Commissioner of Income Tax Delhi -IV v. DLF Commercial Developers Limited

(1) Did the Income Tax Appellate Tribunal (ITAT) fall into error in not holding that the loss of Rs. 4,92,71,000/- on account of derivative transaction was a speculative loss, and was entitled to the benefit of Section 73, in view of the explanation to Section 73 of the hicome Tax Act. Argument heard. Order reserved. ITA 96/2013 The revenue claims to be aggrieved by an order of the Income Tax Appellate 2013:DHC:7849-DB Tribunal (ITAT) dated 30.11.2011 in ITA 2065/Del/2011 which followed its own previous decision in ITA 2064/Del/2011. The appeal pertained to the Assessment Year 2007-08. Briefly the facts for this purpose of this appeal are that the assessee, which entirely provides access to its GolfCourse, collects one-time non-refundable membership fee. This is sought to be brought to taxation and the assessee atthe relevant time claimed that the income tax was entitled to be spread-over for the period of membership of the concerned individual. The Assessing Officer (AO), however, declined the relief On appeal, the appellate commissioner accepted the assessee's contention and granted the relief 7'he revenue's appeal was rejected by the ITAT. The revenue contends that the benefit of spreading-over of income could not have been granted in the circumstance of the case. It is contended that the one-time membership fee has to be treated as income at the point of time of its receipt and is consequently not entitled to the benefit of spread-over. This Court notices thatthe ITAT in its impugned order had relied upon its previous order in another case. The ITAT had relied upon E.D. Sassoon and Company Ltd. v. CFF. The discussion in ITA 180/2012, a judgment delivered byanother Division Bench in this regard pertinently states as follows: " As regards the non-refundable upfront payment it was obsei-ved and held that it entailed and secured use offacilities for the period specified. The assessee, therefore, had to provide and incur expenses for providing the said facilities. The Tribunal has followed the decision ofthis Court in CITv. Dinesh Kumar Goel (2011) 331 ITR 10. In the said case, this High Court has referred to the concept ofincome, and the principles of accountancy. In the said case, the re.<ipondent-assessee was running a coaching institute and was receiving upfront fee for providing coaching, whichwas spread over one year or twoyears. Keeping in view the factual position. Tribunal has rightly appreciated and applied the law as elucidated in the case of Dinesh Kumar Goel (supra). We do not think any substantial question of Imv arises. The appeal is dismissed. No costs. " This Court finds no reason to diverge from the view taken by the Division Bench in respect of the same question for 2006-07. The Court also notices that the revenue's appeal by Special Leave was rejected by the Supreme Court on 08.03.2013. G In viewof the above discussion, no question of law arises forconsideration. The appeal is accordingly dismissed. MAY 06,2013 'ajk'

S. RAVINDRA BHAT, J

NAJMIWAZIRI, J