ITO 16(2)(1), MUMBAI V. SEA FACE PARK CHS LTD, MUMBAI

ITA 1611/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8886 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 02-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE SHRI N. V. VASUDEVAN, J.M. AND SHRI T.R. SOO D, A.M. I.T.A. NO.1611/MUM/2010 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER 16 (2)(1) MATRU MANDIR, TARDEO ROAD, MUMBAI M/S. SEA FACE PARK CHS LTD. 50, BHULBHAI DESAI ROAD, MUMBAI-400 026 PAN NO : AAAAS3577R (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI JITENDRA YADAV RESPONDENT BY : NONE ORDER PER N. V. VASUDEVAN (JM) : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGA INST THE ORDER DATED 14.12.2009 OF COMMISSIONER OF INCOME TAX (APPEALS) - 27, MUMBAI RELATING TO THE ASSESSMENT YEAR 2005-06. THE GROUNDS OF APPEAL OF THE REVENUE READS AS FOLLOWS :- 1. THE LD. CIT(A) ERRED IN DELETING THE ADDITION O N ACCOUNT OF NON-OCCUPANCY CHARGES OF RS.16,50,000/- FOLLOWING T HE DECISION OF HONBLE MUMBAI ITAT WHEREIN IT HAS BEEN HELD THAT N ON- OCCUPANCY CHARGES TAKEN FROM MEMBERS WHO HAVE LET O UT THEIR FLATS IS EXEMPT UNDER PRINCIPLE OF MUTUALLY. 2. THE APPELLANT CRAVES LEAVE TO ATTEND OR ALTER AN Y GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2 2. THE ASSESSEE IS A CO-OPERATIVE HOUSING SOCIETY COMPRISING OF 60 RESIDENTIAL FLATS. DURING THE PREVIOUS YEAR THE ASS ESSEE RECEIVED RS.16,50,000/- FROM ITS MEMBERS TOWARDS NON-OCCUPANCY CHARGES. ACC ORDING TO THE ASSESSEE SINCE THE AFORESAID CHARGES WERE RECEIVED FROM MEMB ERS AND NOT FROM OUTSIDERS THE PRINCIPAL OF MUTUALITY WILL APPLY AND, THEREFOR E, THE CHARGES SO COLLECTED CANNOT BE TREATED AS INCOME OF THE ASSESSEE. THE AS SESSING OFFICER HOWEVER, BROUGHT TO TAX THE NON-OCCUPANCY CHARGES TREATING T HE SAME AS INCOME. 3. ON APPEAL BY THE ASSESSEE THE LEARNED CIT (APPE ALS) DELETED THE ADDITION MADE BY THE AO BY FOLLOWING THE DECISION O F THE ITAT, MUMBAI IN THE CASE OF LOHTSE CO-OPERATIVE HOUSING SOCIETY LTD. V. ITO 51 ITD 108 (BOM). 4. AGGRIEVED BY THE ORDER OF THE LEARNED CIT (APPE ALS) THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNA L. 5. AT THE TIME OF HEARING IT WAS NOTICED THAT THE HONBLE BOMBAY HIGH COURT HAS ALREADY DECIDED THE ISSUE REGARDING TAXABILITY OF NON-OCCUPANCY CHARGES IN MITTAL COURT PREMISES CO-OP SOCIETY VS. ITO 320 ITR 414(BOM). THE BOMBAY HIGH COURT HELD THAT NON-OCCUPATION CHAR GES PAID BY A MEMBER TO A COMMERCIAL CO-OP SOCIETY WAS COVERED BY THE PRINC IPLE OF MUTUALITY AND SO WAS NOT CHARGEABLE TO TAX. IN THE LAST PARAGRAPH OF THE JUDGEMENT, THE COURT HELD THAT EVEN IF THE CHARGES WERE IN EXCESS OF THE LIMI TS IMPOSED BY THE NOTIFICATION ISSUED BY THE GOVERNMENT, STILL THE PRINCIPLES OF M UTUALITY WOULD APPLY. THE RELEVANT OBSERVATIONS OF THE COURT IN THIS REGARD W ERE AS FOLLOWS: APART FROM THAT EVEN ASSUMING THAT THESE GOVERNMEN T NOTIFICATIONS WERE APPLICABLE IF THE SOCIETY COULD NOT HAVE CHARGED EXCESS AMOUNT IT WILL HAVE TO BE REFUNDED TO THE ME MBERS. A MEMBER IS NOT PROHIBITED FROM GIFTING ANY AMOUNT TO THE SOCIETY FOR THE OBJECTS OF THE SOCIETY. THE PRINCIPLE OF MUTUAL ITY WOULD NOT CEASE ON ACCOUNT OF THESE ASPECT. AT THE HIGHEST, A UTHORITIES UNDER 3 THE CO-OPERATIVE SOCIETIES ACT AND RULES IF ANY ACT ION IS TAKEN MAY DIRECT AN ADDITIONAL AMOUNT TO BE REFUNDED. IN OUR OPINION, THEREFORE, CONTRIBUTION BY WAY OF NON OCCUPANCY CHA RGES, PRINCIPLE OF MUTUALITY WOULD APPLY AND CONSEQUENTLY. 6. IN VIEW OF THE AFORESAID DECISION OF THE HONBL E BOMBAY HIGH COURT WE ARE OF THE VIEW THAT THE ORDER OF THE LEAR NED CIT (APPEALS) HAS TO BE UPHELD. WE THEREFORE, UPHOLD THE ORDER OF THE LEARN ED CIT (APPEALS) AND DISMISS THE APPEAL RAISED BY THE REVENUE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED ON THIS 21 ST DAY OF JANUARY, 2011. SD/- SD/- ( T.R. SOOD ) ( N. V. VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT: 21/01/2011 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, D- BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI