ITO 21(2)(4), MUMBAI V. SUVARNANAGAR CO OPERATIVE HOUSING SOCIETY LTD, MUMBAI

ITA 205/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2619 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 22-12-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 08-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SATHYA MOORTHYDR
• Keywords: Business income; Capital receipt
• Section: 148

Judgement Text

1 , INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , . . , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./ITA/205/MUM/2014, /ASSESSMENT YEARS: 2002-03 DCIT, RANGE- 21(2)(4) C-10, ROOM NO.503, 5 TH FLOOR BANDRA KURLA COMPLEX, BANDRA MUMBAI-400 051. VS. M/S. SUVARNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. JAIN HIND CLUB, N.S. ROAD, NO.11, JUHU MUMBAI-400 049. PAN:AAAAS 4938 E ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: SHRI N. SATHYA MOORTHY-DR ASSESSEE BY: NONE / DATE OF HEARING: 13.07.2016 / DATE OF PRONOUNCEMENT: 13.07.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE RODER DT.14.10.13 OF CIT(A)-32, MUM BAI THE ASSESSING OFFICER (A.O.) HAS FILED THE PRESENT APPEAL.THE EFFECTIVE GROUND OF AP PEAL DEALS WITH DELETING THE PENALTY OF RS.36.82 LAKHS,LEVIED U/S. 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE . BRIEF FACTS:- 2. ASSESSEE-CO-OPERATIVE HOUSING SOCIETY(CHS)FILED ITS RETURN OF INCOME ON 2.8.2002, DECLARING TOTAL INCOME OF RS.15,874/-.INITIALLY, TH E RETURN WAS PROCESSED U/S.143(1) OF THE ACT. SUBSEQUENTLY,A NOTICE U/S. 148 WAS ISSUED AND THE A O COMPLETED THE ASSESSMENT U/S.143(3) R.W.S.147 OF THE ACT ON 29.12.2009 DETERMINING INCO ME OF THE ASSESSEE AT RS.1.20 CRORES. WHILE COMPLETING THE ASSESSMENT, AN ADDITION OF RS. 90 LAKHS WAS MADE TREATING THE SALE OF LAND AS BUSINESS TRANSACTION AGAINST THE CLAIM OF T HE ASSESSEE AS LTCG AND THE DEDUCTION CLAIMED U/S.54EA OF THE ACT.BESIDES, AN ADDITION OF RS.30.80 LAKHS WAS MADE ON ACCOUNT OF RECEIPT OF TRANSFER FEE BY TREATING IT AS REVENUE R ECEIPT,WHICH THE ASSESSEE HAD CLAIMED TO BE EXEMPT, U/S.80P,ON THE PRINCIPLES OF MUTUALITY. THE AO INITIATED PENALTY PROCEEDINGS FOR THE AFORESAID TWO ADDITIONS. 3. IN THE MEANWHILE THE ASSESSEE CHALLENGED THE ADDITI ONS BEFORE THE FIRST APPELLATE AUTHORITY (FAA). HE CONFIRMED THE ACTION OF THE AO IN TREATIN G THE RECEIPT CONSEQUENT TO SALE OF PLOT OF LAND AS BUSINESS INCOME.WITH REGARD TO ADDITION MAD E ON ACCOUNT OF TRANSFER FEE, HE ALLOWED 205/MUM/2014(SUVARNAGAR-CHS) 2 RELIEF OF RS.50,000/- AND CONFIRMED THE BALANCE ADD ITION OF RS.30.30 LAKHS. THE AO VIDE HIS ORDER,DT.30.03.2012,IMPOSED A PENALTY OF RS.36,82,9 79/-ON THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME FOR THE YEAR UNDE R CONSIDERATION. 4. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FAA WHO ALLOWED THE APPEAL OF THE ASSESSEE.HE HELD THAT SAL E OF COMMON PLOT BY THE SOCIETY WAS A CAPITAL RECEIPT AND HAD TO BE TAXED AS LTCG ,THAT T HE AO WAS NOT JUSTIFIED IN TREATING THE RECEIPT ON SALE OF PLOT AS BUSINESS INCOME.WITH REG ARD TO TRANSFER FEE THE FAA HELD THAT THE RECEIPT WAS EXEMPT IN VIEW OF THE DECISION OF ADARS H CHS LTD. 5. DURING THE COURSE OF HEARING BEFORE US, THE DEPARTM ENTAL REPRESENTATIVE (DR) STATED THAT THE MATTER COULD BE DECIDED ON MERITS. IT IS NOTICE D THAT IN THE QUANTUM APPEAL THE TRIBUNAL (ITA 179/M/2011 DT.11.4.14) HAD SET ASIDE THE ISSUE OF SALE OF PLOT OF LAND TO THE FILE OF THE AO.WE WOULD LIKE TO REPRODUCE THE RELEVANT PORTION OF THE SAID ORDER WHICH READS AS UNDER (PARA 4 & 5):- 4.BEFORE US,IT HAS BEEN ADMITTED BY BOTH THE PARTI ES THAT THIS ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN IT NO .7168/MUM./2008 AND IN CASE OF OTHER SOCIETIES ALSO, WHO WERE ONE OF THE PARTIES IN THE SALE OF THE SAID PLOT. IN THE SAID DECISION, THE TRIBUNAL HAS SET ASIDE THIS ISSUE TO THE FILE OF TH E ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AS PER THE DIRECTION GIVEN BY THE TRIBUNAL DATED 17 TH NOVEMBER 2005, RELEVANT OBSERVATION AND DIRECTIONS OF THE TRIBUNAL ARE AS UNDER: WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE AMOUNT OF SIMILAR N ATURE WAS RECEIVED BY 14 COOPERATIVE HOUSING SOCIETIES INCLUDING THE FOUR ASSESSEE SOCIE TIES IN THE PRESENT CASE ON ACCOUNT OF SALE CONSIDERATION OF PLOT OF LAND JOINTLY OWNED BY THEM. WHEN THE ISSUE RELATING TO HEAD OF INCOME UNDER WHICH THE SAID AMOUNT WAS CHARGEABL E TO TAX HAD COME UP FOR CONSIDERATION IN THE CASES OF THE ASSESSEE BEFORE T HE TRIBUNAL IN THE FIRST ROUND, THE TRIBUNAL FOUND IT RELEVANT TO ASCERTAIN AS TO WHAT HAD HAPPENED IN THE CASES OF OTHER SOCIETIES. NONE OF THE PARTIES APPEARING BEFORE THE TRIBUNAL, HOWEVER, COULD FURNISH THE RELEVANT DETAILS IN THIS REGARD. THE ISSUE, THEREFO RE, WAS RESTORED BY THE TRIBUNAL TO THE FILE OF THE A.O. FOR DECIDING THE SAME AFRESH AFTER TAKING INTO CONSIDERATION THE FINAL DECISION RENDERED ON A SIMILAR ISSUE IN THE CASE OF OTHER COOPERATIVE HOUSING SOCIETIES. IT APPEARS FROM THE ORDERS OF THE AUTHORITIES BELOW TH AT THE DIRECTION OF THE TRIBUNAL, HOWEVER, HAS NOT BEEN COMPLIED WITH AND THE ISSUE H AS BEEN DECIDED WITHOUT COMPLYING WITH THE DIRECTIONS OF THE TRIBUNAL. AT THE TIME OF HEARING BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ALTHOUGH THE AS SESSEE IN THE PRESENT CASE HAVE DETAILS ABOUT THE EXACT ADDRESS OF THE REMAINING COOPERATIV E HOUSING SOCIETIES, THEY ARE NOT IN A POSITION TO ENFORCE THEIR ATTENDANCE BEFORE THE A.O . OR THEIR COMPLIANCE TO THE NOTICE ISSUED BY THE A.O. U/S 133(6). IN OUR OPINION, IF T HESE DETAILS ARE FURNISHED BY THE ASSESSEE TO THE A.O., THE LATTER IS SUFFICIENTLY EM POWERED TO ENFORCE THE ATTENDANCE OF THE OTHER COOPERATIVE HOUSING SOCIETIES OR THE NECESSAR Y COMPLIANCE OR PART SO AS TO DECIDE 205/MUM/2014(SUVARNAGAR-CHS) 3 THE ISSUE AS PER THE DIRECTION GIVEN BY THE TRIBUNA L IN THE FIRST ROUND VIDE HIS ORDER DATED 17 TH NOV. 2005. WE, THEREFORE, RESTORE THIS ISSUE ONCE AGAIN TO THE FILE OF THE A.O FOR DECIDING THE SAME AFRESH AS PER THE DIRECTION GIVEN BY THE TRIBUNAL VIDE ITS ORDER DATED 17 TH NOV. 2005.THE ASSESSEES ARE DIRECTED TO FURNISH TH E ADDRESSES OF THE OTHER COOPERATIVE HOUSING SOCIETIES TO THE A.O. WHO SHALL ENFORCE THEIR COMPLIANCE IN ORDER TO DECIDE THIS ISSUE AS PER THE DIRECTION GIVEN BY THE TRIBUNAL. 5.IN VIEW OF THE AFORESAID DECISION OF THE TRIBUNAL , WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND RESTORE THE ISSU E BACK TO THE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO DECIDE THE SAME IN VIEW OF THE OBSERV ATIONS AND DIRECTIONS GIVEN BY THE TRIBUNAL IN THE AFORESAID CASE. THUS, GROUND NO.1, IS ALLOWED F OR STATISTICAL PURPOSES. AS THE TRIBUNAL HAD RESTORED BACK THE MATTER TO THE FILE OF AO, SO, PENALTY WOULD NOT SURVIVE AS FAR AS ADDITION MADE ON ACCOUNT OF SALE OF PLOT OF LAND IS CONCERNED. 6 . WITH REGARD TO TRANSFER FEE WE FIND THAT THE TRIB UNAL HAD DEALT THE ISSUE AS UNDER: 11.AFTER CAREFULLY CONSIDERING THE RIVAL SUBMISSIO NS AND ALSO THE CASE LAWS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE, WE FIND THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE BOMBAY HIGH COURT IN MITTAL COOPERATIVE HOUSING SO CIETY LTD. (SUPRA), WHEREIN THE COURT OBSERVED AND HELD AS UNDER: THE NOTIFICATION I SSUED BY THE STATE OF MAHARASHTRA PUTT I NG R ESTRICT I ONS ON T HE AM OUNT OF T R ANSFER FEE WHEN THE M EMBER DESIRES TO TRANSFER HIS SHA R ES OR OCCUPANCY RIGHTS ARE ONL Y IN RESPECT OF HOUS I NG R ES I DENTIAL SOCIETIES . IN THE INSTANT CASE , T HE APPELLANTS ARE NOT HOU S IN G R ESIDENT I AL SOCIET I ES AND CONSEQUENTLY, THOSE NOTIFICATIONS WOULD NO T BE APPLICABLE. TH E BYE-LAW S ARE NOTHING BUT THE CONTRACT BETWEEN THE SOC I ETY AND THE MEMBE R . U NDER THE S E BYE - LAWS , IT IS THE M EMBER WHO HAS TO MAKE THE PAYMENT. ANY INTER SE ARRANGEMENT BETWEEN THE INC O MING MEMBERS AND THE TRANSFEREE I S IRRELEVANT INSOFAR AS THE SOC I ETY IS CONCE R N E D . T HE R E IS AN AGREEMENT BY WHICH THE AMOUNT IS PAID BY THE T R ANSFEREE. INSOFAR AS SOCIETY IS C ONCERNED , EV E N IF RECEIPT IS ISSUED IN THE NAME OF TRANSFEREE IT IS T HE NATURE O F ADMISSION FEE WHICH COU LD BE APPROPRIATED , ONLY ON THE TRANSFEREE BEING ADMITTED.MEREL Y BECAUSE T H E AMOUN T MAY BE APPROPRIATED EARLIER , IT WIL L NOT LOSE THE CHARACTER OF THE AMOUN T BE I NG P A I D BY A MEM BER. IN THESE CIRCUMSTANCES , THE IDENTITY OF T H E CONTRIBUTO R AND B E N E F IC I ARY BEING SATISFIED AND CONSIDERING THE PROVIS I ONS OF MAHARASHTRA CO - OPERATIVE SOCI ET I ES ACT AND RULES FR AM ED THEREUNDER, SURPLUS CAN BE DISPOSED OF IN F AVOUR OF TH E M E M BERS ONLY OR FOR THE OB JE CT S F O R WHICH THEY MAY SPECIFY. 12.THUS, RESPECTFULLY FOLLOWING THE DECISION OF THE BOMBAY HIGH COURT CITED SUPRA, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSION ER (APPEALS) AND HOLD THAT THE AMOUNT OF TRANSFER FEE OF RS.30.30 LAKHS IS NOT TAXABLE IN VI EW OF THE PRINCIPLES OF MUTUALITY. THUS, GROUND NO.2, IS ALLOWED. FROM THE ABOVE ORDER IT IS CLEAR THAT THE TRIBUNAL HAD ALLOWED THE APPEAL FILED BY THE ASSESSEE, WHILE DECIDING THE QUANTUM PROCEEDINGS. IN THESE CI RCUMSTANCES, PENALTY LEVIED BY THE AO HAS TO BE CANCELLED. EFFECTIVE GROUND OF APPEAL IS DECIDED AGAINST THE AO. 205/MUM/2014(SUVARNAGAR-CHS) 4 AS A RESULT APPEAL FILED BY THE AO STANDS DISMISSED . . ORDER PRONOUNCED IN T HE OPEN COURT ON 13 TH JULY,2016. 13 , 2016 SD/- SD/- ( . . !' / C.N. PRASAD ) ( #$ / RAJENDRA ) '% / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 13.07.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.