block of asset as being brought forward. c) Golf course accepted as plant in earlier years not permissible to change block in current year He submitted that golf course, was constructed in previous year relevant to assessment year 1998-99, wherein total cost of Rs. 20,57,09,950 (excluding cost of land) was capitalized and depreciation was claimed thereon @25% under section 32(1) of Act. Further, expenditure on its improvement was incurred in subsequent assessment years and total cost of golf course amounted to Rs. 22, 57, 78,036. He referred to paper book for year-wise details refer 62-70 of Paper Book-Vol I). cost of golf course, it is submitted, comprised of various equipment and items of plant and machinery like irrigation system water tanks including water sprinklers, technical knowhow, bunkers, etc. entire cost incurred on construction of golf course was capitalized as separate block of plant and machinery and accordingly, depreciation at applicable/prescribed rate of 25% was being claimed consistently since assessment year 1998-99 onwards. Following aforesaid consistent method, appellant had, during relevant assessment year 2001-02, claimed depreciation @25% amounting to Rs. 2,42,64,813 on opening WDV written down value ( WDV ) of Rs. 8,91,80,816 and addition of Rs. 1,57,56,876 made during relevant assessment year. He referred to page 39 of Paper book-Vol I. He submitted that claim of depreciation @25% has been allowed to appellant in earlier as well subsequent assessment years, as per details tabulated hereunder: Page | 15 Assessm Return Assessment Remarks ent year filed Particulars 1998-99 28.11.199 Order u/s 143(3) 1st year, claim accepted 8 dated 19.3.2001 by assessing officer under section 143(3), as under: - Refer Tax Audit Report for A.Y. 98- 99 - Assessment order accepting return 1999-00 30.12.199 Return processed 2nd year, claim of 9 u/s 143(1) vide depreciation stood intimation dated accepted, as under: 13.11.2000 - Depreciation claimed in return - Tax Audit Report - Intimation u/s 143(1) 2000-01 28.11.200 Order u/s 143(3) 3rd year, claimed 0 dated 28.3.2003 allowed by assessing officer in regular assessment as under: - Depreciation claimed in return - Tax Audit Report Page | 16 - Assessment u/s 143(3) Reassessment proceedings subsequently initiated on different issue, were quashed by ITAT vide order dated 21.05.2015. 2001-02 30.10.200 Order u/s 143(3) 4th year of claim, 1 dated 29.3.2004 allowed originally by assessing officer. Subsequently, case was reopened and issue was set aside by Tribunal vide order dated 15.6.2016 for de- novo consideration. 2002-03 31.10.200 Return processed 5th year, claim of 2 u/s 143(1) vide depreciation stood intimation dated accepted, as under: 27.2.2003 as under: - Depreciation claimed in return - Tax Audit Report - Intimation u/s Page | 17 143(1) 2003-04 27.11.200 Order u/s 143(3) 6th year of claim. 3 dated 28.2.2006 case was re-opened and issue was set aside by Tribunal vide order dated 15.6.2016 for denovo consideration. He further submitted that , in regular assessment under section 143(3) vide order dated 29.03.2004 for assessment year 2001-02, claim of depreciation was accepted after duly considering replies dated February 2004 and 15.3.2004 filed by appellant. He submitted that vide letter filed in February 2004, appellant furnished detailed break-up of additions to golf course (refer pages 112-118 of Paper book Vol I). He referred that Vide letter dated 15th March 2004, appellant certified that no depreciation has been claimed on value of land on which golf course has been constructed (refer page 119-122 of Paper book Vol I); he also referred to Opinion dated 22.4.2002 was filed during assessment proceedings in support of claim of depreciation on golf course (refer pages 71-73 of paper book Vol I). He therefore submitted that on n perusal of aforesaid details/ documents, it will, be appreciated that assessing officer, after due application of mind and after duly considering exhaustive details/ documents furnished by appellant, agreed with claims and therefore, accepted claim of depreciation on golf course @ 25% in original assessment order. On perusal of above, it may be noted that classification and claim of depreciation @ 25% on golf course as plant stood allowed/ Page | 18 accepted in past assessment years. It was, thus, not open to assessing officer to depart from aforesaid classification and was bound to allow depreciation on golf course as plant, as claimed by appellant. d) Golf course allowed as plant in subsequent years 2006-07 to 2009- 10 He further submitted that ld CIT(A) in assessment years 2006- 07, 2007-08, 2008-09 and 2009-10, while allowing appeal of appellant on issue of depreciation on golf course, directed same to be treated as plant . Most importantly, Revenue s appeals against aforesaid orders of CIT(A) has been dismissed by Hon ble Tribunal vide separate orders dated 2.5.2016, 2.5.2016 and 1.8.2018 for assessment years 2006-07, 2008-09 and 2007-08 and 2009-10 respectively, though on ground of low tax effect [refer pages 279-286 of Paper book-Vol-II]. Be that as it may, it will thus, kindly be appreciated that order of CIT(A) for assessment years 2006-07, 2007-08, 2008-09 and 2009-10, directing golf course to be treated as plant attained finality. Thus according to him claim of depreciation on golf course as plant stands accepted in assessment years 1998-99 to 2000-01, 2002-03 and 2006-07 to 2009-10. Therefore he submitted that it is totally absurd to take different position in some of middle assessment years, more so, when that would be totally contrary to fundamental principle of depreciation being allowed on WDV of relevant block. e) He further referred to several Judicial Precedents to support his contentions. i. He first referred to decision of Delhi Bench of Tribunal in case of DCIT v. Jaypee Greens Ltd. : ITA Nos. 3545 to 3547/Del/2009, wherein on exactly similar facts, Tribunal considering golf course as plant, was pleased to allow Page | 19 depreciation @25% observing that assessing officer has himself allowed depreciation at that rate in past [refer pages 33-38 of case laws paper book]. He submitted that in that case, assessee was engaged in business of running and operating golf course in Greater Noida on which assessee claimed depreciation @ 25%. assessing officer held that golf course and also hospitality services is not covered in block of 'plant', but it is covered in asset 'building' which is used by hotels for hospitality services on which depreciation @20% is allowable. Hence, assessing officer rejected assessee's claim of depreciation @25% for assessment year 2002-03 and 2003-04 and substituted it for 20%. For assessment year 2005-06, AO allowed depreciation applicable for cost of building @10% and rejected claim of @25%. On further appeal, CIT(A) decided issue in favour of assessee holding as under: "2.3 .Rival contentions have carefully been considered. ... second question arises is if Golf Course in itself can be treated as 'plant' or not. In this regard, I agree with ld. AR of appellant that Golf course is specialized superstructure constructed on land with various levels of undulation, hotels, small ponds, etc., which have been created as per rules of game of Golf. It is certainly specialized professional requirement for playing Golf on piece of land. Therefore, cost of creating such technical requirement will certainly make field of Golf Course as 'plant' only. Although various courts citations relied upon by ld., ARs of appellant are not directly applicable to facts of case but there is oblique reference for considering Golf Course as 'plant' only. It is also appreciated that Golf Course in Page | 20 appellant's own case has been treated as 'plant' in assessment year 2001-02 also by Assessing Officer himself. It has also come to my notice that issue of treating Golf course as 'plant' has not been disputed in most of cases which are doing business of running Golf Course. As far as reliance on various courts' citations made by Assessing Officer is concerned, I find that they are not applicable because of messed up facts of case. In totality of all facts and circumstances, I am of view that claim of appellant for providing depreciation @25% on Golf Course is in order. Appellant's succeed on this ground of appeal." (Emphasis supplied) On further appeal by Revenue, Tribunal held as under: 2.5 We have heard both counsels and perused records. AO in this case has treated Golf Course akin to hotel building and allowed 20% depreciation for A.Y. 2002-03 and 2003-04. For A.Y. 2005-06 he has allowed depreciation as applicable to building @10%. It is settled law that Tribunal cannot take away relief that AO has given. Now further we find that on same set of facts in assessee's own case, impugned asset was treated as plant for A.Y. 2001-02 by AO himself and depreciation @25% was allowed. assessment was done u/s 143(3) of IT Act. In present case, we do not find any change in circumstances of case facts or law. Under circumstances, we refer to Hon'ble Jurisdictional High Page | 21 Court decision in case CIT vs. Dalmia Promoters Developers (P) Ltd. 281 ITR 346 wherein it was held that when there is absence of any material change in facts and law, view taken for earlier year cannot be disturbed. In present case, we find that no such material change has been brought out before us. Since depreciation @25% on said asset has been allowed for A.Y. 2001-02, we do not see any reason to disturb rate to 20% as applied by AO. Accordingly, we uphold order of ld. CIT(A) to allow depreciation @25%. 2.6 In result, all revenue's appeals are dismissed. (Emphasis supplied) ii. He further placed reliance in this regard on decision of Delhi Bench of Tribunal in case of ACIT v. CLC Global Ltd. : ITA No. 2288/Del/2008, wherein it has been held that once assessing officer has, on exactly similar facts, allowed depreciation on goodwill in immediately preceding year, there is no reason to take different stand for succeeding year and to disallow depreciation claimed [refer pages 39-46 of case laws paper book]. f) It is further respectfully submitted that though principles of res judicata are not applicable to income tax proceedings, it does not mean that it is open for assessing officer to come to different conclusion on similar facts and circumstances. He relied up on Radhasoami Satsang vs. CIT: 193 ITR 321 CIT vs. Neo Polypack (P) Ltd: 245 ITR 492, CIT vs Excel Industries Ltd.: 358 ITR 295 (SC) , DIT (E) V. Apparel Export Promotion Council: 244 ITR 734 (Del), CIT V. Dalmial Promoters Developers (P) Ltd: 281 ITR 346 (Del.), DIT(E) v. Escorts Cardiac Diseases Hospital: 300 ITR 75 (Del.) CIT V. Girish. Page | 22 Mohan Ganeriwala: 260 ITR 417 (P&H) CIT vs. Sewa Bharti Haryana Pradesh: 325 ITR 599 (P&H) CIT vs. P. Khrishna Warrier: 208 ITR 823 (Ker) CIT vs. Harishchandra Gupta 132 ITR 799 (Ori) g) In view of aforesaid, it is submitted that classification and acceptance of golf course as plant in initial year(s) operates as res-judicata and binds both assessee and Revenue. In these circumstances, assessing officer had no jurisdiction, whatsoever, to change classification in subsequent year(s), including year under consideration. h) On aforesaid ground itself, without anything more, it is respectfully submitted that action of assessing officer/CIT(A) in treating golf course as building and not as plant is not sustainable and calls for being deleted. i) He also submitted that without prejudice to aforesaid, issue that arises in present appeal is whether amount spent on construction of golf course is to be regarded as plant or as building. Under section 32 of Act, depreciation is, it is respectfully submitted, allowable, inter alia, on plant . term plant is defined in section 43(3) of Act, which reads as under: 43(3) plant includes ships, vehicles, books, scientific apparatus and surgical equipment used for purposes of business or profession but does not include tea bushes or livestock or buildings or furniture and fittings On perusal of above definition, it is submitted that inclusive definition of `plant has been given in section 43(3) of Act to include ships, vehicles, books, scientific apparatus and surgical instruments used for purpose of business or profession. definition specifically excludes from its ambit tea bushes, livestock, Page | 23 buildings or furniture and fittings. He referred to decision of Supreme Court in case of Scientific Engineering House Pvt Ltd v. CIT: 157 ITR 86, wherein meaning of term 'plant' was explained. He submitted that legal principles that emerge from aforesaid decision may be culled out as under: (a) Plant in its ordinary sense includes any apparatus, article or object fixed or movable, live or dead, used by businessman for carrying on his business; (b) Plant include any article/ apparatus used by businessman for carrying on business and it is not necessarily confined to apparatus which is used for mechanical operations or processes or is employed in mechanical or industrial business; (c) In order to qualify as plant, article must have some degree of durability. Court, thus, summed up by holding that test is whether article is tool of trade with which assessee carries on his business and if answer is in affirmative, it will be plant . He submitted that applying aforesaid tests, Golf course constructed by appellant, it is submitted, qualifies as plant and is eligible for depreciation @ 25% for following reasons: a) Golf course constructed by appellant, it is submitted, is highly specialized structure built on land. Constructing/ developing/ maintaining golf course is highly skilled and experience-oriented job wherein specific sophisticated machinery and wide range machinery is required to be employed. In order to construct/ develop Golf Course, appellant had to engage highly reputed international designer Jack Nicklaus for designing Golf course. It may be pertinent to mention here that following are important, essential and integral parts of any Golf course: Page | 24 Two varieties of grass Bermuda Tiff Drawf and Grass Selection 419 have to be maintained; Waterways, Bunkers, fairways, roughs, greens and many other things have to be created and maintained; Highly sophisticated turf care machinery is required for maintenance of Golf course; Proper irrigation system is required so as to reach all corners of course. Proper pump stations have to be installed for irrigating golf course. In case of assessee, equipments have been installed for drawing water from 18 bore wells using 75 HP pumps. 907 sprinklers and 203 quick coupling have been installed for irrigating whole course, which requires average of 8,00,000 kilo liters of water every month. b) In support of aforesaid, year-wise details of expenditure on golf course aggregating to Rs. 22.57 crores is placed at pages 62-70 of Paper book-Vol I. On perusal of same, it will kindly be noticed that expenditure on golf course includes following: (a) Expenditure on creation of Irrigation systems, which includes expenditure like pumps, motors, sprinklers, cutters, tanks, etc.; (b) Expenditure on creation of bunkers, waterways, etc.; (c) Expenditure on creation of lakes; (d) Expenditure towards electrification; (e) Expenditure towards creation of stores, medical centers, etc. (f) Expenditure towards procuring technical know-how for development of golf course; (g) Indirect day-to-day business expenses allocated to cost of golf course; Page | 25 (h) Other miscellaneous earthmoving, leveling expenses, etc. c) On perusal of aforesaid, it will be kindly appreciated that Golf course is highly specialized and complex plant constructed on land requiring levels of undulation and other technical requirements as per rules of game of golf. construction of golf course involves various plants and equipment referred above. Further, fact that appellant spent aggregate sum of Rs. 22.57 crores for construction of Golf course during financial years 1997-98 to 2000-01 speaks volume of specialized nature and advanced technology/ expertise that goes into constructing Golf course (Refer pictorial representation of specialized nature of Golf course placed at pages 74-111 of Paper book Vol 1). d) In light of aforesaid, it is respectfully submitted that Golf course has to be treated as plant and is, therefore, entitled to deprecation @ 25% as applicable to plant , more particularly in light of legal position discussed herein. e) Similarly, in present case, in business of Golf course, developing golf course, for running business of operating golf course is, it is submitted, essential/ indispensable part of/ and is used as tool of business. Therefore, applying functional test laid down in various decisions, Golf Course expense has to be, and it is submitted, regarded as `plant f) Attention is also invited to decision of Supreme Court in case of ACIT v. Victory Aqua Farm Ltd: 379 ITR 335, wherein assessee was engaged in business of Page | 26 Aqua Culture and growing prawns in specially designed ponds. In income tax return, assessee claimed depreciation in respect of ponds by treating same to be plant within meaning of section 32 of Act. assessing officer disallowed claim of assessee. apex court held that since ponds were specially designed for rearing/ breeding of prawns, thus, they have to be treated as tools of business of assessee and therefore, such ponds would be treated as plant for purpose of allowing depreciation thereon. relevant extracts of observation of Court are as under: 4. It is not in dispute that if these ponds are 'plants', then they are eligible for depreciation at rates applicable to plant and machinery and case would be covered by provisions of Section 32 of Act. It is not even necessary to deal with this aspect in detail with reference to various judgments, inasmuch as judgment of this Court in Commissioner of Income Tax, Karnataka v. Karnataka Power Corporation [2002(9) SCC 571] clinches issue. Therein Court has taken into consideration earlier judgments on which some reliance was placed by learned counsel for Revenue and is suitably dealt with. relevant portion of said judgment reads as under: . 5. attempt was made by learned counsel for Revenue to effect that pond in question was natural and not constructed/specially designed by assessee. We do not find it be so. In judgment dated 14.10.2004 of High Court, Page | 27 which is decided in favour of assessee, High Court has specifically mentioned that prawns are grown in specially designed ponds. Further, this very contention that these are natural ponds has been specifically rejected as not correct. Moreover, from order passed by Assessing Officer we find that this was not reason given by Assessing Officer to reject claim. Therefore, finding of fact on this aspect cannot be gone into at this stage. 6. We find that judgment dated 14.10.2004 rightly rests this case on 'functional test' and since ponds were specially designed for rearing/breeding of prawns, they have to be treated as tools of business of assessee and depreciation was admissible on these ponds. We, thus, decide question in favour of assessee and as consequence, appeals of Revenue are dismissed and that of assessee are allowed. (Emphasis supplied) g) Kind attention, in this regard, is also invited to decision of Bombay High Court in case of CIT V. Hydro Electric Power Supply Co. Ltd: 122 ITR 288 wherein Court held dam constructed by assessee engaged in business of generation of electric power to be plant . Similarly, wet dock of dockyard in case of CIT V. Mazagon Dock Limited: 191 ITR 460 (Bom.) and swimming pool of caravan park operator in case of Cooke V. Beach Station Caravans Limited: (1974) 3 All ER 159 have been held to be plant . In case of Shyam Enterprises v CIT: 349 ITR 418 (All), High Court, Page | 28 applying functional test, had held that building of special cooling chambers in cold storage plant, being constructed in specific process and manner, is eligible for depreciation as applicable on plant . definition of plant, High Court further held that section 43(3) of Act, providing excludes general buildings but not buildings of special nature. In case of Niko Resources Ltd. vs. ACIT: 395 ITR 301 (Guj), High Court treated mineral oil wells as plant for purpose of applying depreciation under section 32 of Act In case of Airports Authority of India v. CIT: 134 ITD 34 (Delhi), Delhi Bench of Tribunal had held that, terminal building of assessee used as tool of business for regulation of air traffic and communicational and navigational control was to be treated as plant for purposes of claiming depreciation under relevant provisions of Act. In case of Serum Institute of India Ltd. vs. Addl. CIT: 147 TTJ 594 (Pune), Pune Bench of Tribunal had held that various stools, tables, stainless steel racks, trolley, etc., used by assessee in laboratory for manufacturing chemicals and vaccines were to be treated as plant and not as furniture . Tribunal, in this regard, relying on Bombay High Court decision in case of CIT v. Park Devis (India) Ltd.: 214 ITR 587, held that 'functional test' has to be applied in deciding if particular tool constitutes plant and machinery or furniture. Tribunal further held that as various tools, tables, etc., were being used for purpose of production or processing of chemical tests in laboratory premises leading to production of stocks, same must be categorized as plant and machinery. h) Further, reliance is placed on following decisions: Page | 29 Cooke v. Beach Station Caravans Limited (1974) 3 All ER 159 (All.) SK Tulsi and Sons vs. CIT: 187 ITR 685 (All) Moidu s Medicare (P) Ltd v. CIT : ITA Nos. 1261, 1262, 1310 of 2009 (Ker.) Maharashtra State Road Development Corpn. Ltd. v. ACIT: 128 TTJ 32 (Mum. Trib) i) Similarly, in present case, in business of Golf course, developing golf course, for running business of operating golf course is, it is submitted, essential/ indispensable part of/ and is used as tool of business. Therefore, applying functional test laid down in various decisions, Golf Course expense has to be, it is submitted, regarded as `plant and is eligible for depreciation @ 25%. Accordingly, addition made by assessing officer and upheld by CIT(A) calls for being deleted in toto. LD AO reiterated findings given in original assessment and allowed depreciation on golf course @ 10% by treating same as building . On further appeal against said order, CIT(A), vide order dated 31.12.2018 upheld order of assessing officer restricting depreciation on golf course @ 10%. CIT(A) held that no doubt assessee is generating revenue from players for playing golf and allowing its golf course, but it cannot be said that assessee has manufactured or produced anything. aforesaid conclusion of CIT(A) is, it is submitted, contrary to functional test laid down by Courts. CIT(A) failed to appreciate that manufacture/ production is not necessary to treat asset as plant . So long as functional test of plant is satisfied, asset would qualify as plant. Further, reliance placed by CIT(A) on decision in case of CIT v. Anand Theatres: 244 ITR Page | 30 192 (SC) is, it is submitted, totally misplaced since Supreme Court in later case in CIT V. Karnataka Power Corporation: 247 ITR 268 (SC) clarified that decision and observation in Anand Theatres (supra) was limited to buildings used for purposes of hotels or cinema theatres and will not apply otherwise. Moreover, Supreme Court in latest case of Victory Aqua Farm (supra), re-emphasized concept of functional test to determine whether particular asset is to be treated as plant under section 32 of Act. 6. Based on above stated submission he prayed that for aforesaid cumulative reasons, it is respectfully submitted that assessee has rightly claimed depreciation on golf course as plant . 7. LD DR vehemently supported orders of lower authorities. main contention of learned departmental representative was that AO has correctly allowed depreciation considering golf course as building. It was stated that golf course is nothing but piece of land having some landscaping with level undulation, grass on land etc , Small ponds etc. Essentially, according to him golf course is piece of land. Depreciation is not allowed on land. However since certain activities have been carried out on piece of land to make it usable for playing golf learned assessing officer has allowed depreciation considering golf course as building. In fact were golf course may be considered akin to road. road was not covered under depreciation as it was essentially on land. However, after insertion of appendix 1 under rule 5 of income tax rules 1962 building includes roads bridges and converts well, tube wells. learned departmental representative vehemently relied upon decision of honourable Supreme Court in case of CIT vs. Anand Theatres 244 ITR 192. learned CIT DR further relied upon decision of Delhi High Court in case of 52 taxmann.com 21 in brother but toll road Co Ltd vs. assistant Commissioner of income tax. He further relied upon decision of CIT vs. that my local 82 ITR 44 of honourable Supreme Court and 243 ITR 81. He further submitted that in Anand theatre honourable Supreme Court held that building used for Page | 31 running hotel or carrying on cinema theatre and not be held to be plant. In case of Raj Malhotra, honourable Supreme Court held that building in which water was run was not plant. In case of Dr P Venkata of Supreme Court held that if it was found that building or structure constituted apparatus or tool of taxpayer by means of which business activities were carried on amounted to plant but where structure played no part in carrying on these activities but merely constituted place where they were carried on, then it is building and it is not plant. He therefore submitted that in present case players play golf on golf course but golf course as such does not play any part in carrying on playing activity of assessee. He further countered argument of learned authorised representative that issue squarely covered in favour of assessee in case of GP greens Ltd in ITA number 3545/del/2009, wherein coordinate bench vide order dated 9/3/2010 has not due to adjudicate issue as to whether depreciation is allowable on golf course treating same as plant or not. He therefore submitted that ratio of said decision does not apply to facts of case. He further submitted that in case of assessee itself coordinate bench restore issue of depreciation of golf course to AO to examine facts which were not produced before AO including details of construction on 300 acres of land et cetera. He therefore submitted that learned assessing officer has correctly granted depreciation on golf course considering it as building and not plant. 8. We have carefully considered rival contention and perused orders of lower authorities. only issue involved in this appeal is whether golf course constructed by assessee is plant or building. According to revenue authorities, it is building and not plant whereas assessee contends that it is plant. learned CIT (A) has dealt with whole issue considering direction of ITAT and view of AO thereon as under :- 6.1 I have carefully considered assessment order under appeal and earlier orders, submissions by appellant, other materials on record and case laws relied upon. Page | 32 6.2 issue revolves around allowable rate of depreciation on golf course held by appellant. As stated earlier, AO while completing assessment u/s 148 / 143(3) dated 24.12.2017 allowed depreciation on golf course @ 10% considering it as building against claim of appellant of 25% as plant and machinery. addition amounting to Rs. 1,37,71,043/- as made for this difference. CIT(A) allowed appeal of appellant, thereby determining depreciation @ 25%. department preferred further appeal before ITAT, Delhi. Hon'ble ITAT vide their orders in ITA No. 3549/Del/2009 and 4847/Del/2009 for AYs 2001-02 and 2003-04 have set aside matter to file of AO with following direction/remarks:- "45. In second part of above operative para, Ld. CIT(A) held that ratio of decision of Hon'ble Supreme Court in \case of CIT Vs. Anand Theatre is not applicable and then jump to conclusion that business of assessee is to invite players for playing golf and charging fee for that and thus field so prepared was business operated used by assessee for carrying on its business of playing golf. In last lines, without specifically pointing out as to whether golf course that is piece of land with many levels of undulation, holes, small ponds etc can be categorized as plant and machinery and not as building. Id. CIT(A) jumped to conclusion that assessee's claim of depreciation @ 25% is allowed which is not proper and justified approach for quasi-judicial authority. We may point out that golf course has not been categorized in schedule of depreciation and main dispute between assessee and revenue is that assessee is seeking to place golf course in category of plant and machinery whereas Revenue wants to treat same as building. 46. At this juncture, we may point out that we are not in agreement with conclusion drawn by id. CIT(A) that piece of land having some landscaping for playing golf such as Page | 33 various level undulation, holes, small ponds etc construed super structure which- can be categorized as plant and machinery. If this view is accepted then every landscaping having some special features for purpose of its intended use would become plant and machinery and every construction of building for purpose of sports would be converted into plant and machinery. It is pertinent to note that for creation of golf course, landscaping is done for in various levels and some holes, ponds and walking path is created but in our humble understanding this kind of piece of land converted into golf course by creating some specialized facilities for playing golf cannot be put in category of plant and machinery. 47. In view of above, we have no hesitation to hold that Id. CIT(A) granted relief to assessee without any basis and without arriving to conclusion as to whether golf course is plant and machinery or building. Therefore, conclusion of Id. CIT(A) is not sustainable as we are unable to see any basis for factual observations noted by Id. CIT(A) for putting golf course in category of plant. Since issue has not been adjudicated by Id. CIT(A) in proper manner, therefore, this issue is restored to file of AO for fresh adjudication after affording due opportunity of being heard to assessee and without being prejudiced from earlier orders and our observations in this order. 48. We may also point out that to support case of AO, Id. CIT-DR has placed reliance on plethora of decisions including decision of Hon'ble Supreme Court in case of CIT Vs. Anand Theatre (supra), CIT Vs. Gwalior Rayon Silk Mfg. Mills 196 ITR 149 (SC) and decision of Hon'ble High Court of Delhi in case of Moradabad Toll road Co. I/s. ACIT [2014] 52 Taxmann.com 21 [Delhi] to establish that golf course is not plant and machinery and it is to be categorized as building and on other hand, Id. AR has placed Page | 34 reliance on case of decision of Hon'ble Supreme Court in case of CIT Vs. Karnataka Power Corpn. 247 ITR 268 (SC), Scientific Engineering House P. Ltd. Vs. CIT 157 ITR 86 (SC) and decision in case of Victory Aqua Farm Ltd. 61 Taxmann.com 166 (SC) and plethora of decision to support case of assessee that golf course is plant and machinery and it is not building. Interestingly, no cited decision relied by both parties are related to golf course. Therefore, facts regarding this issue have to be dealt in respect of golf course of 300 acres land and how it became plant and machinery attracting 25% depreciation. AO has to examine these details to ascertain issue between parties as stated above. We also note that assessee in its written submissions before authorities below as well as before Tribunal has submitted details of construction on 300 acres of land converting it into golf course, but these details have not been submitted before AO and AO could not get opportunity to verify and examine same. Therefore, in our considered opinion, this issue requires detailed verification and examination at end of AO after affording due opportunity of hearing to assessee and without being prejudiced from earlier assessment and first appellate order. Needless to say that AO would examine all material facts on this issue and after considering mandate of relevant provisions of Act as well as ration of decisions relied upon by both parties shall decide issue afresh in accordance with law." 6.3 Accordingly, AO, after considering issue, has taken depreciation on Golf course @ 10% as applicable to building only, rejecting claim of AO in assessment order under appeal with following remarks:- "5.4 From details of expenses, assessee was not able to justify as to how these expenses make Golf Course Plant. These are simple expenses related to landscaping and Page | 35 construction. If argument of assessee is accepted, then every land with some kind of landscaping or every building used for some king of sports activity would be converted into Plant & Machinery. Further, simply because some special controlling equipment are attached, it will not take out of category of building. golden rule of interpretation is that if some structure / entity are more near to one category than by stretching it should not be considered to fall in category, which is far off. 5.5 Assessee in its responses have submitted that Golf Course, which includes various plants and equipment, falls under definition of term 'Plant' as per provisions of Act and is eligible for depreciation @ 25%. However, during set-aside proceedings, assessee could not justify as to what are these plants and equipment used in Golf Course, which fall under head of 'Plant and Machinery'. Moreover, assessee is already separately claiming depreciation on sporting items like Golf Carts, Pull Carts etc. 5.6 Hon'ble Supreme Court in case of CIT V Anand Theatre 244 ITR 92 has stated that building is not plant and machinery. Even if it is to be construed as plant, only that part of building can be put in category as plant and machinery not entire building. On occasions building may be designed and constructed to specific requirement of particular industry, trade or business, but that would not make such building plant. 