ITO WD 21(1)(4), MUMBAI V. THE PRISEDENCY CHS LTD, MUMBAI

ITA 1953/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48564 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-04-2011
• Assessment Year: misc
• Appeal Filed On: 11-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: P K PARIDA
• Keywords: Capital asset; Business income; Capital receipt
• Section: 28; 143(3)

Judgement Text

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`.50,4 0,775/-, WHICH WAS CLAIMED AS EXEMPT ON THE PRINCIPLES OF MUTUALITY. IN THIS REGARD, THE A.O. HAS ASKED THE APPELLANT TO EXPLAIN AS TO WHY TDR PREMIUM OF `.50,40,775/- SHALL NOT BE TAXED IN VIEW OF THE FACT THAT THE ADDITIONS ALREADY MADE IN THE ASSESSMENT FOR A.YS. 2001-01, 2001-0 2, 2002-03 AND 2003-04 WERE CONFIRMED Y THE CIT(A). IN ITS SUBMI SSION, THE APPELLANT HAS RELIED UPON THE DECISION OF THE LD. CIT (A) COMMISSIONER OF INCOME TAX(A) IN ITS OWN CASE ON THE SIMILAR ISSUE DE CIDED IN ITS FAVOUR FOR THE A.Y. 1999-2000. THIS SUBMISSION HAS ALRE ADY BEEN CONSIDERED BY THE COMMISSIONER OF INCOME TAX(A) HIMSELF WHILE DISPOSING OFF THE APPELLANTS APPEAL FOR A.Y. 2001-02. IT WAS ALSO NOTED BY THE A.O. THAT ALTHOUGH THE DECISION OF THE CIT(A) FOR A.Y. 1999-2000 WAS PRONOUNCED IN FAVOUR OF THE APPELLANT, THE DEPAR TMENT IS IN FURTHER APPEAL BEFORE THE ITAT WHICH IS STILL PENDING . THE APPELLANT HAS FURTHER RELIED ON THE DECISION OF THE HON'BLE ITAT I N THE CASE OF JETHALAL D. MEHTA VS. DCIT. HOWEVER, THE SAID DECISION HAS NOT BEEN ACCEPTED BY THE DEPARTMENT WHICH HAS FILED FURTHER APPEAL BEF ORE THE MUMBAI HIGH COURT, WHICH IS ALSO PENDING. THE A.O. HAS FURTH ER OBSERVED THAT WHILE DEALING WITH THE APPEAL FOR A.Y. 2001-02 IN R ELATION TO THE DISALLOWANCE OF TRANSFER FEES AND TDR PREMIUMS, THE CIT (A) HAS ELABORATELY DISCUSSED IN HIS ORDER AND CONFIRMED THE SA ID ADDITIONS BY PRESIDENCY CO. OP. HSG. SOC. 7 FOLLOWING THE DECISION OF THE HON'BLE ITAT IN THE CA SE OF M/S. WALKESHWAR TRIVENI CO-OP. HSG. SOC. LTD. 88 ITD 159. SIMILAR DISALLOWANCES HAVE BEEN CONFIRMED BY THE CIT(A) RELYI NG ON THE SAME FINDINGS GIVEN BY HIM IN HIS APPELLATE ORDER FOR A.Y. 2001-02. 13. THE A.O. FURTHER NOTED IN THE CASE OF SMT. HANSA M. MEHTA, ASSESSED WITH ITO-21(!)(2), AND A JOINT LEASE RIGHT HOLD ER IN RESPECT OF PLOT NO.5 OF M/S. PRESIDENCY CHS LTD. DURING THE PERI OD UNDER CONSIDERATION AND PRIOR TWO YEARS, IT WAS SEEN THAT SHE ALONG WITH ONE SHRI JASWANTRAI PAREKH HAVE EXPLOITED THE DEVELOPMEN TAL POTENTIAL OF PLOT NO.5, THE PRESIDENCY CHS LD. BY CONSTRUCTING A M ULTI-STORIED STRUCTURE ABUTTING THEIR BUNGALOW. CONSEQUENTLY, THE SUPER-STRUCTURES CONSTRUCTED WERE SOLD IN THE OPEN MARKET TO PERSONS UN RELATED AND UNCONNECTED WITH THE SOCIETY WHO ARE PRESENTLY THE RE SIDENTS OF SUCH RESIDENTIAL UNITS. THESE PEOPLE ENJOY THE COMMON AMENI TIES OF THE PRESIDENCY CHS LTD. THIS POSITION CLEARLY BRINGS OUT TH E FACT THE PRESIDENCY CHS, HAS COLLECTED THE PREMIUM ON TDR TO P ERMIT THE MEMBERS TO REAP THE COMMERCIAL BENEFITS ARISING TO THE M BY WAY OF UTILIZING THE TDR FOR COMMERCIAL DEVELOPMENT. ACCOR DINGLY, TRANSFERABLE DEVELOPMENT RIGHT RECEIVED OF `.50,40,7 75/- WAS BROUGHT TO TAX AS INCOME FROM OTHER SOURCES U/S.56. 14. BEFORE THE LD. CIT(A) THE AR OF THE ASSESSEE MADE E LABORATE ARGUMENTS WHICH ARE AT 5.2. TO 5.3 AT PAGES 5 TO 8 OF THE CIT(A)S ORDER. 15. THE LD. CIT(A) AFTER CONSIDERING THE ARGUMENTS OF THE AR HELD AS FOLLOWS: I HAVE CONSIDERED THE ARGUMENTS OF THE APPELLANT AND HAVE CAREFULLY GONE THROUGH THE JUDGEMENT CITED ABO VE. RESPECTFULLY FOLLOWING THE JUDGEMENT OF SIND CO. OP. HSG. SOCIETY LIMITED (317 ITR 47), IT IS HELD THAT THE AMOUNT RE CEIVED BY THE PRESIDENCY CO. OP. HSG. SOC. 8 APPELLANT OF `.50,40,775/- AS PREMIUM TOWARDS USAGE O F TRANSFERABLE DEVELOPMENT RIGHTS IS NOT TAXABLE IN THE HANDS OF THE APPELLANT ON THE GROUNDS OF MUTUALITY. ACCORDING LY, GROUND NO.3 OF THE APPEAL IS ALLOWED. 16. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS: 1. 1.1. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING PREMIUM O N TRANSFER FEE LAW, THE LD. CIT (A) HAS ERRED IN DELETING PREMIUM O N TRANSFER FEE LAW, THE LD. CIT (A) HAS ERRED IN DELETING PREMIUM O N TRANSFER FEE LAW, THE LD. CIT (A) HAS ERRED IN DELETING PREMIUM O N TRANSFER FEE OF RS. 6,94,820/ OF RS. 6,94,820/ OF RS. 6,94,820/ OF RS. 6,94,820/- -- - RECEIVED RELYING ON THE DECISION OF THE MUMBAI RECEIVED RELYING ON THE DECISION OF THE MUMBAI RECEIVED RELYING ON THE DECISION OF THE MUMBAI RECEIVED RELYING ON THE DECISION OF THE MUMBAI HIGH COU HIGH COU HIGH COU HIGH COURT IN THE CASE OF SIND COOP. HSG. SOC. (2009 ) 26 DTR RT IN THE CASE OF SIND COOP. HSG. SOC. (2009) 26 DTR RT IN THE CASE OF SIND COOP. HSG. SOC. (2009) 26 DTR RT IN THE CASE OF SIND COOP. HSG. SOC. (2009) 26 DTR (BOM) 149. (BOM) 149. (BOM) 149. (BOM) 149. 2. 2.2. 2. I) IN DOING SO, THE LD. CIT (A) HAS ERRED IN IGNORI NG CERTAIN PARAS I) IN DOING SO, THE LD. CIT (A) HAS ERRED IN IGNORI NG CERTAIN PARAS I) IN DOING SO, THE LD. CIT (A) HAS ERRED IN IGNORI NG CERTAIN PARAS I) IN DOING SO, THE LD. CIT (A) HAS ERRED IN IGNORI NG CERTAIN PARAS OF THE ABOVE CITED JUDGMENT WHEREIN IT IS CATEGORIC ALLY STATED THAT OF THE ABOVE CITED JUDGMENT WHEREIN IT IS CATEGORIC ALLY STATED THAT OF THE ABOVE CITED JUDGMENT WHEREIN IT IS CATEGORIC ALLY STATED THAT OF THE ABOVE CITED JUDGMENT WHEREIN IT IS CATEGORIC ALLY STATED THAT THIS CASE THIS CASE THIS CASE THIS CASE- -- -LAW WOULD PERTAIN TO THE ASST. YEARS PRIOR T LAW WOULD PERTAIN TO THE ASST. YEARS PRIOR T LAW WOULD PERTAIN TO THE ASST. YEARS PRIOR T LAW WOULD PERTAIN TO THE ASST. YEARS PRIOR TO NOTIFIC ATION O NOTIFICATION O NOTIFICATION O NOTIFICATION DATED 9/8/2001 OF GOVT. OF MAHARASHTRA FOR COOP. HSG . SOCIETIES. DATED 9/8/2001 OF GOVT. OF MAHARASHTRA FOR COOP. HSG . SOCIETIES. DATED 9/8/2001 OF GOVT. OF MAHARASHTRA FOR COOP. HSG . SOCIETIES. DATED 9/8/2001 OF GOVT. OF MAHARASHTRA FOR COOP. HSG . SOCIETIES. IN THE INSTANT CASE, THE ASST. YEAR BEING PREVIOUS TO THIS IN THE INSTANT CASE, THE ASST. YEAR BEING PREVIOUS TO THIS IN THE INSTANT CASE, THE ASST. YEAR BEING PREVIOUS TO THIS IN THE INSTANT CASE, THE ASST. YEAR BEING PREVIOUS TO THIS NOTIFICATION, NOTIFICATION DATED 27/11/1989 WOULD B E APPLICABLE NOTIFICATION, NOTIFICATION DATED 27/11/1989 WOULD B E APPLICABLE NOTIFICATION, NOTIFICATION DATED 27/11/1989 WOULD B E APPLICABLE NOTIFICATION, NOTIFICATION DATED 27/11/1989 WOULD B E APPLICABLE WHICH SPECIFIED A MAXIMUM OF UPTO RS. 1000/ WHICH SPECIFIED A MAXIMUM OF UPTO RS. 1000/ WHICH SPECIFIED A MAXIMUM OF UPTO RS. 1000/ WHICH SPECIFIED A MAXIMUM OF UPTO RS. 1000/- -- - AS TRAN AS TRAN AS TRAN AS TRANSFER SFER SFER SFER PREMIUM PAYABLE AS PER THE THEN BYE PREMIUM PAYABLE AS PER THE THEN BYE PREMIUM PAYABLE AS PER THE THEN BYE PREMIUM PAYABLE AS PER THE THEN BYE- -- -LAWS OF SOCIETY. LAWS OF SOCIETY. LAWS OF SOCIETY. LAWS OF SOCIETY. II) IN THE INSTANT CASE, THE ASST. YEAR IN QUESTION PERTAINS TO PERIOD II) IN THE INSTANT CASE, THE ASST. YEAR IN QUESTION PERTAINS TO PERIOD II) IN THE INSTANT CASE, THE ASST. YEAR IN QUESTION PERTAINS TO PERIOD II) IN THE INSTANT CASE, THE ASST. YEAR IN QUESTION PERTAINS TO PERIOD PRIOR TO THE NOTIFICATION DATED 27/11/1989 OF GOVT. OF MAHARASHTRA PRIOR TO THE NOTIFICATION DATED 27/11/1989 OF GOVT. OF MAHARASHTRA PRIOR TO THE NOTIFICATION DATED 27/11/1989 OF GOVT. OF MAHARASHTRA PRIOR TO THE NOTIFICATION DATED 27/11/1989 OF GOVT. OF MAHARASHTRA FOR C.H.S. BY IGNORING THIS POINT, THE LD. CIT (A) H AS FA FOR C.H.S. BY IGNORING THIS POINT, THE LD. CIT (A) H AS FA FOR C.H.S. BY IGNORING THIS POINT, THE LD. CIT (A) H AS FA FOR C.H.S. BY IGNORING THIS POINT, THE LD. CIT (A) H AS FAILED TO ILED TO ILED TO ILED TO APPRECIATE THAT PRINCIPLE OF MUTUALITY WILL NOT APP LY IN THE CASE OF APPRECIATE THAT PRINCIPLE OF MUTUALITY WILL NOT APP LY IN THE CASE OF APPRECIATE THAT PRINCIPLE OF MUTUALITY WILL NOT APP LY IN THE CASE OF APPRECIATE THAT PRINCIPLE OF MUTUALITY WILL NOT APP LY IN THE CASE OF PREMIUM ON TRANSFER FEES AS THE SOCIETY HAS CHARGED MOR E PREMIUM ON TRANSFER FEES AS THE SOCIETY HAS CHARGED MOR E PREMIUM ON TRANSFER FEES AS THE SOCIETY HAS CHARGED MOR E PREMIUM ON TRANSFER FEES AS THE SOCIETY HAS CHARGED MOR E AMOUNT THAN THE PERMISSIBLE LIMITS AS PER THE BYE AMOUNT THAN THE PERMISSIBLE LIMITS AS PER THE BYE AMOUNT THAN THE PERMISSIBLE LIMITS AS PER THE BYE AMOUNT THAN THE PERMISSIBLE LIMITS AS PER THE BYE- -- -LAWS OF COOP. LAWS OF COOP. LAWS OF COOP. LAWS OF COOP. HSG. SOCIETIES OR GOVT. NOTIFICATION & THEREFORE THE SOCIE HSG. SOCIETIES OR GOVT. NOTIFICATION & THEREFORE THE SOCIE HSG. SOCIETIES OR GOVT. NOTIFICATION & THEREFORE THE SOCIE HSG. SOCIETIES OR GOVT. NOTIFICATION & THEREFORE THE SOCIETY IS TY IS TY IS TY IS BOUND TO REPAY THE SAME & IF IT RETAINS SUCH EXCESS A MOUNT, THEN BOUND TO REPAY THE SAME & IF IT RETAINS SUCH EXCESS A MOUNT, THEN BOUND TO REPAY THE SAME & IF IT RETAINS SUCH EXCESS A MOUNT, THEN BOUND TO REPAY THE SAME & IF IT RETAINS SUCH EXCESS A MOUNT, THEN IT WILL BE IN THE NATURE OF PROFIT MAKING & SUCH SU M WILL BE EXIGIBLE IT WILL BE IN THE NATURE OF PROFIT MAKING & SUCH SU M WILL BE EXIGIBLE IT WILL BE IN THE NATURE OF PROFIT MAKING & SUCH SU M WILL BE EXIGIBLE IT WILL BE IN THE NATURE OF PROFIT MAKING & SUCH SU M WILL BE EXIGIBLE TO TAX. TO TAX. TO TAX. TO TAX. 3. 3.3. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (A) O N THE ABOVE THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (A) O N THE ABOVE THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (A) O N THE ABOVE THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (A) O N THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. GROUNDS BE SET ASIDE AND THAT OF THE A.O. GROUNDS BE SET ASIDE AND THAT OF THE A.O. GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTORED . BE RESTORED. BE RESTORED. BE RESTORED. 17. WE FIND THAT THE ISSUE IS COVERED BY THE DECISION O F ITAT IN ASSESSEES OWN CASE FOR THE A.Y. 2001-02 WHEREIN IT HAS B EEN HELD AS FOLLOWS: PRESIDENCY CO. OP. HSG. SOC. 9 THE LAST ISSUE IS THE TAXABILITY OF TDR PREMIUM. THE T DRS ARE NOT PURCHASED BY THE SOCIETY. A MEMBER MAY PURCHASE TDRS. WHEN THE MEMBER USES THE TDR, THE SOCIETY CHARGES A PR EMIUM FROM THE MEMBER FOR THE ADDITIONAL FSI USED BY THE M EMBER. THE UNDISPUTED FACT IS THAT THE AMOUNT IN QUESTION BY WAY OF TDR PREMIUM IS RECEIVED BY THE SOCIETY ONLY FROM THE MEMBER. THUS IN OUR CONSIDERED OPINION, THE DECISIONS OF THE JU RISDICTIONAL HIGH COURT IN THE CASE OF SIND CO-OP. HSG. SOCIETY (SU PRA) AND IN THE CASE OF MITTAL COURT PREMISES CHS LTD. (SUPRA) COVE R THE ISSUE AND THE RECEIPT IS NOT TAXABLE ON THE GROUND OF MUTUALITY. THUS THIS GROUND OF THE ASSESSEE IS ALLOWED. RESPECTFULLY FOLLOWING THE DECISION OF THE CO ORDINA TE BENCH WHICH IN TURN HAS FOLLOWED THE DECISION OF THE JURIS DICTIONAL HIGH COURT, WE DISMISS THE REVENUES APPEAL. 1955/M/2010 1955/M/2010 1955/M/2010 1955/M/2010- -- -A.Y. A.Y. A.Y. A.Y. 1995 1995 1995 1995- -- -96 9696 96 18. WHILE COMPLETING THE ASSESSMENT FOR A.Y. 1995-96, T HE ITO WARD 21(1)(4), MUMBAI INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE I.T. ACT. IT IS SEEN FROM THE PENALTY ORDER THAT THE AO CONSIDERED THE GAIN OF `. 20,73,000/- AS BUSINESS PROFIT ON THE SALE OF LAND. THE APPELLANT SOCIETY RECEIVED THE LAND FROM GOVERNMENT AND THEREAFTER SOLD THIS FOR THE PURPOSE OTHER THAN FOR WHICH IT WAS O RIGINALLY REQUISITIONED. THE INCOME REPRESENTING THE SHARE OF P ROFIT FROM THE SALE WAS HELD TO BE IN THE NATURE OF BUSINESS PROFIT ARI SING OUT OF ADVENTURE IN THE NATURE OF TRADE AND ACCORDINGLY ASSE SSED AS BUSINESS INCOME. THE PORTION OF THE SALE CONSIDERATION AMOUNT ING TO `. 20,73,000/- WAS THEREFORE, HELD LIABLE TO BE TAXED U /S. 28 OF THE I.T. ACT AS BUSINESS INCOME. IT WAS CONFIRMED AS SUCH MY LD. CIT(A ) IN THE FIRST ROUND. REGARDING DISALLOWANCE OF VARIOUS EXPENSES, ONL Y THE GET TOGETHER EXPENSES OF `. 55,397/- WAS DELETED BY THE CI T(A) AND HE CONFIRMED THE OTHER ADDITIONS ON ACCOUNT OF EXPENSES, SUCH AS: PRESIDENCY CO. OP. HSG. SOC. 10 1. SUBSIDY FOR PAINTING OF `. 12,000/- 2. GOOD HOUSE KEEPING OF `. 4,27,000/- 3. LONAWALA TRIP EXPENSES OF `. 22,367/- 19. THE LD. AR OF THE APPELLANT STATED THAT THE AO H AS APPLIED SEC. 28 ON A TRANSACTION WHICH IS CLEARLY COVERED U/S. 45 O F THE I.T. ACT. IN ANY CASE, THE AOS ACTION IS SUBJECT TO DEBATABLE INTE RPRETATION. THE APPELLANT IS NOT INVOLVED IN ANY KIND OF PLOTTING BU SINESS WHERE PLOTS ARE PURCHASED AND SOLD. HAVING TRANSFERRED THOSE PLOTS TO THE ELIGIBLE MEMBERS, THE APPELLANT HAS NOT TRADED WITH THE OBJECT OF EARNING PROFITS. THE APPELLANT ADOPTED ONE APPROACH IN RESPE CT OF THIS GAIN WHEREAS THE DEPARTMENT