1999 PLP 3510 (PTD)

R.C. LAHOTI, J.

These two references under section 256(1) of the Income Tax Act, 1961, arising out of the assessment year 1972-73 made at the instance of the Revenue and the assessee both seek the opinion of the High Court on the following questions of law: "Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that rent receipts from the members to whom the rooms were let out by the assessee-club alongwith other facilities were not assessable to income-tax on the doctrine of mutuality? Whether on the facts and in the circumstances of the case, there should be deduction of a portion of the normal overhead expenditure incurred by the assessee against the royalty of Rs.1,16,000? Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the income from swimming pool and stadium at Bombay should be taxed under the head 'business' and not under the head 'income from house property? So far as question No. 1 is concerned, it stands answered by the law laid down by the Supreme Court in the case of CIT v. Bankipur Club Ltd. (1997) 226 ITR

97. In view of the law so laid down, the question is answered in the affirmative, i.e., in favour of the assessee and against the Revenue. So far as question No.2 is concerned, we find from paragraph 7 of the appellate order of the Tribunal that the precise details of the expenditure incurred by the assessee for earning of the income were not made available. The Tribunal formed an opinion that some expenditure had to be allowed for the earning of the income in question because when the lawns of the club were used for social functions, the club had to incur some expenditure. The Tribunal thought it reasonable to allow an expenditure to the extent of 20 percent of the income. This is purely a finding of fact and no question of law arises therefrom. The question, therefore, need not be answered. ??????????? From the appellate order of the Tribunal, it is clear that for the earlier years the earning from swimming pool and the stadium at Bombay was being taxed under the head "income from business" and not under the head "income from house property". It was for the assessment year in question that the Income-tax Officer thought it fit to assess the income from the pool and the stadium as income from house property. However, from the order of the Tribunal it is not clear if the swimming pool and the stadium were let out as property to outsiders, i.e., other than members. On the contrary, we find from the order of the Appellate Assistant Commissioner that the income from the swimming pool and the stadium at Bombay could not be considered as income from property as there was no element of rent for use of the swimming pool and the stadium by the members and the outsiders. This finding of fact has not been dislodged in the order of the Tribunal. Therefore the Tribunal is right in holding that the income from the swimming pool and the stadium at Bombay was rightly taxed under the head "income from business" and not under the head "income from house property". The question is answered accordingly, i.e., in favour of the assessee and against the Revenue. ? No order as to costs. One copy of this order shall be placed on the record of each of the two references. M . B . A . /3131 /FC????????????????????????????????????????????????????????????? Reference answered.