THE NUTAN LAXMI CO-OPERATIVE HSG. SOC LTD, MUMBAI V. ITO WD 21(1)(3), MUMBAI

ITA 1688/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1371 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 13-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA; B K SINGH
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI. BEFORE SHRI R.V. EASWAR, HONBLE PRESIDENT AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER I.T.A. NOS. 1688 & 1689/MUM/2009 ASSESSMENT YEARS : 2004-05 & 2005-06. THE NUTAN LAXMI CO-OPERATIVE THE INCOME-TAX OFFICER, HSG. SOC. LTD., PLOT NO. 51, VS. 21(1)(3), MUMBAI. JAIHIND RECREATION CLUB, N.S. ROAD NO. 11, JVPD SCHEME, JUHU, MUMBAI 400049. PAN AAAAT1208J. APPELLANT RESPONDENT I.T.A. NOS. 912 & 913 /MUM/2009 ASSESSMENT YEAR : 2004-0 5 & 2005-06. THE INCOMETAX OFFICER, TH E NUTAN LAXMI CO-OPERATIVE 21(1)(3), MUMBAI. VS. H SG. SOC. LTD., MUMBAI. APPELLANT. RESPONDENT. ASSESSEE BY : MS. AARTI VISSANJI. DEPARTMENT BY : SHR I B.K. SINGH AND SHRI S.S. RANA. O R D E R PER J. SUDHAKAR REDDY, A.M. THESE ARE CROSS APPEALS FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 AND ARE DIRECTED AGAINST THE ORDER OF T HE CIT(APPEALS)-XXI, MUMBAI DATED 11-11-2008. THE CIT(APPEALS) HAS PASSE D A COMMON ORDER FOR BOTH THE ASSESSMENT YEARS. AS THE ISSUE R AISED IN BOTH THESE 2 APPEALS ARE COMMON, FOR THE SAKE OF CONVENIENCE, TH EY ARE HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS COMMON ORDER. 2. THE ASSESSEE IS A COOPERATIVE HOUSING SOCIETY. THE ADDITIONS IN QUESTION RELATE TO TRANSFER FEE RECEIVED DURING THE YEAR ON ACCOUNT OF TRANSFER OF PLOTS AND ADDITION ON ACCOUNT OF TDR PR EMIUM RECEIPT. 3. MS. AARTI VISSANJI, LEARNED COUNSEL FOR THE ASS ESSEE, AT THE OUTSET, FILED A REQUEST FOR ADMISSION OF ADDITION AL GROUND OF APPEAL FOR THE ASSESSMENT YEAR 2005-06. SHE SUBMITTED THAT THE ASSESSEE SOCIETY HAD DURING THE ASSESSMENT YEAR 2005-06, RECEIVED AN AGG REGATE SUM OF RS.42,28,080/- AS TRANSFER FEE PURSUANT TO SALE OF PLOT IN THE SOCIETY. THIS AMOUNT WAS RECEIVED AS UNDER : 1) FROM TRANSFEROR MEMBERS RS.21,14,040/- 2) FROM TRANSFEREE MEMBERS RS.21,14,040/- ------------------------ TOTAL RS.42,28,080/- ------------------------ SHE SUBMITTED THAT THE ASSESSEE SOCIETY HAD CLAIMED THE ENTIRE AMOUNT RECEIVED AS TRANSFER FEE AS EXEMPT FROM TAX ON THE PRINCIPLE OF MUTUALITY. THE AO HELD THAT THE SAME IS TAXABLE. THE LEARNED C OUNSEL FURTHER SUBMITTED THAT DUE TO AN ERROR THE ASSESSEE DID NOT CONTEST THE ADDITION IN RESPECT OF THE TRANSFER FEE FROM TRANSFEREE MEMBERS . SHE SUBMITTED THAT NO FACTUAL INVESTIGATION IS REQUIRED INTO THE MATTER A S THE AO HAS QUANTIFIED THE AMOUNT RECEIVED FROM TRANSFEREE (INCOMING MEMBE RS) AND THAT IT WAS ONLY A LEGAL ISSUE WHETHER THE SAME IS TAXABLE OR N OT. SHE PRAYED THAT THE FOLLOWING ADDITIONAL GROUND MAY BE ADMITTED : 3 THE LEARNED ASSESSING OFFICER ERRED IN CHARGING T O TAX CONTRIBUTION AGGREGATING TO R.21,14,042/- RECEIVED FROM THE TRANSFEREE (INCOMING MEMBERS), INCIDENTAL TO TRANSF ERS/SALE OF PLOT (TRANSFER FEES), WHICH IS EXEMPT ON THE PRINCIPLE O F MUTUALITY. 4. THE LEARNED DR. MR. B.K. SINGH, SUBMITTED THAT THIS IS A FACTUAL ISSUE AND THE ADDITIONAL GROUND CANNOT BE A DMITTED. 5. AFTER HEARING RIVAL SUBMISSIONS, WE ARE OF THE CONSIDERED OPINION THAT THIS ADDITIONAL GROUND IS PURELY A LEG AL ISSUE AND DOES NOT REQUIRE ASCERTAINMENT OR EXAMINATION OF FACTS OR AD DUCING OF ANY FRESH EVIDENCE. THE ASSESSEE SOCIETY HAS MADE A CLAIM OF EXEMPTION IN ITS RETURN OF INCOME BEFORE THE AO AND THE AO HAS DISCU SSED THE MATTER ELABORATELY IN THE ASSESSMENT ORDER AND THE FACTS A RE NOT IN DISPUTE. IN VIEW OF THE ABOVE DISCUSSION, WE ADMIT THE ADDITION AL GROUND. 6. MS. AARIT VISSANJI SUBMITTED THAT IN BOTH THE A SSESSEES APPEALS THE SOLE ISSUE IS THE TAXABILITY OF TRANSFE R FEES. HE SUBMITTED THAT THE AO AS WELL AS THE CIT(APPEALS) REJECTED THE CLA IM OF THE ASSESSEE BY RELYING ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF WALKESHWAR TRIVENI COOP. HOUSING SOCIETY. SHE SUBMI TTED THAT THIS DECISION HAS BEEN OVERRULED BY THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SIND COOPERATIVE SOCIETY 317 ITR 47 (BOM). SHE FURTHER RELIED UPON THE DECISION OF THE JURISDI CTIONAL HIGH COURT IN THE CASE OF MITTAL COURT PREMISES REPORTED IN 328 ITR 4 14 AND SUBMITTED THAT THE ASSESSEE SOCIETY IS A PLOT SOCIETY AND NOT A RE SIDENTIAL FLAT SOCIETY AND HENCE THE NOTIFICATION ISSUED BY THE STATE OF M AHARASHTRA PUTTING RESTRICTIONS ON THE AMOUNT OF TRANSFER FEE WHEN THE MEMBER DESIRE TO 4 TRANSFER HIS SHARES OR OCCUPANCY RIGHTS ARE NOT APP LICABLE TO THIS SOCIETY. SHE PRAYED FOR RELIEF. 7. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED TH AT THE BYE- LAWS OF THE SOCIETY HAVE TO BE EXAMINED TO SEE WHET HER THERE IS ANY COMMERCIAL ANGLE INVOLVED AND ALSO IT HAS TO BE EXA MINED WHETHER THE GOVERNMENT NOTIFICATIONS ARE APPLICABLE TO THE PLOT SOCIETY. HE POINTED OUT TO PARA 28 OF THE ORDER OF THE HONBLE HIGH COU RT IN THE CASE OF SIND COOPERATIVE HOUSING SOCIETY AND SUBMITTED THAT FOU R TESTS HAVE BEEN PRESCRIBED THEREIN AND THE AO SHOULD BE GIVEN AN OP PORTUNITY FOR EXAMINING WHETHER THIS SOCIETY FULFILS THESE FOUR T ESTS. 8. MS. AARTI VISSANJI, ON THE OTHER HAND, SUBMITTE D THAT THE ASSESSEE SOCIETY IS REGISTERED UNDER THE MAHARASHTR A COOPERATIVESOCIETIES ACT AND HENCE THE QUESTION OF IT BEING COMMERCIAL S OCIETY OR A SOCIETY FOR THE PURPOSE OF PROFIT, DOES NOT ARISE. 