5.7 In Industry, no production can be normally carried on without building where plant and machinery is installed but for that reason, building cannot be considered as plant when there is separate entry for building for purpose of Depreciation. 5.8 concrete pathways, drive ways, inter connecting roads constructed in Golf course which links and provide Page | 36 approach to playground cannot be referred as Plant but would be covered in "Building" within meaning of Section 32 as worked "building" specifically includes roads, bridges etc. 5.9 Moreover, when we come to basic question as why depreciation is allowed, because every tangible asset depreciates. It is off. passage of time causes physical assets to wear, tear and otherwise lose value; depreciation & designed to capture that loss of value over tangible asset's useful life. Through depreciation, company is able to capture and spread out costs over long-term. In context of above definition also, Golf Course cannot be considered as Plant but Building only. 5.10 Furthermore, assessee is already taking depreciation separately on sporting items like Golf Carts, Pull Carts etc. In view of above discussion depreciation on Golf Course is limited to 10%" 6.4 I have examined contention of appellant, assessment order and direction by Hon'ble ITAT. 6.5 It is evident that no depreciation has been claimed on land but only add-ons on land has been taken to consider as plant and "machinery by appellant, which was taken as building by AO. It is also observed that in depreciation chart as per IT Act and Rules, no such category has been mentioned related to depreciation on golf course. No direct ruling or any case laws has been brought to notice by appellant, to say that golf course is plant and machinery. case laws relied upon are on different issues all together. issue in this case is decided looking to fact and circumstances of this case only. Accordingly, this has to be examined with reference to activities of appellant company. 6.6 golf course is playground with various equipments such as sprinklers, holes, ponds and other add-ons incorporated therein to facilitate sports of golf. It is stated to be highly sophisticated and Page | 37 value added equipments have been installed. No doubt that appellant is generating revenue from players for playing golf and allowing its golf course but it cannot be said that it has manufactured or produced anything as creation of asset akin to plant and machinery. In common parlance plant or machinery is such to become tool for production of commercial goods, generally tangible in nature. This also finds support from various judgments wherein it is held that functional test is required to understand and consider whether it is plant or asset specially for case of appellant. In case of appellant, golf course has been created as sports facility to facilitate and provide entertainment to its clients who are either residents of hotel run by appellant or members. There is no production per se is substantiated. 6.7 Further conversion of land with inserting certain playing equipments, creating landscaping, holes, ponds and others is being done ii regular course to facilitate game of golf and not aimed to any production of goods and services. It may be facility to provide for better and smooth play of golf, thereby better commercial prospects for company but cannot be termed as plant and machinery within meaning of Act. 6.8 definition of plant and machinery as mentioned in section 43(3) of Act is as follows:- "43(3) "plant" includes ships, vehicles, books, scientific apparatus and surgical equipment used for purposes of business or profession but does not include tea bushes or livestock or buildings or furniture and fittings" 6.9 In present case, landscaping etc. are neither surgical equipments nor any scientific apparatus. add-ons on land for running of smooth play of golf such as landscaping, sprinklers, waterways, holes etc. are required for any such activity in normal circumstance as same is required for maintenance of any building also. Therefore, putting up of various sophisticated or Page | 38 specialized item cannot be basis for treating any golf course as plant and machinery. Therefore, argument of appellant that it has put up various value addition is not tenable. 6.10 Further, it is not directly related to production or creation of any output but work as support system and therefore, appropriately considered by AO as building and not plant. It is also to be mentioned that assessee is running hotel and therefore, residents of hotel are also provided facility to play golf. In such circumstance, main objective is to increase business of hotel by providing additional benefit / facility of golf. 6.11 issue discussed in case of CIT vs. Anand Theatre (supra) is clearly in favour of revenue with respect to facts relates to appellant. Therefore, same is accordingly followed where it is clearly mentioned that in such circumstance it has to be treated as building and not plant. 6.12 Therefore, looking to facts and circumstances of case and in law, where no specific rate of depreciation has been provided in Act / Rules nor categorized golf course as plant and machinery, landscaping and some structuring and fixtures done over land for purpose of sports to lure client where no_ product is also demonstrated to have been manufactured but only facility is provided, this cannot be considered as plant and machinery. Accordingly, appellant is not entitled for depreciation @ 25% but only treated as building as this is super structure on land, which is being used for purpose of business. 6.13 Therefore, I have no reason to differ with findings of AO and thus addition is confirmed in case of appellant. 9. It is admitted fact that assessee is company engaged in business of inviting membership and then allowing those members to play golf on golf course constructed by it. It is also apparent that assessee is engaged in business of running of golf course and also earning revenue from apartments. It has constructed golf course at total cost of Page | 39 Rs. 225728037 as on 31st of March 2001. Its main source of income is membership fees. golf course constructed comprised of various equipments and items of plant and machinery like irrigation system, water tanks including water sprinklers, technical know-how, bunkers et cetera. assessee has submitted that entire cost incurred on construction of golf course was capitalized as separate block of plant and machinery and depreciation thereon is allowable at rate of 25%. Admittedly, above cost on which depreciation is claimed does not include cost of land. honourable Supreme Court in 243 ITR 81 CIT vs. Dr B Venkata Rao while holding that nursing room is plant has laid down guiding principles for considering which building constitutes plant. It was held there in that :- assessee is medical practitioner. He runs nursing home. In respect of building in which nursing home is run, assessee claimed, for assessment year 1983-84, that it was plant . His contention was rejected by Income-tax Officer and by Commissioner (Appeals). Income-tax Appellate Tribunal found to contrary. Applying functional test, it held that nursing home was plant. High Court affirmed that view. It said that building used as nursing home is not comparable with ordinary building having regard to number of persons using it, manner of its use and purpose for which it is used. building was used to not only house patients and nurse them, but also to treat them, for which various kinds of equipment and instruments were installed. most apposite decision in this context is that delivered by Allahabad High Court in S. K. Tulsi and Sons v. CIT [1991] 187 ITR 685. Reference was made to earlier judgment, where also functional test approved by this court in several decisions was applied. It was held that if it was found that building or structure constituted apparatus or tool of taxpayer by means of which business activities were carried on, it amounted to plant ; but where structure played no part in carrying on of those activities but merely constituted place wherein they were carried on, building could not be regarded as plant. Page | 40 Tribunal and High Court in instant case proceeded upon assumptions of what nursing home should contain. This may not be altogether appropriate. What is to be determined is whether particular nursing home building was equipped as to enable assessee to carry on business of nursing home therein or whether it is just any premises utilized for that object. We find from order of Tribunal as also assessment order that assessee s nursing home is equipped to enable sterilization of surgical instruments and bandages to be carried on. It is reasonable to assume in circumstances, particularly having regard to Tribunal s order, which states that sterilization room covers about 250 sq. ft. that nursing home is also equipped with operation theatre. In circumstance, we think that finding of High Court should be accepted. We would, however, add that in case such as this, Tribunal should proceed upon material placed by assessee which establishes that building is specially equipped as plant for assessee s business. 10. In SCIENTIFIC ENGINEERING HOUSE (PVT.) LTD. v. COMMISSIONER OF INCOME TAX, ANDHRA PRADESH [1986] 157 ITR 86X (SC) Honorable Supreme court has held that that "plant" was not necessarily confined to apparatus, which was used for mechanical operations or process or was employed in mechanical or industrial business. But in order to qualify as "plant", particular article had to have some degree of durability. test to be applied was: Did article fulfill function of plant in assessee's trading activity? Was it tool of his trade with which he carried on his business? If answer was in affirmative, it would be "plant". 11. Honourable supreme court in ASSISTANT COMMISSIONER OF INCOME TAX v. VICTORY AQUA FARM LTD. [2015] 379 ITR 335 (SC) has held that when assessee carried on business of aquaculture. It grew prawns in specially designed ponds. It claimed depreciation in respect of these ponds treating them as tools of its business and, therefore, constituting plant within meaning of section 32 of Income-tax Act, 1961. Assessing Page | 41 Officer disallowed claim but Tribunal held in favour of assessee. Two Benches of High Court took opposing views. On appeal to Supreme Court , affirming view of Tribunal, that High Court had specifically mentioned that prawns were grown in specially designed ponds and contention that these were natural ponds had been specifically rejected as not correct. Moreover, this was not reason given by Assessing Officer to reject claim. Therefore, finding of fact on this aspect could not be gone into at this stage. functional test was applicable and since ponds were specially designed for rearing or breeding of prawns, they had to be treated as tools of business of assessee and depreciation was admissible on these ponds as plant. 12. Further honourable Gujarat High Court in NIKO RESOURCES LTD. v. ASSISTANT COMMISSIONER OF INCOME-TAX (2017) 395 ITR 301 while deciding issue whether mineral oil well constitute plant as claimed by assessee or building as claimed by revenue, has held that Under section 32 of Income-tax Act, 1961, depreciation allowance is, subject to provisions of section 34 , permissible only in respect of certain assets specified therein, namely, buildings, machinery, plant and furniture owned by assessee and used for purpose of business. Section 43(3) defines plant in very wide terms. In order to qualify as plant article must have some degree of durability. test would be: does article fulfill function of plant in assessee's trading activity? Is it tool of his trade with which he carries on his business ? If answer is in affirmative, it will be plant. Thus, it was held that Tribunal was not right in law in treating mineral oil wells as buildings for applying rate of depreciation under section 32 of Act. mineral oil wells constituted plant for purposes of section 32. 13. In present case also before us, golf course owned and used by assessee for purpose of business as tool of business of assessee. It is functioning like plant in case of assessee. Further, it is not case of revenue that assessee has claimed any depreciation on land. It is similar to depreciation on pond allowed in case of Page | 42 aquaculture company by honourable Supreme Court in 379 ITR 335 and honourable Gujarat High Court holding that mineral oil well also constitute plant. learned CIT is not correct in saying that playing equipments, creating landscaping, holes, ponds and others are being done in regular course to facilitate game of golf and not into any production of goods and services. In fact, by creating these facilities, assessee has created service facility for its members and it produces revenue for assessee. It is not always necessary that each plant should produce certain other tangible goods. Further, in case of assessee in certain assessment years under section 143 (3) of income tax act claim of depreciation holding golf course as plant has been accepted by revenue and in subsequent years in assessment year 2006 07 to 2009 10 also claim of assessee is accepted. In fact claim of depreciation on golf course as plant stands accepted in assessment year 98 99 to assessment year 2000 01, 2002 03 and 2006 07 to 2009 10. Even otherwise, coordinate bench in case of Deputy Commissioner of Income Tax vs. JP greens Ltd in ITA number 3545-3547/Del/2009 , on identical facts and circumstances considered golf course as plant and depreciation at rate of 25% was allowed holding that assessing officer himself has allowed depreciation at that rate in past in that particular case. decision relied upon by learned CIT DR that Toll Road does not qualify as plant for higher rate of depreciation as held by honourable Delhi High Court in 52 taxmann.com 21 (Delhi) in Moradabad Toll Road Co Ltd vs. Asst Commissioner of income tax was decided as road was specifically considered as part of building in part of appendix 1 of Income tax Rules 1962. Thus, fact of that case is distinguishable. Further, it was not stated before us that revenue has not accepted decision of coordinate bench in DCIT vs. JP greens Ltd where golf course was held to be plant. Therefore, it stands concluded that golf course is plant looking to nature of business of assessee. Further, judicial precedents relied upon by parties also only lays down proposition established by higher judicial forum supports above view. In view of this, ground number 1 of appeal of assessee is allowed reversing views of lower authorities, holding that golf course is plant on which Page | 43 assessee is entitled to depreciation at rate of 25% under income tax act. 14. In view of our decision in ground number 1 of appeal, second ground raised by assessee, which was alternative claim, does not survive, hence it is dismissed. 15. Accordingly, ITA number 1030/del/2019 for assessment year 2001 02, filed by assessee is allowed. Assessment year 2003 04 16. assessee has raised following grounds of appeal in ITA No. 1031/Del/2019 for Assessment Year 2003-04 against order of Commissioner of income tax (appeals) 5, New Delhi dated 31/12/2018:- 1. That CIT(A) erred on facts and circumstances of case and in law in upholding action of assessing officer in making addition of Rs. 60,54,840 on account of allowance of depreciation on golf-course as building as against same being considered as plant and machinery by appellant. 1.1 That CIT(A)/assessing officer erred on facts and circumstances of case and in law in not appreciating that classification of golf course could not be changed in subsequent year when claim of depreciation @ 25% on golf course as plant stood allowed/ accepted in past assessment years, i.e., 1998-99 to 2000-01 and succeeding assessment years, i.e., 2006-07 to 2009-10. 1.2 That CIT (A)/assessing officer erred on facts and circumstances of case and in law in not appreciating that classification of block of asset, which has been allowed/accepted and merely carried forward from earlier years, cannot be modified in current year 1.3 That CIT(A) erred on facts and circumstances of case and in law in holding that golf course has not manufactured or produced anything so as to classify it as plant and machinery . 2. Without prejudice, that assessing officer erred on facts and circumstances of case and in law in not re-computing depreciation Page | 44 admissible under section 32( 1 )(ii) of Act with reference to revised written down value of golf course, consistent with finding of treating golf course as building in earlier year(s). 17. only issue involved in this appeal is whether golf course is plant or building. We have already decided this in appeal of assessee for assessment year 2001 02 holding that golf course is plant. In view of this ground number 1 of appeal is allowed for similar reasons given by us in appeal for assessment year 2001 02. Ground number 2 being alternative claim by assessee is not required to be adjudicated in view of our decision in ground number 1 of above appeal. 18. Accordingly ITA number 1031/del/2019 filed by assessee is allowed. Assessment year 2004-05 19. learned Deputy Commissioner Of Income Tax, circle 4 (1), New Delhi has raised following grounds of appeal in ITA No. 5582/Del/2010 for Assessment Year 2004-05 against order of learned Commissioner Of Income Tax (Appeals) VII, New Delhi dated 13/10/2010:- 1. order of learned CIT (APPEALS) is erroneous & contrary to facts & law.. 2. On facts and in circumstances of case and in law, Ld. CIT (Appeals) has erred in deleting addition of Rs. 68,11,697/- made by AO by disallowing excess depreciation claimed by assessee i.e. by directing AO to allow depreciation on Golf Course @ 15% as against 10% allowed by AO. 2.1. ld CIT (A) ignored fact Golf Course is building and not machinery and is not entitled for depreciation @ 15% applicable for machinery. 3. On facts and circumstances of case and in law, Ld. CIT (Appeals) has erred in deleting addition of Rs. 55,00,000/- made by AO by disallowing expenses on account of golf course and repair & maintenance expenses. Page | 45 3.1. Ld CIT(A) ignored fact that there is abnormal increase in expenses and decline in income of assessee. 4. appellant craves leave to add, to alter, or amend any grounds of appeal raised above at time of hearing. 20. Ground number 1 and 4 of appeal are general in nature, no arguments were advanced by parties, and hence they are dismissed. 21. Ground number 2 of appeal along with ground number 2.1 is with respect to direction of learned CIT to learned assessing officer to allow depreciation on golf course at rate of 15% considering it is planned against depreciation at rate of 10% allowed by learned assessing officer considering it as building. This issue has already been decided by us in appeal for assessment year 2001 02 in case of assessee wherein we have held that golf course is plant, for similar reasons, we hold that there is no infirmity in order of learned CIT for this year. Accordingly, ground number 2 of appeal of revenue is dismissed. 22. Ground number 3 of appeal is against order of learned CIT in deleting addition of INR 5,500,000 made by AO disallowing expenses on account of golf course on repairs and maintenance. learned assessing officer found that assessee has debited sum of INR 5 002703/ on golf course maintenance and further INR 8 280468/ on repairs and maintenance stop learned assessing officer disallowed INR 3,000,000 out of general repairs and maintenance and INR 2,500,000 out of thus Rs. 55,00,000 were disallowed on account of repairs. assessee preferred appeal before learned CIT who deleted above disallowance vide para number 5.1 of his order. learned CIT noted that learned assessing officer should make intelligent and well- grounded estimate in appropriate cases where estimation is actually required but he does not possess absolute arbitrary authority to assess any figure he likes. He held that such estimate must be based on adequate and relevant material. He further held that in instant case he do not find any adequate all relevant material based on which expenses incurred by assessee could be disallowed. Accordingly, he deleted disallowance. Page | 46 revenue challenged above disallowance deletion as per ground number 3. 23. learned CIT DR vehemently supported order of learned assessing officer and stated that learned CIT has not given any finding that why he is disallowing above expenditure when assessee has failed to show genuineness of expenditure incurred. 24. Learned authorised representative submitted that learned assessing officer has made adopted disallowance is despite assessee maintaining complete details of expenditure merely for reason that there is increase in above expenditure vis-a-vis golf course income. He further submitted that assessee maintains regular books of accounts, which are duly audited and certified by tax audit. He further stated that learned assessing officer has further failed to point out any specific defect in those details and merely because of reason that there is increase in expenditure compared to golf course income disallowance has been made. He further referred to order of learned CIT and submitted that there is no infirmity in order of learned CIT deleting above disallowance. 25. We have carefully considered rival contention and perused orders of lower authorities on this issue. It is fact that assessee has submitted details of such expenses which are placed at page number 132 139 of paper book. books of accounts of assessee are duly audited and learned assessing officer has also not pointed out any specific debate defect in details of such expenses. merely because there is increase in expenditure compared to golf course income disallowance cannot be made. Further assessing officer has also not established that those expenditure have not been incurred wholly and exclusively for purposes of business. In view of this we do not find any infirmity in order of learned CIT in deleting above disallowance. Accordingly, ground number 3 of appeal of learned assessing officer is dismissed. 26. Accordingly, ITA number 5582/del/2010 filed by learned assessing officer for assessment year 2004 05 is dismissed. Page | 47 Assessment year 2005-06 27. For assessment year 2005 06, assessee as well as learned assessing officer has preferred appeals against order of Commissioner of income tax (appeals) VII, New Delhi dated 27/10/2009. 28. assessee has raised following grounds of appeal in ITA No. 4536/Del/2009 for Assessment Year 2005-06:- 1. That CIT(Appeals) erred on facts and in law in confirming addition to extent of Rs. 20,41,449 out of total addition of Rs. 84,16,051 made by assessing officer under section 41(1) of Income Tax Act, 1961 (The Act ). 2. That CIT(Appeals) erred on facts and in law in confirming addition of Security deposits received by appellant over years aggregating to Rs. 34,05,42,851. 2.1 Without prejudice, that CIT (Appeals) failed to appreciate that out of total security deposit of Rs. 34.05,42,851 security deposit of Rs. 31,14,60.578 was on account of refundable deposit owed by appellant to its members and same could not, therefore, be regarded as taxable income of appellant. 2.2 Further without prejudice that CIT(Appeals) erred on facts and in law in not holding that addition, if any, had to be restricted to security deposits received during year amounting to Rs. 78.87.656 only. 2.3 Further without prejudice that CIT(Appeals) failed to appreciate that out of total deposit of Rs. 34,05,42,851, Rs. 3,52.88,416 was in nature of advance membership fee, which had already been offered for tax by appellant in subsequent year(s). 3. Without prejudice, having held advance membership fee of Rs. 3,52,88,416 to be taxable in year under appeal, CIT(Appeals) erred on facts and in law in not directing assessing officer to exclude advance membership fee of Rs. 3,52,88,416 from taxable Page | 48 income of appellant of subsequent year(s) in which said income had already been offered and subjected to tax. 4. That CIT(Appeals) erred on facts and in law in confirming disallowance of Rs. 72,29,915 on account of bad debts/ advances written off in normal course of business. 29. revenue has raised following grounds of appeal in ITA No. 4721/Del/2009 for Assessment Year 2005-06:- 1. order of learned CIT (APPEALS) is erroneous & contrary to facts & law. 2. On facts and in circumstances of case and in law, learned CIT (A) has erred in restricting additions made by AO disallowing expenses claimed on account of provisions no longer written back to Rs. 20,41,449/- as against disallowance of Rs. 84,16,051/- made in assessment order. 2.1. Ld. CIT (A) ignored fact that disallowance of Rs. 84,16,051/- was made by AO in accordance of provisions of section 41 (1) (a) of I. T. Act. 3. On facts and in circumstances of case and in law, Ld. CIT(A) has erred in deleting addition of Rs. 19,59,50,000/- made by AO on account of undisclosed income on sale of land. 3.1. Ld. CIT (A) ignored fact that AO has made addition on basis of sale consideration received by assessee in earlier years on similar property. 4. On facts and in circumstances of case and in law, Ld. CIT(A) has erred in deleting addition of Rs.49,71,84,511/- made by AO being Long Term Capital Gain on transfer of ownership to M/s. ITC Ltd. 4.1. Ld. CIT (A) ignored fact that LTG has arrived at by AO on basis of agreement to sell in favour of ITC Ltd. 5. On facts and in circumstances of case and in law, Ld. CIT (A) has erred in deleting addition of Rs.20,31,305/- made by Page | 49 AO on account of interest disallowed as having been paid for non- business activities. 5.1 Ld. CIT (A) ignored fact that assessee utilized 64% of borrowed sum during year for repayment of term loans. 6. On facts and in circumstances of case and in law, Ld. CIT (A) has erred in deleting addition of Rs.51,08,772/- made by AO on account of excess depreciation claimed. 6.1. Ld. CIT (A) ignored fact that Golf Course is entitled for depreciation of 10% i.e. for building and not 25% meant for plant and machinery. 30. Briefly stated facts shows that assessee has filed its return of income on 31/10/2005 declaring loss of Rs 28641836/ . assessment u/s 143 (3) of income tax act was passed on 18/12/2007 determining total taxable income of Rs 497184511/ . Assessee preferred appeal before learned CIT who partly allowed appeal of assessee. Therefore, both parties are in appeal before us. 31. We 1st take up appeal filed by assessee. first ground of appeal is against confirmation of addition of INR 2 041449/ out of total addition of INR 8 416051/ made by AO under provisions of section 41 (1) of income tax act. brief facts of issue shows that in computation of total income sum of INR 8 416051/ was claimed as provisions no longer required and written back. allowances for which resulted in increased of existing declared losses. On being confronted regarding that visibility of such claim, it was stated that such written back amount primarily consisted of various provisions, which were not allowed in earlier years as per income tax act. Therefore, it are written back and claimed as admission deduction during previous year. learned assessing officer verified details in support of such claim and found that said) was emission on account of net balances of trading assets and liabilities which primarily consisted of business advances, debtors, creditors and other provisions. Therefore according to him such) is clearly in nature of remission of trading liabilities and have to be treated as profits Page | 50 chargeable to tax under provisions of section 41 (1) of income tax act. In view of this, above addition was made. assessee preferred appeal before learned CIT who considered whole issue and found that learned assessing officer nowhere brought on record anything to show that any allowance or deduction regarding any particular amount written back had been allowed in earlier years. He further noted that provision for bad and doubtful debts were already added back to total income and offered by assessee for taxation. After that on examination of reconciliation of provisions no longer required written back during year under consideration with copies of computation of income for assessment year 2000 1, 2001 02 and 2003 04 he noted that INR 6 374602/ was already added back by assessee of to its total income in earlier years. Therefore he deleted above amount from deduction and sustained balance addition of INR 2 041449/ . Therefore, against order of learned CIT assessee is in appeal as per ground number 1 of appeal and revenue is in appeal as per ground number 2. Both these grounds of appeal being interconnected are taken together. 32. learned authorised representative supported order of learned CIT the deletion of disallowance is concerned and with respect to addition sustained is submitted that same logic which has been given by learned CIT for deleting addition applies to extent of additions sustained by him as learned assessing officer has failed to bring on record any material that these expenditure have been allowed to assessee in earlier years. He submitted that in absence of this learned CIT should have deleted whole disallowance. 33. learned CIT DR vehemently supported order of learned assessing officer and submitted that learned CIT has wrongly deleted above disallowance. 34. We have carefully considered rival contention and perused orders of lower authorities. We have carefully perused paragraph number 5 of order of learned CIT where in assessee has submitted detailed chart assessment year -wise showing provisions created, provisions debited, and additional provisions made amount disallowed in Page | 51 return of income. On basis of above analysis learned CIT noted that sum of INR 1 54606/ was disallowed by assessee in assessment year 2000 01, Rs. 2886114 in assessment year 2001 02 and Rs 3333882/ in assessment year 2003 04 and therefore he held that assessee itself has disallowed above sum amounting in all INR 2 6374602/ in earlier years and therefore out of sum of INR 80 416051/ sum of INR 6 374602 is not following under provisions of section 41 (1). He therefore held that addition made by learned assessing officer to that extent of INR 6 374602/ is not sustainable. We do not find any infirmity in order of learned CIT to that extent. Further with respect to disallowance of INR 2 041449/ of balance sum sustained by learned CIT A, assessee could not show that whether these expenditure have already been disallowed by assessee in earlier years or not and therefore in absence of such details, additions cannot be deleted. In view of this we find no infirmity in order of learned CIT in upholding disallowance of INR 2 041449/ . Accordingly, ground number 1 of appeal of assessee and ground number 2 of appeal of revenue are dismissed. 35. Ground number 2 of appeal of assessee is with respect to confirmation of addition of security deposit received by appellant over years amounting to INR 3 40542851/ . appellant, in course of carrying on business of running and maintenance of golf course, popularly known as Classic Golf Course , receives membership fee from its members for use of golf course and club facility. Broadly stated, there are two types of members, viz., individual member and corporate member. Every member admitted to membership signs membership plan and is bound by rules and regulations. In terms of membership plan, every individual member is required to pay security deposit, membership entrance fee, advance membership fee, subscription fee, etc. corporate member is, however, not required to pay any security deposit. In audited financial statements for year ended 31.03.2005 (the year under consideration), appellant had, in `Schedule 12 thereto under heading Current Liabilities , disclosed/ shown `Other liabilities of Rs.34,05,42,851 as under:- Page | 52 Payment received against Golf course Rs. 3,52,88,416 membership Security Deposit against Golf Course Rs.31,14,60,578 membership Total Rs.34,67,48,994 Less: Membership subscription receivable Rs. 62,06,143 Net Amount Rs.34,05,42,851 In assessment order, assessing officer held aforesaid amount of Rs.34,05,42,851 to be in nature of trading receipt taxable under provisions of Act. On appeal, said addition made by assessing officer was upheld by CIT(A). Therefore, assessee is in appeal before us. 36. learned authorised representative vehemently contested orders of lower authorities. He submitted detailed note as under :- Rs. 34,05,42,851 includes `Payment received against Golf course membership of Rs. 3,52,88,416, which is in nature of advance membership fees offered for taxation as income on pro-rata basis. same amount of Rs. 3,52,88,416 has already been offered for tax in subsequent year(s). assessing officer also regarded said amount as part of security deposit to make addition of same, which is patently erroneous and has resulted in double taxation of same amount. Further, CIT(A), while approving action of assessing officer observed that since membership fees has been utilized for creation of fixed assets which in turn have been used by members, deferment of income is therefore, not relevant in facts and circumstances of case. In this regard, it is respectfully submitted that aforesaid allegation of CIT(A) is not tenable inasmuch as CIT(A) failed to appreciate that: (a) membership fees is taxable on accrual basis and not on receipt basis; and Page | 53 (b) Since appellant had already offered to tax said amount in subsequent year(s), same income cannot be taxed twice. As regards (a) above, it is submitted that it is quite elementary that in mercantile system of accounting, amount is taxed as income in year in which same accrues. concept of income and its accrual is judiciously well settled and reference, in this regard, may be made to following decisions. In landmark decision rendered by Supreme Court in case of E. D. Sassoon and Co. Ltd. v. CIT: 26 ITR 27, question was raised as to when commission for managing agency linked with annual net profits of managed company accrues or arises. After deliberating on concept of accrual of income as whole, Supreme Court laid down that income must be held to accrue at point of time when assessee contributed to its accruing or arising and debt becomes due. Supreme Court held as under: It is clear therefore that income may accrue to assessee without actual receipt of same. If assessee acquires right to receive income, income can be said to have accrued to him though it may received later on its being ascertained. basis conception so that he must have acquired right to receive income. There must be debt owned to him by somebody ... Unless and until there is created in favour of assessee debt due by somebody it cannot be said that he has acquired right to receive income or that income has accrued to him ... But in order that income can be said to have accrued to or earned by assessee it is not only necessary that assessee must have contributed to its accruing or arising by rendering services or otherwise but he must have created debt in his favour. debt must have come into existence and he must have acquired right to receive payment mere expression "earned" in sense of rendering service etc. by itself is of no avail. (Emphasis supplied) Page | 54 In view of above observation, it is clear that for accrual of income two conditions are cumulatively required to be satisfied, i.e. (a) assessee must have contributed to accruing or arising of income by rendering services or otherwise; and (b) debt must be created in favour of assessee. One of necessary conditions of accrual, thus, is that debt must have come into existence and assessee must have acquired right to receive payment. Unless and until his contribution or parenthood is effective in bringing into existence debt or right to receive payment or in other words, debitum in praesenti, solvendum in futuro, it cannot be said that any income has accrued to assessee. It will kindly be appreciated that advance membership fees is received for rendering services to members in subsequent years and hence appellant has not contributed to its earning in year under consideration. Therefore, advance membership fees could not be regarded as income accrued in favour of appellant in year under consideration. Applying aforesaid principle, advance membership fees has been held to be taxable on pro-rata basis in following decisions: CIT vs. T. N. K. Govindarajulu Chetty : 165 ITR 231 (SC) - Held that interest received for 2 years is to be spread over according to mercantile system of accounting Rama Bai &Ors. V. CIT : 181 ITR 400 (SC) CIT v. Dinesh Kumar Goel : 331 ITR 10 (Del.) CIT v. Punjab Tractor Co-operative Muli-purpose Society Ltd. : 234 ITR 105 (P&H)- Amount received in advance under post warranty service charges, Held that amount pertaining to year under consideration could only be taxed not entire amount received CIT v. Coral Electronics (P) Ltd. : 274 ITR 336 (Mad) CIT v. Hindustan Computers Ltd. : 233 ITR 366 (All) ACIT and DCIT vs. Mahindra Holidays and Resorts India Ltd: 131 TTJ 1 (ITAT (SB) - Chennai)) Treasure Island Resorts (P) Ltd. vs. DCIT : 90 ITD 814 (Hyd) Page | 55 Akash Lavlesh Leisure (P) Ltd v. ITO: 78 taxmann.com 338 (Hyd.) T.K. International Ltd. v. ACIT : 91 ITD 481 (Cuttack) - Consideration received towards sale of time share for 99 years held taxable over years in which assessee was to provide services and facilities As regards (b) above, it is emphatically reiterated that since appellant had already offered to tax said amount in subsequent year(s), same amount cannot be taxed twice in year under consideration merely because amount received has been utilized for creation of fixed assets. For aforesaid reasons, addition to extent of Rs.3,52,88,416, being advance membership fees offered to tax on pro-rata basis, is liable to be deleted. 37. learned Commissioner of income tax Department representative vehemently relied upon order of learned CIT and learned assessing officer. He extensively referred to paragraph number 7 of learned CIT and submitted that both these receipts are revenue in nature and therefore chargeable to tax in end of assessee in year in which they received. He therefore submitted that there is no infirmity in order of lower authorities. 38. We have carefully considered rival contention and perused orders of lower authorities on issue. learned CIT has decided whole issue as per paragraph number 7.1 7.7 of his order. Undisputedly assessee is running golf course and making revenue collection by way of refundable security deposit and membership fees from members. This indicates that assets are fully operation and members are deriving benefit from use of assets. As such, it is not in dispute that appellant is carrying on business of running of golf course. Facts shows that assessee has received certain security deposits and membership fees collected by appellant from members along with borrowed funds were utilized for creation of fixed assets by assessee. learned CIT following decision of honourable Page | 56 Supreme Court income Calcutta stock exchange Association Ltd and Delhi stock exchange Association Ltd held that security deposit received from members are not capital receipt but are revenue receipts and are taxable as income of appellant. He further held that nature of such security deposit is whether refundable or non-refundable is immaterial. He further noted that though assessee has offered golf course membership fees of INR 3 5288416/ as income in subsequent years such deferment of income is not relevant on facts and circumstances of case of appellant as membership fees received by assessee is also assessable as income for assessment year in which it is received. He further noted that it is fact that unless security deposits and membership fees were paid by members, appellant would not have granted membership of golf club to those members. He therefore held that both this sum of security deposit as well as membership fee has correctly been charged by learned assessing officer as income of assessee. learned CIT with respect to entrance fees and membership fees has followed decision of honourable Supreme Court in case of Calcutta stock exchange Association Ltd 36 ITR 222 and Delhi stock exchange Association Ltd 41 ITR 495 wherein it has been held that entrance fee/membership fees received from members is income. 39. On careful analysis of order of learned CIT A, according to us he has wrongly applied decision of Calcutta stock exchange Ltd and Delhi stock exchange Ltd. In Calcutta stock exchange Ltd issue of monthly fees received by assessee. Therefore, it cannot be said that if fees received which is pertaining to year itself it cannot be said not to be income of assessee. In case of assessee, assessee has received advance membership fees for which services were to be rendered in subsequent years and assessee has already offered such income in subsequent years on accrual basis. It is not case of revenue that assessee has not offered golf course membership fees income in year to which it pertains to. It is also not case of revenue that assessee provides all services to members in year in which membership fee is received, and in subsequent years, no services were Page | 57 rendered. membership fees are chargeable to tax under provisions of business income. assessee follows undisputedly, mercantile/accrual system of accounting. Therefore, income/expenses of assessee are also required to be recorded as income only based on accrual system. Thus, whenever Income accrues to assessee irrespective of time of receipt of such income is taxable as business income. Under mercantile system of accounting, assessee has option to account for any income either on accrual or after accrual, on basis of method of accounting regularly followed by it . So far as issue of entrance fee and membership fees received by assessee, we are of opinion that it should be accounted for as income only when it accrues to assessee. Merely because income, which is pertaining to subsequent years, is received by assessee in earlier years does not become income of earlier years under section 5 of income tax act in case of either business income or u/s 28. Hence, according to us, membership fee income of assessee should be chargeable to tax in year to which it pertains. Therefore, we reverse finding of learned CIT in holding that that sum of INR 3 5288416 received as golf course membership fee is chargeable to tax as income. As such, it is claim of assessee that subsequently such income has already been offered for taxation therefore for year to which it pertains. Therefore, we direct learned assessing officer to tax above income of INR 3 5288416 as Income for impugned assessment year to which it pertains to. Therefore, if assessee has offered income, to year to which it pertains to, addition is required to be deleted. However, it is not known that how much income is pertaining to which year, therefore, we direct assessee to show before assessing officer about taxability of this income in subsequent years on accrual basis. learned assessing officer may verify same and if income has been offered in subsequent years on accrual basis, addition deserves to be deleted in this year. 40. With respect to issue of taxability of security deposit against golf course membership fee of INR 3 11460578/ , claim of assessee is that such security deposit is refundable in nature. It is required to be Page | 58 refunded to members at end of specified years or as per terms of membership. If membership is refundable to members, it becomes liability of assessee, which is required to be repaid. It is not case of revenue that assessee do not refund or under no obligation to refund above sum at end of specified period or on happening of certain events. identical issue arose before honourable Gujarat High Court in principal Commissioner of income tax vs. Gulmohar Green Golf and country club Ltd 392 ITR 601 (2017) (Gujarat) wherein it was been held that security deposit recovered from members at time of their enrolment as member is refundable on occurrence of contingency mentioned in rules and regulation and bylaws, therefore it is required to be treated as deposit, thus, capital receipt. Therefore, it was held that it is not income of assessee. As in case of assessee also security deposit is refundable hence respectfully following decision of honourable Gujarat High Court in 392 ITR 601, we also hold that sum of refundable security deposit received from members of assessee is capital receipt and cannot be charged to tax as income. Accordingly, we direct learned assessing officer to delete addition to extent of refundable deposit received from members. Accordingly, ground number 2 and 3 of appeal of assessee is partly allowed. 41. Now we come to ground number 4 of appeal of assessee wherein learned CIT has upheld disallowance of INR 7 229915/ on account of bad debt/advances written off in normal course of business. During relevant assessment year under consideration, appellant claimed deduction of bad debts/advances written off aggregating to Rs. 72,29,903, since there was no possibility of any recovery against said debts/advances. Details of bad debts/advances written off are placed at pages 98-103 of paper book. assessing officer, in assessment order, proceeded to disallow claim of bad debts written off by appellant by holding that appellant had not been able to furnish details of exact nature of debt, year of its approval, reasons of dispute, etc., to establish genuineness of debt. On appeal, aforesaid disallowance was affirmed in appeal by CIT(A) on ground Page | 59 that same comprises of bad debts written off amounting to Rs. 12,86,282 and advances written off amounting to Rs. 59,43,633. Insofar as bad debts written off is concerned, since evidence of fulfillment of conditions of section 36(1)(vii) of Act was not furnished, same was upheld. As regards, advances written off, same was held to be towards capital expenditure and hence held to be not allowable as deduction. 42. learned authorised representative submitted that aforesaid action of assessing officer in making disallowance of deduction claimed for bad debts/advances written off is not sustainable for reasons elaborated in note submitted as hereunder: It is, at outset, respectfully submitted that bad debts/advances written off by appellant related to debts arising/advances made in earlier years. On perusal of details placed at pages 98-103 of paper book, it will be noticed that debts/ advances written off arose in normal course of business and, therefore, write off of such debts based upon commercial decision taken by management of appellant having regard to there being no chance of recovery out of said debts/advances, were allowable as bad debt and/or loss incidental to business. It is respectfully submitted that advances/ deposits were given by appellant in ordinary course of carrying on business, and, thus, if any such amount become irrecoverable, same would be, it is submitted, allowable as trading loss under section 28 of Act. Attention in this regard is invited to decision of Delhi Bench of Tribunal in case of Minda HUF v. JCT: 101 ITD 191. In that case Tribunal was pleased to hold that CIT (A) erred in not allowing claim of assessee in respect of advances written off which had become irrecoverable. relevant observations of Tribunal are reproduced herein-below for ready reference: We have carefully considered entire material on record and rival submissions. From details furnished by Page | 60 assessee in paper book it is found that assessee had given full details of each item. amounts represented advances given to parties. advances were given during course of business for supply of raw material etc. Either material was not supplied or defective material was supplied. amount became irrecoverable from parties to whom advances were made. Thus, advances were totally connected with business activities of assessee. learned CIT(Appeals) was not justified in observing that amount of advance was not trading loss. After seeing details of amounts, it is observed that assessee was not required to take lengthy litigation for recovering small amounts. In our opinion, therefore, approach of learned CIT(A) is not justified. (Emphasis supplied) Reliance in this regard is also placed on following decisions: CIT v. Mysore Sugar Co. Ltd.: 46 ITR 549 (SC) CIT v. Triveni Engg. & Industries Ltd.: 343 ITR 245 (Del) Mohan Meakin Ltd. v. CIT: 348 ITR 109 (Del) Kwality Fun Foods and Restaurants (P.) Ltd. v. DCIT: 356 ITR 170 (Mad) Devi Films Private Ltd. vs. CIT: 75 ITR 301 (Mad.) CIT v. Inden Biselers: 181 ITR 69 (Mad.) P. Satyanarayana v. CIT: 116 ITR 803 (AP) CIT v. H. P. Lohia: 77 Taxman 476 (Cal) CIT v. Gillanders Arbuthnot & Co. Ltd.: 9 Taxman 76 (Cal.) CIT v. Sethu Film Distributors: 212 ITR 620(Mad) CIT v. Abdul Razak & Co.: 136 ITR 825(Guj) Salora International Ltd. v. JCIT: 129 Taxman 68 (Del.) CIT V. Shreyans Industries Limited: 207 CTR 281 (P&H) DCIT vs. M/s Edelweiss Capital Ltd.: ITA No: 3971/Mum/2009 (Mum ITAT) Page | 61 CIT v. Claridges Investment & Finance Pvt. Ltd.: 18 SOT 390 (Mum ITAT) ITO v. Gokaldas Pragji: 24 ITD 25 (Ahd. ITAT) Gujarat Fluoro Chemicals Ltd. v. JCIT: 76 TTJ 313 (Ahd.) Asst. CIT v. Shantilal Balabhai: 74 TTJ 506 (Ahd.) ITO vs. Ashok Kumar Lalitkumar: 53 ITD 326 (Ahd.) It is further submitted that advances primarily related to tour expenses, advances for organizing party, advance for laundry services, advances to employees, advance for vehicle repair, advance for painting, etc., (refer details of expenses placed at pages 98-103 of paper book). Therefore, it is not correct to hold that such advances were for procuring capital expenditure. That apart, even insofar as advances for procuring capital assets was considered, in following decisions it has been held that where asset does not come into existence, then expenditure incurred is allowable as revenue expenditure: CIT v. Priya Village Roadshows : 332 ITR 594 (Del.) Indorama Synthetics Ltd v. CIT: 333 ITR 18 (Del.). Expenses relating to setting up of new unit for expansion of its business operations, which was later abandoned was held to be revenue expenditure CIT v. Vardhman Spinning &General Mills: 176 Taxman 157 (P&H) Asiatic oxygen Ltd. v. CIT :190 ITR 328 (Cal.) Hindustan Aluminium Corporation ltd. v. CIT: 159 ITR 673 (Cal.) CIT v. Graphite India Ltd. : 221 ITR 420 (Cal) CIT v. Coromandal fertilizers: 247 ITR 417 (AP) Enpro India Ltd. v. DCIT:113 Taxman 132 (Del. Trib.) Page | 62 CIT v. Honda Siel Power Products Ltd. : ITA No. 758/2008 Sutlej Industries Ltd. v. ACIT : 94 TTJ 108 (Del) It is thus submitted that merely because part of advances related to acquisition of capital asset could not have been basis for disallowing write off since no asset came into existence. In view of aforesaid, it is respectfully submitted that action of assessing officer in not allowing deduction of aforesaid sum of Rs. 72,29,915 is not tenable and, hence, calls for being reversed. 43. learned departmental representative vehemently supported order of learned CIT and submitted that when expenditure incurred by assessee is for purpose of advances paid for capital expenditure, they are not allowable as there u/s 37 (1) or u/s 28 of income tax act. He further submitted that even as such, these expenditure are not incurred during year but are advances. Unless assessee proves that assessee has incurred loss by writing of these advances during year, it cannot be allowed. Further, writing of advance is loss, which has to be on revenue account. Even under section 28, loss, which is of capital nature, is not at all allowable. He therefore submitted that advances written off by assessee for purchase of capital asset is not allowable loss or expenditure under income tax act. 44. We have carefully considered rival contentions and perused orders of lower authorities. assessee has placed details of bad debts, loans etc written off during year under consideration at page number 98 103 of paper book. On careful verification of these details, it is found that expenses incurred by assessee in form of advances to various parties are for various expenditure of revenue nature. Certain advances were also given for material which if would have purchased would have been fallen in category of repairs and maintenance. Certain amount of advances and security deposit is given to various parties are also for purposes of pity services. However sum of INR 3 47700 was also provided for purchases of computer. Further sum of INR 6 72119/ is also paid for purchase of computers. However, it is stated that no such Page | 63 computer is purchased but amount is written off. It is not in dispute that assessee has purchased computers but has not adjusted advances. Therefore, undoubtedly, such advances were for purchase of capital assets, which have never been acquired by assessee. To justify claim of allowability assessee has relied upon decision of honourable Delhi High Court in case of Indo Rama synthetics Ltd vs. Commissioner of income tax 333 ITR 18 (Del). We found that in that particular decision claim was with respect to allowability of certain expenditure in nature of salary, wages, repairs, maintenance, design and engineering fees along with other expenditure of revenue administrative nature. It was not case of advances given for purchase of capital asset. It is also not case of assessee that advances given by it for golf course of business, never came into existence. Thus, reliance on these decisions is misplaced. Reliance placed on another decision of honourable Delhi High Court in CIT v. Priya Village Roadshows : 332 ITR 594 (Del.) is also misplaced because issue before honourable court was with respect to claim of allowability of feasibility study report expenditure for existing business which even otherwise would have been allowed as revenue expenditure. In present case, advances for capital goods such as computers et cetera would as such could not have been allowed to assessee as revenue expenditure. We have also perused other judicial precedents also raised before us, however, we are not impressed to allow claim of assessee, as none of decision cited before us relates to advances written off for purchase of capital asset given in earlier years was involved. Further, for claim of allowability u/s 28, loss should be of revenue nature. For claim of allowability u/s 37 (1) of act, expenditure should be of revenue nature. Therefore, prime condition that is required to be satisfied by assessee is that that expenditure is revenue in nature. According to us advances given for purchase of capital goods, cannot be considered to be revenue in nature, when they are written off. In view of this, we do not find any infirmity in order of learned CIT A, in principle, that advances given for purchase of capital goods he further written off in this year is capital expenditure. With respect to allowability of bad debts, there is no Page | 64 infirmity in order of learned CIT mentioned in para number 10.2 of his order that such advances should have been shown as income in earlier years. In view of this, we dismiss ground number 4 of appeal of assessee. 45. In result ITA number 4536/Del/2009 for assessment year 2005 06 filed by assessee is partly allowed. 46. Now we come to appeal filed by learned assessing officer in ITA number 4721/Del/2009 for assessment year 2005 06. 47. first ground of appeal is general in nature and therefore it is dismissed. 48. second ground of appeal is related to ground number 1 of appeal of assessee. This ground has already been decided while deciding ground number 1 of appeal of assessee wherein we have held that there is no infirmity in order of learned CIT in deleting disallowance of INR 6 374602/ . Hence, this ground of appeal is dismissed. 49. ground number 3 is with respect to deletion of addition of INR 1 95950000/ because of undisclosed income on sale of land. learned assessing officer noted that profit and loss account of assessee for impugned assessment year reflects sale of land as measure 31 canals (3.25 acres or 1550 0 yd ) for consideration of Rs, 4 crores. cost of above land was INR 1 9071127/ and thus it resulted into taxable income of INR 2 0928872/-. learned AO asked assessee to justify market price of such land through furnishing of comparable instances. assessee did not furnish same. Therefore learned AO noted that in contiguous plot of land and high-end residential apartments were constructed and sold by company in financial year 2000 to 2003 which yielded profit of INR 1 3.52 crores. AO noted that assessee has sold 22.69 acre of land on 26/2/2001 at rate of INR 1.90 crores per acre to ITC Ltd. Further on 17/3/2003 4.43 occurs were sold to ITC at rate of Rs. 2 .03 crores per acre. He compared situation of plot sold during year with plots sold in earlier year and found that assessee has under shown sale consideration. Therefore, he noted that estimated sale price should have been Rs. 7.26 Crore per acre resulting into sale consideration of INR 2 35950000/ instead of only INR 40,000,000 is shown by assessee thus, he made addition of INR 1 95950000/ as Page | 65 suppression of sale consideration. matter reached to learned CIT who deleted addition. Therefore, revenue is in appeal. 50. learned departmental representative vehemently supported order of learned assessing officer and submitted that when sale price of plot of land earlier was stated to be much higher, sale consideration shown by assessee is definitely understated. He further submitted that assessee did not furnish comparative sale instances. He further stated that assessee also failed to explain understated price, which is highly incompatible with actual sale made by assessee in earlier. He therefore submitted that addition made by learned assessing officer should have been sustained by learned CIT A. 51. learned authorised representative vehemently submitted that assessing officer has made addition based on conjectures and surmises and false and baseless allegation of suppression of sale consideration from sale of land. He submitted that there is no evidence available with learned assessing officer that actual sale consideration received is not real consideration received by assessee and assessee has received much more than whatever is stated in sale deed. He further stated that in absence of any evidence of actual receipt of sale consideration outside books of accounts unless brought on record by learned assessing officer no addition should have been made under provisions of law. He further stated that full value of consideration received has been shown which cannot be construed as market value but must be taken to be price bargained by parties to sale. He referred and relied upon decision of honourable Supreme Court in 66 ITR 622/ and 131 ITR 597. He further referred to decision of honourable Delhi High Court in 309 ITR 233 (Del) wherein it has been categorically held that provisions of section 48 of act does not have any reference to market value but only to consideration referred to in sale deed as sale price of assets which have been transferred. He further referred to plethora of decision to support its contention. He therefore submitted that learned CIT has correctly deleted addition. Page | 66 52. We have carefully considered rival contention and perused orders of lower authorities. During year under consideration, assessee had, vide sale deed dated 26th May, 2004, transferred plot of land admeasuring 31 canals 2 Marlas (about 3.89 acres), situated at Village Sukhrali, Tehsil & Dist. Gurgaon to M/s. Green Max Estates Pvt. Ltd., for total consideration of Rs. 4 crores . cost of said land was reflected at Rs. 1,90,71,127 in books of accounts, resulting in taxable `business income of Rs. 2,09,28,872, which was shown as income in profit and loss account. In impugned assessment, assessing officer, on basis of certain other transactions of sale of land/ flat, substituted actual consideration of Rs. 4 crores by notional/ hypothetical amount of Rs. 23,59,50,000 and made addition of difference amounting to Rs. 19,59,50,000 as alleged undisclosed income. 6.1 findings of A.O. in assessment order as well as in remand report & written and oral submission(s) made on behalf of appellant have been carefully considered. It has been case of A.O. that consideration shown by appellant was not real consideration, but this has been done without bringing on record any evidence- direct or inferential- in support of same. It is trite law that onus to prove otherwise than fact, lies on person who alleges. It has been consistently held by courts of laws that it is for Revenue to establish that there has been understatement of consideration by assessee & consideration actually received is more than one disclosed before tax authorities. In case A.O. wants to make out case that assessee had received more consideration then he should have basic material and evidence in his hands, which suggest that consideration exceeded amount shown in document. Reliance is placed on decisions of Supreme Court in CIT v. George Henderson Co Ltd(1967) 66 ITR 622(SC), CIT v. Gillanders Arbuthnot & Co (1973) 87 ITR 407(SC), K.P. Varghese v. ITO(1981) 131 ITR 597(SC), CIT V. Shivakami Co. (P) Ltd. (1986) 159 ITR 71 (SC) and CIT Vs. Godawari Corpn. Ltd. (1993) 200 ITR 567 (SC ), wherein it has been held that unless there is evidence that more than what was stated was received, no higher price or value Page | 67 can be taken to be basis for computation of capital gains. Reliance is also placed on decisions of jurisdictional High Court of Delhi in CIT V. Gulshan Kumar (Deed.) (2002) 257 ITR 703 (Del.) & CIT V. Naresh Khattar HUF (2003) 261 ITR 664 (Delhi), CIT V. Sm. Sushila Devi (2002) 256 ITR 179 (Delhi) and CIT v. Smt. Nilofer I. Singh (2009) 221 CTR 277/ (2009)176 Taxman 252/(2008)14 DTR 108. These decisions make it more than clear that expression full value of consideration as contemplated in section 48 of Act does not have any reference to market value but only to consideration referred to in sale deeds or other supporting evidences as sale price of assets which have been transferred. 6.2 In instant case, no material has been confronted by department, so as to suggest that assessee paid consideration of Rs. 23,59,50,000/- i.e. Rs. 7.26 crores per acre multiplied by 3.25 acres in place of Rs. 4,00,00,000/- . In instant case, all that A.O. has done is to rely upon hypothetical sale price, which does not show or prove that there is some underhand dealing & consideration has passed more than what is disclosed by assessee. sale consideration disclosed by assessee, supported by documentary evidence cannot be .disbelieved merely on basis of hypothetical sale price adopted by Assessing Officer. In view of aforesaid discussion, I am of considered view that A.O. has failed to adduce evidence on record in support of understatement of sale consideration by assessee. Therefore, A.O. is directed to adopt me sale consideration of impugned plot of residential land at figure as disclosed by assessee. As result, ground no.3 is allowed. 53. aforesaid land was, as stated above, sold by assessee to Green Max Estates (P) Limited vide sale deed dated 26thMay, 2004 for total sale consideration of Rs. 4 crores. On perusal of sale deed, it will be kindly noticed that entire sale consideration of Rs. 4 crores was received by assessee vide cheque No. 736042 dated 26thMay, 2004, drawn on Standard Chartered Bank, Greater Kailash, New Delhi. said cheque was deposited by assessee in its bank with Standard Chartered Bank. On perusal of Page | 68 sale deed, it will also be kindly noticed that stamp duty of Rs. 32 lacs was paid on total sale consideration of Rs. 4 crores, which had been duly accepted by Stamp Authorities. Apart from consideration of Rs. 4 crores received by assessee, no other consideration was received assessee from buyer against sale of aforesaid land in Village Sukhrali, Tehsil & Dist. Gurgaon, Haryana. It is emphatic submission of assessee that assessing officer proceeded solely on conjectures and surmises to make false and baseless allegation of suppression of sale consideration from sale of land at Village Sukhrali, Tehsil & Dist. Gurgaon. It is respectfully submitted that no evidence, whatsoever, has been brought on record by assessing officer to substantiate baseless allegation of receipt of sale consideration outside books of accounts. Naturally, in absence of any evidence of actual receipt of sale consideration outside books of accounts by assessee being brought on record, no addition could be made under provisions of Act. Hon Supreme Court in case of K.P. Varghese v. ITO: 131 ITR 597 has held that : .. If, therefore, revenue seeks to bring case within sub-s. (2), it must show not only that fair market value of capital asset as on date of transfer exceeds full value of consideration declared by assessee by not less than 15% of value so declared, but also that consideration has been understated and assessee has actually received more than what is declared by him. ... revenue must go further and prove that second condition is also satisfied. Merely by showing that first condition is satisfied, revenue cannot ask court to presume that second condition too is fulfilled, because even in case where first condition of 15% difference is satisfied, transaction may be perfectly honest and bona fide transaction and there may be no understatement of consideration. fulfillment of second condition has, therefore, to be established independently of first condition and merely because first condition is satisfied, no inference can necessarily follow that second condition is also fulfilled. Each condition has got to be viewed and established independently before sub-s. (2) can be invoked and burden of Page | 69 doing so is clearly on revenue. It is well-settled rule of law that onus of establishing that conditions of taxability are fulfilled is always on revenue and second condition being as much condition of taxability as first, burden lies on revenue to show that there is understatement of consideration and second condition is fulfilled. Moreover, to throw burden of showing that there is no understatement of consideration, on assessee would be to cast almost impossible burden upon him to establish negative, namely, that he did not receive any consideration beyond that declared by him. aforesaid observations of Hon. Supreme Court lay down general proposition of law that it is for Revenue to prove that assessee has actually received money/cash more than what is declared by assessee before seeking to substantiate apparent consideration by any fictional/notional sum. It is trite law that in terms of section 45 read with section 48 of Act, what could be taxed is only actual consideration received and same could not be substituted by any other amount unless there is positive evidence to establish any receipt/ movement of money over and above stated consideration. In case of CIT v. George Henderson And Co. Ltd.: 66 ITR 622 (SC), it is held that, expression "full value of consideration" could not be construed as market value but must be taken to be price bargained for by parties to sale. Further assessee before learned CIT has clearly stated that comparable sale of land to ITC Ltd that above agreement did not materialize and subsequently it was cancelled since assessee was not able to obtain required permission and it is still continues to be owned and possessed by assessee. Even further, comparison of sale of plot of land with sale of flat in adjoining area is not comparing apples with Apple but Apple with oranges. Thus, in absence of any corroborative evidence of having received consideration higher than what has been stated in sale deed and in books of account, addition made by learned assessing officer is not in accordance with law. In view of this, we do not find any infirmity in order of learned CIT and deleting above addition which is made purely on basis of conjectures and Page | 70 surmises. Accordingly, ground number 3 of appeal of revenue is dismissed. 