ITO 16(1)(1), MUMBAI V. STERLING CHS LTD, MUMBAI

ITA 1443/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8445 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Department
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 22-02-2010
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Assessee Lawyers: VISHWAS MAHANDALE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI. T.R. SOOD (A.M.) AND SHRI. VIJAY PAL R AO (J.M) ITA NO.1443/MUM/2010 ASSESSMENT YEAR : 2005-2006 I.T.O. 16(1)(1) MATRU MANDIR MUMBAI 400 007. VS. STERLING CHS LTD. PEDDAR RD., MUMBAI 400 026. PAN : AAAJS1912M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUMEET KUMAR RESPONDENT BY : SHRI VISHWAS MAHANDALE O R D E R PER VIJAY PAL RAO, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 22.12.2009 OF LEARNED CIT(A)-XXVII, MUMBAI FOR THE ASSESSMENT YEAR 2005- 2006. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL: 1. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITI ON ON ACCOUNT OF NON-OCCUPANCY CHARGES OF ` 8,36,400/- FOLLOWING THE DECISIONS OF HONBLE MUMBAI ITAT AND THE DECISION O F HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S. SIND CHSL, WH EREIN IT HAS BEEN HELD THAT NO-OCCUPANCY CHARGES TAKEN FROM MEMBERS WHO HAVE LET OUT THEIR FLATS IS EXEMPT UNDER PRINCI PLE OF MUTUALITY. 2. THE LEARNED CIT(A) ERRED IN DELETING HE ADDITIO N ON ACCOUNT OF TRANSFER CHARGES OF ` 95,000/- FOLLOWING THE DECISION OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF M/S. SHYAM CHS AND SUPRABHAT CHS WHEREIN IT HAS BEEN HELD THAT ALL AMOUNTS RECEIVED BY THE CHS ON THE GROUNDS OF TRANS FER CHARGES ARE EXEMPT UNDER THE PRINCIPLE OF MUTUALITY . THE DECISION IS NOT ACCEPTED BY THE DEPARTMENT AND THE ISSUE IS SUBJUDICE. 3. GROUND NO.1 IS REGARDING THE ADDITION FOR NON-OC CUPANCY CHARGES ` 8,36,400/- COLLECTED FROM MEMBERS WHO HAVE SUB-LET THEIR FLATS. THE ASSESSEE CLAIMED THESE CHARGES EXEMPTED UNDER THE P RINCIPLE OF MUTUALITY. ITA NO.1443/MUM/2010 ASSESSMENT YEAR : 2005-2006 2 THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE A SSESSEE AND ADDED THE SAME IN THE INCOME OF THE ASSESSEE. 4. ON APPEAL, THE CIT(A) HAS DELETED THE ADDITION M ADE BY THE ASSESSING OFFICER BY FOLLOWING THE DECISION OF HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF M/S,. SIND CHS. 5. WE HAVE HEARD THE LEARNED DR AS WELL AS LEARNED AR AND CONSIDERED THE RELEVANT RECORD. THE AR HAD POINTED OUT THAT THIS ISSUE HAVE BEEN CONSIDERED AND ADJUDICATE BY THE HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF MITTAL COURT PREMISES CO-OPERATIVE SOCIETY LTD. VS. I.T.O. [2010] 320 ITR 414 (BOM), ACCORDING TO THAT HE HAS SUBMITTED T HAT THE LEARNED CIT(A) HAS RIGHTLY DISALLOWED THE ADDITION MADE BY THE ASS ESSING OFFICER. THE LEARNED DR HAD RELIED UPON ORDER OF THE ASSESSING O FFICER. AS POINTED OUT BY THE LEARNED AR WE NOTE THAT THE HONBLE JURISDIC TIONAL HIGH COURT IN THE CASE OF MITTAL COURT PREMISES CO-OPERATIVE SOCIETY LTD.