HAD A DIFFERENT POINT OF VIEW IN RESPECT OF THE SAME TRANSACTION. THIS DOES NOT AMOUNT TO CONCEALMENT O F INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 20. THE QUANTUM DISALLOWANCE OF `.55,397/-, `.22,367 /-, `.12,000/- AND `.4,29,000/- ARE RELATED TO COMMON BENEFITS. THE AMOUNT REPRESENTS THE EXPENDITURE MADE BY THE SOCIETY AND THE RE IS NOT DISPUTE REGARDING THE EXPENSE HAVING BEEN INCURRED. T HEREFORE, THE ADDITIONS ARE NOT IN THE NATURE OF CONCEALED INCOME. 21. ON APPEAL, THE LD. CIT(A) HELD AS FOLLOWS: I HAVE CAREFULLY CONSIDERED THE ISSUE. IT IS A FACT TH AT THE APPELLANT HAS ENTERED INTO A SINGLE TRANSACTION OF TRA NSFER OF PLOT OF LAND IN THE LAST MANY YEARS, WHICH WAS TRADED AS TRA NSFER OF CAPITAL ASSET AND PROFIT WAS SHOWN AS CAPITAL GAINS IN THE APPELLANTS RETURN OF INCOME. THE SAME WAS TREATED AS BUSINESS PROFIT BY THE A.O. AND CONFIRMED AS SUCH BY MY LD. C IT(A) PREDECESSOR. IT IS NOT A CASE WHERE THE APPELLANT WAS EN GAGED IN THE TRADING IN PLOTS ON A REGULAR OR SEMI REGULAR BA SIS. THEREFORE, THE ACTION OF THE APPELLANT IN FORMING A BELIEF THA T SUCH ONE-OFF TRANSACTION RESULTED IN CAPITAL GAINS CANNOT BE IMPUT ED WITH A MALAFIDE MOTIVE. SIMILARLY, CERTAIN EXPENSES CLAIMED TO HAVE PRESIDENCY CO. OP. HSG. SOC. 11 BEEN ESSENTIAL FOR THE FUNCTIONING OF THE SOCIETY BUT NOT ALLOWED AS SUCH CAN ALSO NOT BE INTERPRETED TO BE AN ADDITION IN THE NATURE OF CONCEALED INCOME. IN OTHER WORDS, THE ADDI TIONS MADE IN THE APPELLANTS SOCIETY ARE SUCH WHERE THE INTERPRE TATION OF A CERTAIN INCOME BEING BUSINESS OR CAPITAL GAINS IS INVO LVED. ALSO EXPENSES INCURRED HAVE NOT BEEN PROVED TO BE BOGUS, IT S PURPOSE IS ALSO SUBJECT TO INTERPRETATION AND IN SUCH CIRCUMSTANCES, THE ADDITION ON BOTH THE COUNTS CANNOT BE HELD TO BE INT EH NATURE OF CONCEALED INCOME OR RESULTING FR OM FILING OF INACCURATE PARTICULARS OF INCOME. UNDER THESE CIRCUMST ANCES, THE A.O. IS DIRECTED TO DELETE THE PENALTY LEVIED OF `.4 ,65,887/- U/S. 271(1)(C) OF THE ACT. 22. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US AND RAISED THE FOLLOWING GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF `. 4,65,887/- ;LEVIED U/S. 271(1)(C) OF THE I.T. ACT, 1961 23. WE HEARD BOTH THE PARTIES. IN THE CASE OF RELIANC E PETRO PRODUCTS LTD., THE APEX COURT HAS HELD AS FOLLOWS: MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE R EVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT PENALTY U/ S.271(1)(C) OF THE ACT. IF WE ACCEPT THE CONTENTION THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY THE ASSESSING OF FICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY. THAT IS CLEAR LY NOT THE INTENDMENT OF THE LEGISLATURE 24. FURTHER PENALTY U/S. 271(1) CANNOT BE LEVIED W HEN TWO VIEWS ARE POSSIBLE WITH RESPECT TO A CLAIM I.E. WHEN THE ISSUE IS DEBATABLE, AS HELD IN THE CASE OF CIT VS HARSHVARDHAN CHEMICALS & MIN ERALS LTD. 259 ITR 212 AND DURGA KAMAL RICE MILLS VS CIT 265 ITR 25 . WE THEREFORE DELETE THE PENALTY IMPOSED BY THE AO. PRESIDENCY CO. OP. HSG. SOC. 12 25. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. ITA NO. 1956/M/2010 ITA NO. 1956/M/2010 ITA NO. 1956/M/2010 ITA NO. 1956/M/2010- -- - A.Y. 1999 A.Y. 1999 A.Y. 1999 A.Y. 1999- -- -2000 2000 2000 2000 26. WHILE COMPLETING THE ASSESSMENT FOR THE A.Y. 1999-2 000, THE ITO WARD 21(1)(4), MUMBAI IMPOSED PENALTY U/S. 271(1) OF THE I.T. ACT, 1961. THE AO HAS CONCLUDED THAT THE ASSESSEE HAS CONCEAL ED ITS INCOME TO THE EXTENT OF `. 15,85,727/- ON ACCOUNT O F TRANSFER FEES AND DISALLOWANCE OF VARIOUS EXPENSES AND HAS LEVIED PENALTY OF `. 5,70,137/-. 27. THE LD. AR OF THE APPELLANT STATED THAT VARIOUS E XPENSES HAVE BEEN DISALLOWED BY THE AO. THESE WERE NOT HELD TO BE BOGUS, BUT WAS CONSIDERED AS NOT ALLOWABLE. FURTHER REGARDING THE T RANSFER OF TDR TO ITS MEMBERS, THE APPELLANT HAD UNDER A BONAFIDE BELIE F CLAIMED THE SAME AS CAPITAL RECEIPT NOT EXIGIBLE TO TAX AND ON TH E BASIS OF APPLICATION OF DOCTRINE OF MUTUALITY, THE APPELLAN T HAD NOT OFFERED THE SAME FOR TAXATION. FURTHER, THE TRANSFER FEES RECEIVE D OF `. 3,00,000/- WAS NOT ALSO OFFERED FOR TAXATION ON THE GROUND OF MU TUALITY . THE LD. AR DREW MY ATTENTION TO THE DECISION OF HONBLE BOMB AY HIGH COURT IN THE CASE OF SIND CO. OPERATIVE HSG. SOC. LTD VS ITO WA RD-1(7), PUNE 317 ITR 47, IN WHICH IT WAS HELD THAT AS THE AMOUNT E XCLUSIVELY USED FOR THE BENEFIT OF MEMBERS A CLASS AND CHARGING OF TRA NSFER FEES HAS NO ELEMENT OF TRADING OR COMMERCIALITY AND MEMBERS ALON E HAVE RIGHT TO SHARE SURPLUS, THE RECEIPT OF TRANSFER FEES IS NOT LIABLE TO TAX. 28. THE QUANTUM DISALLOWANCE OF EXPENSES OF `. 12,85,7 27/- ARE RELATED TO COMMON BENEFITS. THE AMOUNT REPRESENTS THE EXPENDITURE MADE BY THE SOCIETY AND THERE IS NO DISPUTE REGARDING THE EXPENSE HAVING BEEN INCURRED. THEREFORE, THE ADDITIONS ARE NOT IN THE NATURE OF CONCEALED INCOME. PRESIDENCY CO. OP. HSG. SOC. 13 29. ON APPEAL, THE LD. CIT(A) HELD AS FOLLOWS: I HAVE CONSIDERED THE ARGUMENTS OF THE APPELLANT AND HAVE CAREFULLY GONE THROUGH THE JUDGEMENT CITED ABO VE. RESPECTFULLY FOLLOWING THE JUDGEMENT OF SIND