9. COMING TO THE REVENUE APPEAL, THE LEARNED DR SU BMITTED THAT THERE IS ONLY ONE ISSUE AND IT RELATES TO TAXABILIT Y OF TDR CONTRIBUTIONS. HE SUBMITTED THAT THE CIT(APPEALS) HAS FOLLOWED HIS PREDECESSORS ORDER IN THE CASE OF VITHALNAGAR CO-OP. SOCIETY. HE RELI ED ON THE ORDER OF THE AO. 10. MS. AARSI VISANJI, IN REPLY, SUBMITTED THAT TH E G-BENCH OF THE TRIBUNAL IN ITA NO. 4398/MUM/2003 FOR ASSESSMEN T YEAR 1996-97 AND ITA NO.4399/MUM/2003 FOR ASSESSMENT YEAR 2000- 01, ORDER DATED 5 TH FEB., 2010, HAS UPHELD THE ORDER OF THE CIT(APPEAL S) IN THE CASE OF VITHALNAGAR COOP. HOUSING SOCIETY. SHE RELIED ON TH E SAME. 5 11. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDER ATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSA L OF THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS W ELL AS THE CASE LAWS CITED, WE HOLD AS FOLLOWS: 12. THE ISSUE IN THE ASSESSEES APPEAL, IN PRINCIP LE, IS COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT BOTH IN THE CASE OF SIND COOPERATIVE HOUSING SOCIETY AS WELL AS MITTAL COURT PREMISES COOPERATIVE SOCIETY LTD. (SUPRA). THE TRANSFER FEE RECEIVED FROM THE INCOMING MEMBERS IS EXEMPT ON THE PRINCIPLES OF MU TUALITY, IF THE OTHER CONDITIONS SPECIFIED IN THESE JUDGMENTS ARE SATISFI ED. THE OBJECTS OF THE SOCIETY AND THE BYELAWS HAVE NOT BEEN EXAMINED BY T HE LOWER AUTHORITIES. IT HAS ALSO NOT BEEN EXAMINED WHETHER THERE IS ANY NOTIFICATION ISSUED BY THE STATE OF MAHARASHTRA PUTTING RESTRICTIONS ON T HE AMOUNT OF TRANSFER FEES IN THE CASE OF THE PLOT SOCIETIES. UNDER THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE HAS TO BE SET ASIDE TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE E ARE ALLOWED FOR STATISTICAL PURPOSES. 14. COMING TO THE REVENUES APPEALS, THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL, G-BENCH, MUMBAI IN THE CASE OF VITHALNAGAR CO-OP. HSG. SOC. LTD. (SUPRA) WHERE ON MERITS IT HAS BEEN HELD THAT WHEN THE AMOUNT IS RECEIVED FROM THE MEMB ERS, THE SAME IS EXEMPT ON THE PRINCIPLES OF MUTUALITY. IN ANY EVENT , THE OTHER ASPECTS, AS MENTIONED IN THE ASSESSEES APPEALS, HAVE TO BE EXA MINED BY THE AO. IN VIEW OF THE SAME, WE SET ASIDE THE MATTER TO THE FI LE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. 6 15. IN THE RESULT, THE REVENUES APPEALS ARE ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 30 TH DAY OF JUNE, 2010. SD/- SD/- (R.V. EASWAR) (J. SUDHAKAR REDDY) PRESIDENT. ACCOUNTANT MEMBER. MUMBAI, DATED : 30 TH JUNE, 2010. WAKODE COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, B-BENCH (TRUE COPY) BY ORDER AS STT.REGISTRAR, ITAT, MUMBAI BENCHES, MUMBAI.