The Tax Publishers2020 TaxPub(DT) 1845 (Mum-Trib)

INCOME TAX ACT, 1961

Section 4

Membership fee received for 15 years was liable to spread over the period of time for which such fee was received. Accordingly, AO was directed to tax 1/5th share of fee in each year, rather than taxing the entire sum in the year of receipt itself.

Income - Year of taxability - Entrance fee for giving membership of club for years -

Assessee-company running the club received one time membership entrance fees of Rs. 3 crore as one time membership fees for life time membership of club (15 years). AO treated the said receipt as revenue receipt against assessee's treatment as a capital receipt. Held: Membership fee received for 15 years was liable to spread over the period of time for which such fee was received. Accordingly, AO was directed to tax 1/5th share of fee in each year, rather than taxing the entire sum in the year of receipt itself.

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2010-11 to 2015-16

INCOME TAX ACT, 1961

Section 37(1)

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