ITO 12(3)(2), MUMBAI V. NEWS MAKER IV CHAMBER PREMISES CO OP SOC. LTD., MUMBAI

ITA 1402/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1748 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 01-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M SUBRAMANIAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER ITA NO. 1402/MUM/2012(A.Y. 2005-06) ITA NO.1403/MUM/2012(A.Y. 2007-08) ITA NO.1404/MUM/2012 (A.Y. 2008-09) INCOME TAX OFFICER 12(3)(2), ROOM NO.114, 1 ST FLOOR, AAYKAR BHAVAN, MUMBAI - 400 020. (APPELLANT) VS. M/S. NEW MAKER IV CHAMBER PREMISES CO-OP SOCIETY LTD., NARIMAN HOUSE, NARIMAN POINT, MUMBAI - 400 021. PAN: AAAAN 2428A (RESPONDENT) APPELLANT BY : SHRI MOHIT JAIN RESPONDENT BY : SHRI M.SUBRAMANIAN DATE OF HEARING : 07/03/2013 DATE OF PRONOUNCEMENT : 0 7/03/2013 ORDER PER I.P.BANSAL, J.M ALL THESE APPEALS ARE FILED BY THE DEPARTMENT AND THEY ARE DIRECTED AGAINST THREE SEPARATE ORDERS OF LD. CIT(A)-23 DATE D 28/12/2011 FOR ASSESSMENT YEARS 2005-06 & 2008-09 AND 24/1/2012 F OR ASSESSMENT YEAR 2007-08. THE ISSUES RAISED IN ALL THESE APPEALS A RE COMMON AND GROUNDS OF APPEAL READ AS UNDER: GROUNDS OF APPEAL FOR A.Y. 2005-06: 1. WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT( (A) HAS ERRED IN DIRECTING THE ASSESSING O FFICER TO DELETE ADDITION OF RS. 1,15,000/- ON ACCOUNT OF USE OF TERRACE GARD EN BY HOLDING THAT THE RECEIPT IS COVERED BY CONCEPT OF MUTUALITY & HENCE NOT TAXABLE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DIRECTING THE ASSESSING OFFI CER TO DELETE ADDITION OF RS. 13,80,000/- ON ACCOUNT OF DISH ANTENNA BY HOLDI NG THAT THE RECEIPT IS COVERED BY CONCEPT OF MUTUALITY AND HENCE NOT TAXAB LE ITA NO. 1402/MUM/2012(A.Y. 2005-06) ITA NO.1403/MUM/2012(A.Y. 2007-08) ITA NO.1404/MUM/2012 (A.Y. 2008-09) 2 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT THE ASSESSING OFFICER BE RESTORE D GROUNDS OF APPEAL FOR A.Y. 2007-08: 1. WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT( (A) HAS ERRED IN DIRECTING THE AS SESSING OFFICER TO DELETE ADDITION OF RS.50,000/- ON ACCOUNT OF USE OF TERRACE GARDEN BY HOLDING THAT THE RECEIPT IS COVERED BY CONCEPT O F MUTUALITY & HENCE NOT TAXABLE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE ADDITION OF RS. 7,50,000/- ON ACCOUNT OF USE OF COM MON AREA BY HOLDING THAT THE RECEIPT IS COVERED BY CONCEPT OF M UTUALITY AND HENCE NOT TAXABLE 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE ADDITION OF RS. 15,30,000/- ON ACCOUNT OF USE OF DI SH ANTENNA BY HOLDING THAT THE RECEIPT IS COVERED BY THE CONCEPT OF MUTUALITY AND HENCE NOT TAXABLE. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT THE ASSESSING OFFICER BE RESTORED 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. GROUNDS OF APPEAL FOR A.Y. 2008-09: 1. WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT( (A) HAS ERRED IN DIRECTING THE ASSESSING O FFICER TO DELETE ADDITION OF RS.60,000/- ON. ACCOUNT OF USE OF TERRACE BY HOL DING THAT THE RECEIPT IS COVERED BY CONCEPT OF MUTUALITY & HENCE NOT TAXABLE . 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DIRECTING THE ASSESSING OFFI CER TO DELETE ADDITION OF RS. 6,00,000/- OR ACCOUNT OF USE OF COMMON AREA BY HOLDING THAT THE RECEIPT IS COVERED BY CONCEPT OF MUTUALITY AND HENC E NOT TAXABLE 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DIRECTING THE ASSESSING OFFI CER TO DELETE ADDITION OF RS. 14,40,000/- ON ACCOUNT OF USE OF DISH ANTENNA B Y HOLDING THAT THE RECEIPT IS COVERED BY CONCEPT OF MUTUALITY AND HENC E NOT TAXABLE ITA NO. 1402/MUM/2012(A.Y. 2005-06) ITA NO.1403/MUM/2012(A.Y. 2007-08) ITA NO.1404/MUM/2012 (A.Y. 2008-09) 3 4. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS AND THAT THE ASSESSING OFFICER BE RESTORED 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. IN ALL THESE THREE CASES LD. CIT(A) HAS DELETED THE ADDITION ON THE BASIS OF ORDER OF TRIBUNAL IN ASSESSEES OWN CASE DATED 1 /2/2011 IN ITA NO.559/MUM/2010, IN RESPECT OF ASSESSMENT YEAR 2006 -07, WHEREIN THE RECEIPTS OF THE ASSESSEE BY WAY OF TERRACE GARDEN ON HIRE, USE OF COMMON FACILITY OR DISH ANTENNA CHARGES WERE HELD TO BE EXEMPTED FROM TAX ON THE PRINCIPLE OF MUTUALITY. RELEVANT PORTION OF THE ORDER HAS ALSO BEEN REPRODUCED IN THE ORDER PASSED LD. CIT(A) IN RESPEC T OF A.Y. 2007-08. 3. IN THIS VIEW OF THE SITUATION, AT THE OUTSET IT WAS POINTED OUT BY LD. AR THAT THE ISSUE RAISED BY REVENUE IN THIS APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY AFOREMENTIONED DECISION. COPY OF ORDE R OF THE TRIBUNAL WAS ALSO PLACED ON OUR RECORD AND A COPY WAS GIVEN TO LD. D R. AFTER GOING THROUGH THE SAID ORDER LD. DR RELIED UPON THE ORDER PASSED BY A.O. 4. WE HAVE HEARD BOTH PARTIES AND THEIR CONTENTIONS HAVE CAREFULLY BEEN CONSIDERED. FOR THE SAKE OF COMPLETENESS RELEVANT PORTION OF THE AFOREMENTIONED TRIBUNAL ORDER IS REPRODUCED BELOW VIDE WHICH IT HAS BEEN HELD THAT ALL THE RECEIPTS COVERED IN AFOREMENTIONE D DEPARTMENT APPEALS ARE GOVERNED BY THE PRINCIPLE OF MUTUALITY. AS RIGHTLY NOTED IN THE ORDER OF THE CIT(A), A CO- ORDINATE BENCH OF THIS TRIBUNAL EN THE CASE OF DELHI GYMKHANA CLUB LT D V. DCIT, 35 SOT 335 HAS OBSERVED THAT THE EXEMPTION ON ACCOUNT OF MUTUALITY WOULD BE UPHELD ONLY AS LONG AS ITS MUTUAL ASSOCIAT ION IS RETAINED AND ITS INCOME IS NOT TAINTED COMMERCIALITY, BUT ON THE CORE QUESTION REALLY IS AN TO WHETHER RECEIPTS ON THE GIVEN FACTS OF THE CASE, IT CAN BE SAID THAT THE ACTIVITIES OF THE ASSESSEE SOCIETY BY WAY OF GIVING TERRACE GARDEN ON HIRE, USE OF COMMON