54. Now we come to ground number 4 of appeal of assessee where learned CIT has deleted addition of Rs 497184511/ made by learned assessing officer being long-term capital gain on transfer of ownership of ITC Ltd. above addition has been made subject to exact details of date on acquisition cost of land on protective basis and on substantive made basis addition has been made in assessment year 2001 02 and 2003 04 on basis of agreement to sale dated 16th/2/2001 and 17/3/2003. brief fact shows that assessee owns 238.25 acres of land in Haryana. Out of which assessee on 16/02/2001 entered into agreement to sale for sale of about 22.691 of land to ITC Ltd for consideration of INR 450,000,000. Further, on 17/03/2003, assessee further entered into agreement to sale of 4.43 acres of land with ITC Ltd for consideration of INR 90,000,000. Thus out of total consideration of INR 5 4 crores assessee only received 53,50,00,000 but continued to retain possession of said land and sale could not be affected in absence of various provisions from government and regulatory bodies. Ultimately, above agreements were cancelled and entire money was refunded to buyer. learned assessing officer held that there is transfer of land in assessment year 2001 02 and 2003 04 and consequently assessee was liable to pay tax on capital gain in those relevant years. For assessment year 2001 02 and 2003 04 for above additions were deleted by learned CIT and order of learned CIT has been affirmed by coordinate bench as per order dated 15/6/2016 in ITA number 3549/del/2009 and 4847/2009. In view of this, it is apparent that when substantive addition has already been deleted on merits of issue, protective addition made during year also does not survive. 55. learned CIT has dealt with above issue as under:- 8. Ground of Appeal No.5 relates to grievance of appellant against action of Assessing officer in adding sum of Rs. 49,7184,511/- on account of Long-term capita! gains on protective basis. It was submitted on behalf of die appellant that said issue is Page | 71 covered in favour of appellant by order of my predecessor-in- office in appellant s own case for assessment year 2001-02. 8.1 I have carefully considered findings of Assessing Officer and written submissions made on behalf of appellant. I find that identical issue in appellant s own case was decided in its favour by my predecessor-in-office in Appeal No. 141/2007-08 vide order dated 22-05-2009 for assessment year 2001-02 by holding that In totality of all facts and circumstances, I have come to conclusion that in present case there was neither sale nor transfer of possession as covered in clause (i) to (v) of section 2(47) of Act. In view of facts as discussed above, I do not find justification to bring Rs.45 crores received by appellant from I.T.C. as Agreement to Sale of land measuring 22.69 acres to Capital Gains Tax. same is directed to be deleted. 8.2 On verification of details furnished by appellant during appellate proceedings, it is found that appellant continues to hold possession of land and legal title over land in question. Further, appellant still occupies and uses aforesaid land for its business activities. During year under consideration neither any sale agreement and /or any sale deed was executed nor was possession handed over to party who has paid sale consideration in A.Y.2001-02 and 2003-04. In view of aforesaid, it can be safely concluded that transfer of land has not taken place during year under appeal and therefore, question regarding taxability of transfer of impugned land under Capital Gains does not arise during year under consideration. As already mentioned above, identical issue in appellant s own case was decided in its favour by my predecessor-in- office in A. Y. 2001-02. As facts and circumstances of case are pari materia with case of. appellant in A.Y. 2001-02, for reasons as discussed in aforesaid order of my predecessor-in-office, this ground of appeal is allowed. Page | 72 56. As revenue could not point out that what is trigger point of taxing above amount in this year and further in which year transfer of capital asset has happened, above addition has rightly been deleted by learned CIT A. In view of this we do not find any infirmity in order of learned CIT deleting protective addition of Rs. 497184511/ . Thus, ground number 4 of appeal is dismissed. 57. ground number 5 of appeal is with respect to deletion of addition of INR 2 031305/ made by learned assessing officer on account of interest disallowances. above disallowance has been made by learned assessing officer on basis of cash flow statement attached with audited financial statements for year ended on 31st of March 2005 holding that assessee had out of fresh loan of INR 7.75 crores received from ITC during year under consideration utilized only INR 4.95 crores for repayment of old Tom loan and interest due thereon. Thus, learned AO held that only 64 percentage of new borrowed funds were utilized for non- business purposes and therefore disallowed proportionate sum of INR 2031305/ out of total interest of INR 3 173915/ . learned CIT deleted above addition after verification of details holding that out of total borrowing of INR 77,500,000 only INR 7 5,00,000, if at all, had been utilized for repayment of old borrowings and interest thereon of INR 4.95 crores. He further held that learned assessing officer has not brought on record anything to show that assessee has utilized borrowed funds for non-business purposes. Thus, he deleted above disallowance. 58. learned departmental representative vehemently supported order of learned assessing officer whereas learned authorised representative referred to submission made before learned CIT and findings recorded by him. 59. We have carefully considered rival contention and perused orders of lower authorities. On careful reading of para number 9.1 of order we do not find any infirmity in order of learned CIT wherein it has been held that that fresh borrowing of INR 7.75 crore were utilized for repayment of loan pertaining to earlier years and purpose of loan has been accepted by learned assessing officer, disallowance made Page | 73 by learned assessing officer is not sustainable. We also do not find any infirmity in order of learned CIT mentioning reasons for deletion of disallowance in para number 9.1 of his order. Accordingly, ground number 5 of appeal of AO is dismissed. 60. ground number 6 is against deletion of addition of INR 5 108772/ made on account of excess depreciation claimed on golf course holding that golf course is plant and machinery and not building as claimed by learned assessing officer. above issue has been squarely dealt with by us in appeal of assessee for assessment year 2001 02 wherein we have held that golf course is plant and not building. For same reasons given therein, we dismiss ground number 6 of appeal of AO. 61. In view of this appeal number 4721/del/2009 for assessment year 2005 06 preferred by learned assessing officer is dismissed. Penalty appeals u/s 271 (1) (c) for Y 2005-06 Assessee and AO 62. For assessment year 2005 06, penalty proceedings were initiated by learned assessing officer u/s 271 (1) (C) of act on completion of assessment proceedings as well as before first appellate authority. learned AO levied penalty u/s 271 (1) ( c) of act as per order dated 14/3/2011 of INR 1 28005767/ on several additions made by learned assessing officer as under:- a. provision no longer written back of INR 8 416051/ b. undisclosed income on sale of land of INR 1 95950000/ c. treatment of security deposit of INR 3 40542851/ as income of assessee d. disallowance of interest expenditure of INR 2 031305/ e. disallowance of bad debts of INR 7 229915/ f. disallowance of depreciation of INR 5 108772/ g. taxability of long-term capital gain on protective basis of Rs. 497184511/ Page | 74 63. Assessee preferred appeal before learned CIT who confirmed penalty on following issues only:- a. disallowance of bad debts or advances return of amounting to INR 7 229915/ upheld by learned CIT b. Confirmation of addition of INR 2 041449/ because of provision of liabilities returned back. 64. Thus, assessee is aggrieved by confirmation of penalty on these two above counts, and therefore it is in appeal in ITA number 4560/Del/2019. 65. revenue is also aggrieved with order of learned CIT in deleting penalty only on one account that learned CIT has deleted penalty on taxability of non-refundable membership fee and security deposit amounting to INR 3 40542851 as income chargeable to tax. Such appeal is preferred in ITA number 4849/Del/2011. 66. assessee has raised following grounds of appeal in ITA No. 4560/Del/2011 for Assessment Year 2005-06 against order of learned Commissioner of income tax (appeals) VII common New Delhi dated 16/8/2011 wherein penalty levied by learned assessing officer u/s 271 (1) (c) of income tax act as per order dated 14/3/2011 of INR 12,80,05,767/ has been partly confirmed:- 1. That CIT(A) erred on facts and in law in confirming penalty imposed under section 271(1 )(c) of Income Tax Act, 1961 ( Act ) on disallowance of deduction of bad debts / advances written off aggregating to Rs. 72,29,915 for alleged furnishing of inaccurate particulars of income. 1.1 That CIT(A) erred on facts and in law in not appreciating that claim made by appellant was bonafide claim and therefore, no penalty was leviable under section 271(1 )(c) of Act. 1.2 That CIT(A) erred in holding that conduct of appellant creates doubt about bonafides and that there was no reasonable cause in not disclosing full particulars. 2. That CIT(A) erred on facts and in law in confirming penalty imposed on account of addition of provision written back by Page | 75 appellant amounting to Rs.20,41,449 out of total provision of Rs. 84,16,051 for alleged furnishing of inaccurate particulars of income. 2.1 That CIT(A) has failed to appreciate that claim made by appellant was bonafide claim, which is clearly evident form fact that: (a) out of total provision of Rs.'84,16,051, provision of Rs. 63,74,602 was allowed by CIT(A), and (b) provision of Rs. 20.41,449 was sustained only due to non- availability of old records. 2.2 That CIT (A) erred in holding that appellant filed to prove genuineness of its claim in respect of Rs. 20,41.449. 3. That CIT(A) has erred on facts and in law in confirming penalty imposed without appreciating that appellant has been consistently incurring huge losses and has not been able to claim set off of said losses even till date, which clearly establishes bonafide of appellant. 67. brief fact shows that learned assessing officer levied penalty of INR 128010000/ on all additions made in case of assessee for assessment year 2005 06, learned CIT on issue of a. claim of allowability of bad debts written off INR 7 229915/ upheld by learned CIT and confirmed by us also in this order b. Taxability of sum of INR 2 041449/ u/s 41 (1) (a) of act made by learned assessing officer and confirmed by first appellate authority and coordinate bench. 68. Thus, penalty has been substantially deleted by learned CIT and assessee is contesting confirmation of penalty on about two counts only. 69. On issue of disallowance of INR 7 229915/ in respect of bad debts written off, before learned assessing officer assessee was not able to furnish details of exact nature of the, year of accrual, reasons of dispute and evidence of 4 speed for recovery along with evidence of litigations et cetera to establish genuineness of such claim. above addition was sustained by learned CIT and by us Page | 76 in appeal of assessee. However, issue here is whether assessee has furnished inaccurate particulars of income to that extent. claim of assessee is that assessee has return of above sum on basis of commercial decision taken by management, as there are no chances of recovery. claim of assessee is that it is business loss or bad debts or allowability of expenditure u/s 37 (1) of act. assessee also submitted that assessee could not furnish details because of reason that operations of assessee were closed in October 2006 on account of lockout due to labor disturbances further due to this office of assessee was vandalized by labor union. Such facts were also demonstrated by police complaint of assessee dated 5/10/2006. In view of this, it was submitted that assessee has not been able to furnish certain documentary evidences before lower authorities however, commercial justification were given by assessee. It was rejected. It was further stated that there is no requirement of proving that debt has become bad during year. assessee submitted that bad debts amounting to INR 1 286282/ was confirmed for reason that assessee failed to furnish evidence of fulfillment of condition. Further with respect to writing of advances of INR 5 943633/ assessee submitted complete details. Therefore, there is no reason of confirming disallowance, which is supported by several judicial precedents. It was further stated that it is bona fide claim and therefore penalty should not be levied. However learned CIT confirmed penalty vide para number 6.2 of his order as he held that default on part of assessee in not disclosing full particulars was attributable to reasonable clause. 70. With respect to taxability of sum of INR 2 041449/ u/s 41 (1) (a) of act which was claimed to be because of non availability of documentary evidences, it was submitted that above sum was part of liabilities returned back and provision is no longer required of INR 8 752240/ . learned assessing officer disallowed same whereas learned CIT upheld disallowance of INR 2 041449/ holding that balance sum of INR 6 374602/ was already disallowed by assessee in earlier assessment year and therefore provisions of section 41 of Page | 77 income tax act does not apply. Thus disallowance of INR 2 041449 was upheld. same was also upheld by coordinate bench. Therefore levy of penalty was contested before learned CIT AO in para number 7.1 of his order confirmed same on disallowance of INR 2 041449/ . 