ITAT Pune Partly Allows Poona Club Limited's Appeal for A.Y. 2017-18: Key Rulings on Non-Member Receipts, Section 14A Disallowance, and Entrance Fees
Background and Overview
The Income Tax Appellate Tribunal, Pune Bench, delivered its ruling in Poona Club Limited Vs ACIT (ITAT Pune), ITA No. 2881/PUN/2025, pertaining to Assessment Year 2017-18. The appeal was directed against the order passed by the Ld. CIT(A)/NFAC dated 15.09.2025, which had in turn arisen from the assessment order framed on 28.12.2019 by the ACIT, Circle-7, Pune.
The assessee — a company limited by guarantee operating as a club offering sports, entertainment, and hospitality facilities to its members — had filed its return of income for A.Y. 2017-18 on 01.03.2018, declaring total income of ₹2,75,74,730. The case was selected for complete scrutiny under CASS, and after considering the assessee's submissions, the Assessing Officer made aggregate additions of ₹1,23,78,739, bringing the total assessed income to ₹3,99,53,469. The assessee's appeal before CIT(A)/NFAC did not yield relief, prompting the present appeal before the Tribunal.
The Tribunal ultimately partly allowed the appeal, granting significant relief across multiple grounds by following its own earlier decisions rendered in the assessee's case across different assessment years.
Ground-wise Analysis of the Tribunal's Rulings
Ground No. 1 — Venue Charges from Non-Members and Guests: ₹28,89,280
The Assessing Officer had made an addition of ₹28,89,280 representing venue charges received from non-members and guests, treating the entire gross receipt as taxable income outside the principle of mutuality.
The Tribunal referred to its earlier rulings in the assessee's own case, particularly the decision for A.Y. 1994-95 in Poona Club Ltd. Vs. ACIT, ITA No.625/1998, which was subsequently followed for A.Y. 2010-11 in ITA No.1481/PUN/2016 dated 26.09.2018. These decisions consistently held that only the net profit element at 20% of such receipts is taxable, rather than the entirety of the gross receipts.
Following this consistent line of precedent, and in the absence of any contrary binding precedent cited by the Revenue, the Tribunal:
- Sustained ₹5,77,856 (representing 20% of ₹28,89,280)
- Deleted the remaining addition of ₹23,11,424
Ground No. 1 was partly allowed.
Ground No. 2 — Dinner Receipts from Non-Members and Guests: ₹10,72,762
A parallel issue arose in respect of dinner receipts collected from non-members and guests. The Assessing Officer had treated the full amount of ₹10,72,762 as taxable.
Applying the same reasoning as in Ground No. 1, and drawing from the earlier decisions for A.Y. 1994-95 and A.Y. 2010-11, the Tribunal applied the 20% profit element approach consistently:
- Sustained ₹2,14,552 (20% of ₹10,72,762)
- Deleted ₹8,58,210
Ground No. 2 was partly allowed.
Ground No. 3 — Cricket Ground Charges from Non-Members and Guests: ₹13,47,250
The addition of ₹13,47,250 on account of cricket ground charges received from non-members and guests was challenged under Ground No. 3.