FACILITY OR D ISH ANTENNA ARE TAINTED BY COMMERCIALITY. WE DO NOT THIN SO. WE HAV E NOTED THAT ITA NO. 1402/MUM/2012(A.Y. 2005-06) ITA NO.1403/MUM/2012(A.Y. 2007-08) ITA NO.1404/MUM/2012 (A.Y. 2008-09) 4 THESE FACILITIES ARE PROVIDED TO THE MEMBERS OF THE SOCIETY AND IT IS NOT EVEN DISPUTED THAT NO OUTSIDER, I.E. A PERSON O THER THAN THE MEMBERS OF THE ASSESSEE SOCIETY, IS ALLOWED TO USE THESE FACILITIES. THE NOMINAL CHARGE IS COLLECTED FROM THE PERSONS WH O ACTUALLY USED THESE SERVICES OF THE SOCIETY TO ENSURE THAT THE RE LATED EXPENSES ARE BORNE BY ONLY ACTUAL USERS OF THE RELATED SERVICES. IT IS NOT EVEN THE CASE OF THE ASSESSING OFFICER THAT CHARGES FOR THE SE FACILITIES ARE ON THE BASIS OF MARKET FORCES OR AFFECTED BY COMMERCIA L CONSIDERATION. THESE ACTIVITIES, IS OUT HUMBLE UNDERSTANDING, DO N OT HAVE ANY ELEMENT OF COMMERCIALITY. ON THESE FACTS, IT CANNOT BE SAID THAT THE ELEMENT OF MUTUAL ASSOCIATION IS NOT RETAINED EVEN WHEN CHARGES ARE NOT RECOVERED FROM ALL THE MEMBERS BUT ONLY FROM TH E MEMBERS WHO HAVE ACTUALLY USED THE RELATED SERVICES. IN VIEW OF THE HONBLE SUPREME COURTS JUDGEMENTS IN THE CASE OF CIT V. B ANKI CLUB, 226 ITR 97(SC). THE ELEMENT OF MUTUALITY REMAINS INTACT . IN THIS VIEW OF THE MATTER, THE AUTHORITIES BELOW WERE NOT JUSTIFIE D IN HOLDING THAT THE RECEIPTS ON ACCOUNT OF USE OF TERRACE GARDEN, O UT OF CONTRIBUTION OF USE OF COMMON AREA AND OUT OF DISH ANTENNA CHARG ES WILL NOT BE COVERED BY THE PRINCIPLE OF MUTUALITY AND WILL, ACC ORDINGLY BE TAXABLE IN THE CASE OF THE ASSESSEE SOCIETY. IN VIEW OF THE ABOVE DISCUSSIONS, IN OUR CONSIDERED VIEW, THESE RECEIPTS ARE COVERED BY THE PRINCIPLES OF MUTUALITY AND ACCORDINGLY, NOT LIABLE TO BE TAXE D. WE UPHOLD THE GRIEVANCE OF THE ASSESSEE AND DIRECT THE AC TO DELE TE THE IMPUGNED ADDITIONS TO INCOME. THE ASSESSMENT YEAR DECIDED BY THE TRIBUNAL IS MIDD LE YEAR AND NO DIFFERENCE IN THE FACTS AND CIRCUMSTANCES OF THESE YEARS WITH THE ASSESSMENT YEAR 2006- 07 WAS BROUGHT TO OUR NOTICE. THEREFORE, RESPECTFU LLY FOLLOWING THE AFOREMENTIONED DECISION OF TRIBUNAL WE HOLD THAT NO INFIRMITY HAS BEEN COMMITTED BY LD. CIT(A) WHILE RELYING UPON THE ORDE R OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y 2006-07, THE REQUISITE REL IEF HAS BEEN GIVEN TO THE ASSESSEE. WE DECLINE TO INTERFERE. 5. IN THE RESULT, ALL THE APPEALS FILED BY THE REVE NUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 7 TH DAY OF MARCH, 2013 SD/- SD/- (N.K.BILLAIYA ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 7 TH MARCH .2013 ITA NO. 1402/MUM/2012(A.Y. 2005-06) ITA NO.1403/MUM/2012(A.Y. 2007-08) ITA NO.1404/MUM/2012 (A.Y. 2008-09) 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R B BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.