71. Before us, during course of hearing, assessee has preferred application for admission of additional ground invoking rule 11 of income tax (appellate tribunal s) rules, 1963 stating that penalty levied by learned assessing officer is beyond jurisdiction and bad in law. It is further challenge that satisfaction in assessment order is not properly recorded and further notice issued on 18/12/2007 u/s 274 of act for initiating penalty proceedings is without specifying any charge of default. Thus, it was also prayed that above issue is purely legal in nature and goes to root of matter and therefore these additional ground number 4 of appeal should be admitted. 72. learned departmental representative vehemently contested above application of admission of additional evidence and stated that such grounds of never been raised before learned lower authorities and therefore now should not be admitted. 73. We have carefully considered rival contention and find that above ground of appeal is purely legal in nature and no further facts are required to be investigated. Thus in interest of justice, we admit additional ground raised by assessee which is related to jurisdictional facts about proper satisfaction as well as initiation of penalty proceedings by learned assessing officer. 74. On merits of issue, learned authorised representative referred to copy of notice dated 18/12/2007 issued u/s 271 (1) of act which is placed at page number 64 of paper book wherein it has been stated that penalty proceedings have been initiated on assessee for concealment of particulars of income or furnishing inaccurate particulars of such income. learned authorised representative submitted that penalty should be deleted on this ground itself. He further stated that claim of assessee is also supported by decision of honourable Karnataka High Court in 73 taxmann.com 241 Page | 78 against which special petition has been dismissed by honourable Supreme Court in 242 taxman 180. 75. learned departmental representative vehemently contested above issue and stated that proper satisfaction has been recorded by assessing officer and it is non-statutory notice, which has been referred by learned authorised representative. 76. We have carefully considered rival contention and perused orders of lower authorities. We have also carefully considered notice issued by learned assessing officer, which is placed at page number 64 of paper book wherein none of twin charges have been struck off by learned assessing officer in notice dated 18/05/2007. Therefore, issue squarely covered in favour of assessee by decision of Karnataka High Court against which special petition has been dismissed in 242 taxman 180 by honourable Supreme Court. Further recently honourable Delhi High Court in [ITA number 475/2019 dated 2/8/2019] as per paragraph number 21 of that order has also upheld view of coordinate bench that notice issued by learned assessing officer would be bad in Law if it did not specify under which limb of section 271 (1) (c), penalty proceedings had been initiated. In view of this, we allow ground number 4 of appeal of assessee and direct learned AO to delete penalty u/s 271 (1) (c) of act. 77. Accordingly we allow ITA number 4560/Del/2009 filed by assessee for assessment year 2005 06 against penalty sustained by learned CIT A. 78. revenue has raised following grounds of appeal in ITA No. 4849/Del/2011 for Assessment Year 2005-06:- 1. order of learned CIT (APPEALS) is erroneous & contrary to facts & law. 2. On facts and in circumstances of case and in law, learned CIT (A) has erred in deleting penalty u/s 271(1) (c) of Act levied by AO on ground that assessee furnished inaccurate particulars of income by not showing non-refundable membership fee and security deposit amounting to Rs. 34,05,42,851/- as income chargeable to tax. Page | 79 3. CIT (A) erred in not appreciating fact that penalty u/s 271(1) (c) can be levied on civil infraction of law. 4. Ld. CIT (A) erred in not appreciating that case position of law was amply clear and there was no scope of difference in opinion on this issue. Thus, assessee intentionally chose not to declare income in respect of membership fee and scrutiny deposit received during year. 79. As we have already crash penalty order passed by learned assessing officer in ITA number 4560/Del/2011 holding that notice issued by learned assessing officer does not specify charge on which penalty is levied, on basis of decision of honourable Karnataka High Court against which special leave petition by honourable Supreme Court is dismissed and also decision of honourable Delhi High Court on that issue, we do not find any merit on this issue in appeal filed by learned AO. Therefore ITA number 4849/Del/2011 filed by learned Asst Commissioner of income tax, New Delhi is dismissed. 80. Accordingly, in penalty proceedings for assessment year 2005 06, appeal of assessee is allowed appeal of revenue is dismissed. AY 2007-08 81. For assessment year 2007 08, assessee filed its return of income declaring loss of INR 6 8685141 on 27/10/2007. assessment u/s 143 (3) of act on 30/12/2009 determining total income of assessee assessing total loss of INR 6 3950975/ . learned assessing officer disallowed depreciation on golf course amounting to INR 1 085614/ . He also held that membership fees and non-refundable security deposit received of INR 3 648552/ is also assessable as taxable income of assessee. On appeal before learned CIT A, he confirmed addition of INR 3 648552/ holding that membership fees on refundable security deposit received by assessee during assessment year 2007 08 is income of assessee. Therefore, assessee is aggrieved with order of learned CIT has preferred this appeal. assessee has raised following grounds of appeal in ITA No. 653/Del/2011 for Assessment Year 2007-08:- Page | 80 1. That CIT(A) erred on facts and in law in confirming addition of Rs.36,48,552 on account of membership fees and refundable security deposit received during assessment year 2007-08. 1.1 That CIT(A) erred on facts and in law in confirming action of assessing officer without appreciating that Rs. 33,81,750 was received as advance membership fees and was offered for tax on mercantile basis by appellant in subsequent year(s) to which same relates. 1.2 That CIT(A) failed to appreciate that Rs. 2,66,762 was amount received on account of refundable security deposit owed by appellant to its individual members and same could not, therefore, be regarded as taxable income of appellant. 82. Both parties submitted before us that this issue is covered in appeal of assessee for assessment year 2005 06 wherein, identical issue arose. Therefore submitted that their arguments on this issue are similar to arguments raised in that appeal on that issue. 83. We have carefully considered rival contention and perused orders of lower authorities. only issue involved in this appeal is whether sum of Rs. 3381750/ received by assessee as advance membership fees is chargeable to tax in this year or not. Further, refundable deposit of INR 2 66762/ received by assessee from individual members which is shown by assessee is liability, is chargeable to tax as income of assessee or not. Identical issue has been dealt with by us in ground number 2 and 3 of appeal of assessee for assessment year 2005 06. Therefore, for similar reasons given therein we hold that membership fees received by assessee of Rs. 3381750/ as advance membership fees, and shall be chargeable to tax on basis of accrual income to which it pertains. For such verification as in assessment year 2005 06, we set aside issue back to file of learned assessing officer. With respect to issue of taxability of non-refundable security deposit we have already hold that such receipt is not income of assessee. Accordingly, we hold for this year too that non-refundable security deposit received by assessee is not income chargeable to tax. Accordingly, ground number 1 of appeal of assessee is allowed. Page | 81 84. In result ITA number 653/del/2011 for assessment year 2007 08 filed by assessee is allowed. Assessment Year 2008-09 85. assessee has raised following grounds of appeal in ITA No. 4098/Del/2011 for Assessment Year 2008-09:- 1. That CIT(A) erred on facts and in law in confirming addition of Rs.3,65,667 on account of membership fees and refundable security deposit received during assessment year 2008-09. 1.1 That CIT(A) failed to appreciate that Rs. 1,44,000/- was received as advance membership fees and was offered for tax on mercantile basis by appellant in subsequent year(s) to which same relates. 1.2 That CIT(A) failed to appreciate that Rs. 1,85,667/- out of total membership fees of Rs.3,65,667, was received on account of refundable security deposit owed by appellant to its members and same could not, therefore, be regarded as taxable income of appellant. 1.3 That CIT(A) erred in not adjudicating alternative ground taken by appellant to effect that assessing officer having assessed membership fees in earlier assessment years, ought to have excluded very same amount from taxable income of appellant for year under appeal. 86. Identical issue has been dealt with by us in appeal of assessee for assessment year 2005 06 wherein we have held that membership fees received in advance by assessee is chargeable to tax on accrual basis to which it pertains to and non-refundable security deposit received by assessee is capital receipt not chargeable to tax as income in hands of assessee. This is decided as per ground number 2 and 3 of appeal of assessee for that year. Both parties confirmed that there is no change in facts and circumstances of case. Therefore, for similar reasons we also hold that membership fees received in advance by assessee is not income in this year but is chargeable to tax in Page | 82 year in which it has accrued to assessee and as well as non- refundable security deposit received by assessee is not income. Accordingly, ground number 1 of appeal of assessee is allowed. 87. In result, appeal of assessee for assessment year 2008 09 is allowed. Assessment Year 2009-10 88. assessee has raised following grounds of appeal in ITA No. 1516/Del/2014 for Assessment Year 2009-10:- 1. That CIT(A) erred on facts and in law in confirming addition of Rs.2,03,944 on account of refundable security deposit received by appellant during relevant assessment year, merely by following CIT(A) orders for preceding assessment years. 1.1 That CIT (A) failed to appreciate that security deposit received by appellant was in nature of interest free security deposit and appellant was under legal obligation to refund same on member ceasing to be so. 1.2 That CIT(A) failed to appreciate that security deposit received by appellant was continuing legal obligation and same could not be regarded as trading surplus/ income for relevant assessment year. 89. Identical issue has been dealt with by us in appeal of assessee for assessment year 2005 06 wherein we have held that membership fees received in advance by assessee is chargeable to tax on accrual basis to which it pertains to and non-refundable security deposit received by assessee is capital receipt not chargeable to tax as income in hands of assessee. This is decided as per ground number 2 and 3 of appeal of assessee for that year. Both parties confirmed that there is no change in facts and circumstances of case. Therefore, for similar reasons we also hold that membership fees received in advance by assessee is not income in this year but is chargeable to tax in year in which it has accrued to assessee and as well as non- Page | 83 refundable security deposit received by assessee is not income. Accordingly, ground number 1 of appeal of assessee is allowed. 90. In result, appeal of assessee for assessment year 2009-10 is allowed. Assessment Year 2010-11 91. assessee has raised following grounds of appeal in ITA No. 4998/Del/2015 for Assessment Year 2010-11:- 1. That CIT(A) erred on facts and in law in upholding action of assessing officer in making addition of Rs.56,78,661/- on account of security deposits and membership fees received during relevant assessment year. 1.1 That CIT(A) erred on facts and in law in not appreciating that amount received on account of refundable security deposit was amount owed to members and same could not, therefore, be regarded as taxable income of appellant. 1.2 Without prejudice, CIT(A) erred on facts and in law not excluding membership fees already taxed in assessment for earlier year(s) from taxable income of appellant for year under consideration. 92. Identical issue has been dealt with by us in appeal of assessee for assessment year 2005 06 wherein we have held that membership fees received in advance by assessee is chargeable to tax on accrual basis to which it pertains to and non-refundable security deposit received by assessee is capital receipt not chargeable to tax as income in hands of assessee. This is decided as per ground number 2 and 3 of appeal of assessee for that year. Both parties confirmed that there is no change in facts and circumstances of case. Therefore, for similar reasons we also hold that membership fees received in advance by assessee is not income in this year but is chargeable to tax in year in which it has accrued to assessee and as well as non- refundable security deposit received by assessee is not income. Accordingly, ground number 1 of appeal of assessee is allowed. 93. In result, appeal of assessee for assessment year 2009-10 is allowed. Assessment year 2011-12 Page | 84 94. assessee has raised following grounds of appeal in ITA No. 4999/Del/2015 for Assessment Year 2011-12:- 1. That CIT(A) erred on facts and in law in upholding action of assessing officer in making addition of Rs.37,06,534/- on account of security deposits and membership fees received during relevant assessment year. 1.1 That CIT (A) erred on facts and in law in not appreciating that, amount received because of refundable security deposit was amount owed to members and same could not, therefore, be regarded as taxable income of appellant. 1.2 Without prejudice, CIT(A) erred on facts and in law not excluding membership fees already taxed in assessment for earlier year(s) from taxable income of appellant for year under consideration. 95. Identical issue has been dealt with by us in appeal of assessee for assessment year 2005 06 wherein we have held that membership fees received in advance by assessee is chargeable to tax on accrual basis to which it pertains to and non-refundable security deposit received by assessee is capital receipt not chargeable to tax as income in hands of assessee. This is decided as per ground number 2 and 3 of appeal of assessee for that year. Both parties confirmed that there is no change in facts and circumstances of case. Therefore, for similar reasons we also hold that membership fees received in advance by assessee is not income in this year but is chargeable to tax in year in which it has accrued to assessee and as well as non- refundable security deposit received by assessee is not income. Accordingly, ground number 1 of appeal of assessee is allowed. 96. In result, appeal of assessee for assessment year 2011-12 is allowed. Assessment Year 2012-13 97. assessee has raised following grounds of appeal in ITA No. 138/Del/2016 for Assessment Year 2012-13:- 1. That CIT (A) erred on facts and in law in upholding action of assessing officer in making addition of Rs. 16,10,000/- on account Page | 85 of security deposits received from members during relevant assessment year. 1.1 That CIT(A) erred on facts and in law in not appreciating that amount received on account of refundable security deposit was amount owed to members and same could not, therefore, be regarded as taxable income of appellant. 98. Identical issue has been dealt with by us in appeal of assessee for assessment year 2005 06 wherein we have held that membership fees received in advance by assessee is chargeable to tax on accrual basis to which it pertains to and non-refundable security deposit received by assessee is capital receipt not chargeable to tax as income in hands of assessee. This is decided as per ground number 2 and 3 of appeal of assessee for that year. Both parties confirmed that there is no change in facts and circumstances of case. Therefore, for similar reasons we also hold that membership fees received in advance by assessee is not income in this year but is chargeable to tax in year in which it has accrued to assessee and as well as non- refundable security deposit received by assessee is not income. Accordingly, ground number 1 of appeal of assessee is allowed. 99. In result, appeal of assessee for assessment year 2012-13 is allowed. Order pronounced in open court on 26/08/2019. -Sd/- -Sd/- (BEENA PILLAI) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 26 /08/2019 K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Page | 86 Landbase India Ltd. v. Deputy Commissioner of Income-tax, Circle-4(1), New Delhi