Case nº Ruling No. AAR/44/ST-I/29/2016 in Application No. AAR/44/ST-1/10/2016 of AAR Cases, August 12, 2016 (case In Re : Avadh Infratech Ltd. Vs)
| Judge | For Appellant: Shri Avinash Poddar, CA and For Respondents: Shri Govind Krishna Dixit, AR |
| President | V.S. Sirpurkar, Chairman, Shri S.S. Rana and R.S. Shukla, Members |
| Resolution Date | August 12, 2016 |
| Issuing Organization | AAR Cases |
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Ruling: 1. M/s. Avadh Infratech (hereinafter also referred as an applicant) is a partnership firm. The main object of the applicant is to establish a club with luxurious amenities such as restaurant, swimming pool and gymnasium as also to do all incidental activities necessary for the attainment of the foregoing objects of the club. The applicant has already started the process of conversion into a Limited Company because it has the planning to collect the money from its shareholders which shall be utilized for the purposes and object, i.e., establishment of a luxurious club. Hence, membership shall be granted to only those persons who are shareholders of the company. The part of share subscription is towards equity share capital and remaining towards development contribution fund and will be treated as a deposit in the company. 2. Applicant has raised following question before this Authority; Whether the money/contribution received by company against shares and deposit from the prospective members for raising funds which can be used for achieving the sole object of the company, i.e., establishing a luxurious club, is taxable as service as per the provisions of the Finance Act, 1994 3. Applicant submits that as per the definition of Service under Section 65B(44) of the Finance Act, 1994, following can be concluded: (a) First and foremost, there has to be an activity; (b) Second, if there is an activity then it shall be carried out by a person for another person; (c) Third, if there is any activity and it is being carried out by a person for another person then there shall be a consideration; that anything or transaction to be covered under the definition of service shall satisfy all the above three things, otherwise it cannot be termed as service; that in the light of the facts of the present case, there is no activity, since receiving an amount against the issuance of shares by a company cannot be said to be against an activity; that if there is no activity then the... |
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