CO. OP. HSG. SOC. LTD., IT IS HELD THAT THE AMOUNT RECEIVED BY THE AP PELLANT ON ACCOUNT OF TRANSFER FEES IS NOT TAXABLE ON THE GROUNDS OF MUTUALITY. FURTHER, IT IS NOT A CASE OF THE AO THAT THE EXPENSES ARE BOGUS OR THEY HAVE BEEN BOOKED ONLY FOR INFLATIN G THE EXPENSES. WHETHER AN EXPENSE IS MADE FOR THE PURPOSE OF THE SOCIETY OR NOT IS A DEBATABLE ISSUE AND AS LONG AS THE SAM E IS NOT PROVED TO HAVE NEVER BEEN INCURRED, CONCEALMENT PEN ALTY CANNOT BE LEVIED IN RESPECT OF THE SAME. AS A RESULT, THE AO IS DIRECTED TO DELETE THE PENALTY LEVIED OF `. 4,65,88 7/- U/S. 271(1)(C) OF THE I.T. ACT. 30. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF `. 5,50,995/- LEVIED U/S. 271(1)(C) OF THE I.T. A CT, 1961 31. WE HEARD BOTH THE PARTIES. IN THE QUANTUM APPEA L IT HAS BEEN HELD AS FOLLOWS: THE TDRS ARE NOT PURCHASED BY THE SOCIETY. A MEMBE R MAY PURCHASE TDRS. WHEN THE MEMBER USES THE TDR, THE SOCIETY CHARGES A PREMIUM FROM THE MEMBER FOR THE ADD ITIONAL FSI USED BY THE MEMBER. THE UNDISPUTED FACT IS THAT T HE AMOUNT IN QUESTION BY WAY OF TDR PREMIUM IS RECEIVED BY THE SOCIETY ONLY FROM THE MEMBER. THUS IN OUR CONSIDERED OPINION , THE DECISIONS OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SIND CO- OP. HSG. SOCIETY (SUPRA) AND IN THE CASE OF MITTAL COU RT PREMISES CHS LTD. (SUPRA) COVER THE ISSUE AND THE RECEIPT IS NO T TAXABLE ON THE GROUND OF MUTUALITY. THUS THIS GROUND OF THE ASSESSE E IS ALLOWED. PRESIDENCY CO. OP. HSG. SOC. 14 32. THEREFORE, THE QUANTUM APPEAL HAVING BEEN ALLOW ED, THE PENALTY HAS NO LEG TO STAND. FURTHER WITH RESPECT TO THE EXPEN SES (I) THE EXPENSES HAVE NOT BEEN FOUND TO BE BOGUS BY THE AO (II ) WHETHER THE EXPENSES MADE FOR THE PURPOSE OF THE SOCIETY OR NOT IS A DEBATABLE ISSUE (III) THERE IS NO DISPUTE THAT THE EXPENSES HAVE B EEN INCURRED. THEREFORE, TAKING INTO CONSIDERATION THE ABOVE FAC TORS, WE FIND THAT CONCEALMENT PENALTY IS NOT LEVIABLE. 33. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF APRIL, 2011. SD/- SD/- (J. SUDHAKAR REDDY) (J. SUDHAKAR REDDY) (J. SUDHAKAR REDDY) (J. SUDHAKAR REDDY) (ASHA VIJAYARAGHAAN) (ASHA VIJAYARAGHAAN) (ASHA VIJAYARAGHAAN) (ASHA VIJAYARAGHAAN) ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER MUMBAI, DATED 29 TH APRIL, 2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI PRESIDENCY CO. OP. HSG. SOC. 15 DATE INITIALS 1 DRAFT DICTATED ON: 27 .0 4. 2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 27 .0 4 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10. DATE OF DISPATCH OF ORDER: _________ ______