(SUPRA) HAS CONSIDERED IN THE ISSUE PARA 9 AND 10 AS UNDER: THAT BRINGS US TO THE ISSUE IN SO FAR AS NON-OCCUP ATION CHARGES ARE CONCERNED. LET US, THEREFORE, EXAMINE AS TO WH ETHER NON- OCCUPATION CHARGES ARE ASSESSABLE TO TAX. NON-OCCU PATION CHARGES ARE AGAIN PAYABLE BY THE MEMBER ON ACCOUNT OF THE FACT THAT MEMBER IS NOT OCCUPYING THE PREMISES. BY E-LAW THEMSELVES PROVIDE FOR NON-OCCUPATION CHARGES. CON TRIBUTION, THEREFORE, IS BY THE MEMBER, THE OBJECT OF THE CONT RIBUTION IS FOR THE PURPOSE OF INCREASING THE SOCIETYS FUNDS, WHIC H COULD BE USED FOR THE OBJECT OF THE SOCIETY. THE OBJECT OF THE SOCIETY AS NOTED EARLIER IS TO PROVIDE SERVICE, AMENITIES AND FACILITIES TO ITS MEMBERS. IN THESE CIRCUMSTANCES, IN OUR OPINION, T HE PRINCIPLE OF MUTUALITY AS DISCUSSED IN INCOME TAX APPEAL NO.9 31 OF 2004 MUST ALSO APPLY. THERE IS NO ELEMENT OF PROFITEERI NG. THE BYE LAWS THERE UNDER PROVIDES FOR THE SAME. WE MAY HER E POINT OUT THAT THE MATTER HAD BEEN REMANDED BY THE TRIBUNAL. THE TRIBUNAL HAD OBSERVED THAT THE ASSESSING OFFICER TO TREAT THE NON-OCCUPANCY CHARGES RECEIVED BY THE ASSESSEE-SOCI ETY WHICH IS A PREMISE SOCIETY OVER AND ABOVE THE 10 PER CENT OF THE MAINTENANCE CHARGES AS NON-TAXABLE IN ITS HANDS AS THE SAME IS GOVERNED BY THE PRINCIPLE OF MUTUALITY. THOUGH IN THE PRESENT APPEAL, THE LEARNED COUNSEL F OR THE ASSESSEE/APPELLANTS HAD NOT CONTESTED THE ORDER OF REMAND NOR THE COUNSEL APPEARING IN THE MATTERS, IN APPEAL S ARISING FROM SIND CO-OPERATIVE HOUSING SOCIETY VS. ITO [200 9] 317 ITR 47 (BOM), THE LEARNED COUNSEL FOR THE REVENUE THERE IN SHRI ITA NO.1443/MUM/2010 ASSESSMENT YEAR : 2005-2006 3 GUPTA HAD CONTESTED THE FINDINGS IN SO FAR AS THE N ON- OCCUPANCY CHARGES, THOUGH THEY WERE NOT ISSUES IN T HOSE APPEALS AND HE CONTENDED THAT AMOUNT OVER 10 PER CE NT. IN THE ALTERNATIVE IS ASSESSABLE TO TAX. IN OUR OPINION, FIRSTLY, THE 10 PER CENT LIMIT IS NOT APPLICABLE TO THE COMMERCIAL SOCIETY LIKE THE APPELLANT HEREIN. THE TRIBUNAL ITSELF IN THE CASE OF M/S. MITTAL TOWERS CO-OPERATIVE HOUSING SOCIETY LTD. HAS ACCEPT ED THAT DECISION. IT HAS BEEN ACCEPTED BY THE REVENUE. HO WEVER, CONSIDERING THE ORDER OF REMAND, QUESTION (B) ALSO WILL HAVE TO BE ANSWER IN THE NEGATIVE AGAINST THE REVENUE AND I N FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT WE FIND NO ERROR OR ILLEGALITY IN THE ORDER OF THE CIT(A) QUA THIS ISSUE. 6. GROUND NO.2 IS REGARDING ADDITION ON ACCOUNT OF TRANSFER CHARGES. WE HAVE HEARD THE LEARNED DR AS WELL AS LEARNED AR AND CONSIDERED THE RELEVANT RECORD. AT THE OUT SET WE NOTE THAT THIS ISSUE HAVE BEEN CONSIDERED AND ADJUDICATE BY THE HONBLE JURISDICTIONAL HIGH C OURT IN THE CASE OF M/S. SIND CO-OPERATIVE SOCIETY VS. ITO [2009] 317 ITR 47 . THE HONBLE HIGH COURT HAS HELD THAT THE AMOUNT RECEIVED ON ACCOUNT OF TRANSFER CHARGES AS PER THE GOVERNMENT NOTIFICATION CANNOT BE TREATED A S INCOME OF THE ASSESSEE TO THE EXTENT OF ` 25,000/- IN EACH CASE. THE LEARNED AR OF THE ASSE SSEE HAS SUBMITTED THAT IN THIS CASE OF THE ASSESSEE THE AMO UNT OF TRANSFER CHARGES IS LESS THAN ` 25,000/- IN EACH CASE AND, THEREFORE, IT IS LESS T HAN THE AMOUNT WHICH IS PERMITTED BY GOVERNMENT NOTIFICATION. ACC ORDINGLY, IN VIEW OF THE FACTS SUBMITTED BY LEARNED AR, WE DIRECT THE ASSESS ING OFFICER TO ALLOW CLAIM OF THE ASSESSEE IF THE AMOUNT ON ACCOUNT OF TRANSFE R CHARGES IS UP TO ` 25,000/- IN EACH CASE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISP OSED OF IN TERMS OF THE ABOVE ORDER. ORDER PRONOUNCED ON THIS 11 TH DAY OF FEBRUARY, 2011. SD/- (T.R. SOOD) (ACCOUNTANT MEMBER) SD/- (VIJAY PAL RAO) (JUDICIAL MEMBER) MUMBAI, DATED 11.02.2011. ITA NO.1443/MUM/2010 ASSESSMENT YEAR : 2005-2006 4 JANHAVI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- , MUM BAI 4. COMMISSIONER OF INCOME TAX, CITY- , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH E, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI