ITO 16(2)(1), MUMBAI V. BHAVESHWAR SAGAR CHS LTD, MUMBAI

ITA 1609/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8971 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 02-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S SRIVASTAV
• Assessee Lawyers: V N KHANDEKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B : MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA. NO. 1609/MUM/2010 ASSESSMENT YEAR 2005-2006 ITO 16 (2) (1) MUMBAI 400 007 VS. M/S. BHAVESHWAR SAGAR CHS LTD. MUMBAI 400 036 PAN AAAAB2358K (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI R.S. SRIVASTAV (DR) FOR RESPONDENT : SHRI V.N. KHANDEKAR ORDER PER D. MANMOHAN, V.P. 1. FOLLOWING GROUNDS WERE URGED BY THE REVENUE : 1. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF TRANSFER CHARGES OF RS.16,60,000/- 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 TRANSFER CHARGES ARE EXEMPT UNDER THE PRINCIPLE OF MUTUALITY. THE DECISION HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND THE SAME IS SUBJUDICE. 2. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O N ACCOUNT OF NON-OCCUPANCY CHARGES OF RS.1,14,804/- FOLLOWING THE VARIOUS DECISION OF HONBLE MUMBAI ITAT WHEREIN IT HAS BEEN HELD THAT NON-OCCUPANCY CHARGES TAKEN FROM MEMBERS WHO HAVE LET OUT THEIR FLATS IS EXEMPT UNDER PRINCIPLE OF MUTUALITY. 2. THE CASE WAS LISTED FOR HEARING ON 3-1-2011. SE CRETARY OF ASSESSEES SOCIETY FILED A LETTER SEEKING ADJOURNME NT ON THE GROUND THAT THEY WISH TO APPOINT AN ADVOCATE TO REPRESENT THE CASE. HOWEVER, UPON VERIFYING THE RECORD WE NOTICED THAT THE ISSUE S ARISING FROM THE ORDER OF THE LEARNED CIT(A) ARE PRIMA FACIE COVERED IN FAVOUR OF THE 2 ASSESSEE AND THEREFORE, THE REQUEST FOR ADJOURNMENT WAS REJECTED AND WE PROCEED TO DISPOSE OF THE APPEAL EXPARTE, QUA TH E ASSESSEE. 3. WE HAVE HEARD THE LEARNED DR AND CAREFULLY PERU SED THE RECORD. FACTS IN SHORT ARE THAT THE ASSESSEE, A CO- OPERATIVE HOUSING SOCIETY HAS ALLOTTED FLATS TO MEMBERS FROM WHOM MAI NTENANCE CHARGES ARE RECOVERED TO MEET EXPENDITURE SUCH AS SALARY, P ROPERTY TAX, WATER CHARGES. SINCE THOSE RECEIPTS ARE NOT SUFFICIENT FO R MAINTAINING THE PROPERTY, ASSESSEE-SOCIETY HAD ALSO CHARGED TRANSFE R FEES FROM ITS MEMBERS FOR TRANSFER OF PREMISES. SIMILARLY INCOMIN G MEMBER HAS TO PAY CERTAIN CHARGES SUCH AS ENTRANCE FEES FOR ADMIS SION AS A MEMBER. THE CASE OF THE ASSESSEE WAS THAT INCOME FROM TRANS FER FEES IS EXEMPT ON THE GROUND OF MUTUALITY. SIMILARLY AMOUNT COLLE CTED TOWARDS NON- OCCUPANCY CHARGES AS PER THE SOCIETYS RULES IS ALS O EXEMPT BY APPLICATION OF THE PRINCIPLES OF MUTUALITY, SINCE I T IS FOR THE BENEFIT OF THE MEMBERS AND THE CONTRIBUTIONS RECEIVED ARE UNIF ORM AND THERE IS NO UNREASONABLENESS OR COMMERCIAL TAINT IN THE RECE IPT. THE ASSESSING OFFICER WAS, HOWEVER, OF THE VIEW THAT THE AMOUNT R ECEIVED, TOWARDS TRANSFER FEES AND NON-OCCUPANCY CHARGES, IS TAXABLE IN THE HANDS OF THE ASSESSEES SOCIETY. 4. ON AN APPEAL FILED BY THE ASSESSEE, LEARNED CIT (A) OBSERVED THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S. SHYAM CHS AND SUPRABHAT CHS (JUDGMENT DATED 1-10-2009) HE LD THAT THE AMOUNTS RECEIVED BY CO-OPERATIVE HOUSING SOCIETY ON THE GROUND OF TRANSFER CHARGES ARE EXEMPT UNDER THE PRINCIPLES OF MUTUALITY. SIMILARLY DECISION OF THE ITAT, MUMBAI BENCHES WAS RELIED UPON BY LEARNED CIT(A) TO HOLD THAT NON-OCCUPANCY CHARGES C OLLECTED FROM MEMBERS ARE EXEMPT UNDER THE PRINCIPLES OF MUTUALIT Y. 5. LEARNED DR WAS UNABLE TO PLACE ANY DECISION OF THE TRIBUNAL/HIGH COURT TO CONTRADICT THE FINDINGS OF T HE LEARNED CIT(A). 3 6. UNDER THESE CIRCUMSTANCES, WE DO NOT FIND ANY I NFIRMITY IN THE ORDER OF THE LEARNED CIT(A) AND THEREFORE, A FFIRM THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT, ON THIS THE 2 4 TH DAY OF JANUARY, 2011. SD/- (RAJENDRA SINGH) ACCOUNTANT MEMBER SD/- (D. MANMOHAN) VICE PRESIDENT DATED : 24 TH JANUARY, 2011 VBP/- COPY TO 1. ITO 16 (2) (1), MATRU MANDIR, TARDEO ROAD, MUMBAI 400 007 2. M/S. BHAVESHWAR SAGAR CHS LTD., 20, NAPEANSEA RO AD, MUMBAI 400 036 PAN AAAAB2358K 3. COMMISSIONER OF INCOME TAX (APPEALS)-27, MUMBAI 4. C.I.T.,CITY-XVI, MUMBAI 5. DR B BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI