BHOOMI REALTORS, MUMBAI V. INCOME TAX OFFICER-30(1)(2), MUMBAI

ITA 2315/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5820 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 13-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Keywords: Business income; TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER ITA NO. 2315 /MUM/201 8 (A.Y: 2012 - 13) M/S. BHOOMI REALTORS HDIL, KALIDONIA, WING A, 8 TH FLOOR, OPP. VIJAY NAGAR, SAHAR ROAD, ANDHERI (E) MUMBAI 400 059 PAN: AAAAB 3440 J V. INCOME TAX OFFICER 30(1)(2), C - 13 , 5 TH FLOOR, PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI 400 051 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MAHAVIR JAIN DEPARTMENT BY : SHRI KUSUM BANSAL DATE OF HEARING : 21 .02 .2019 DATE OF PRONOUNCEMENT : 12 .04 .2019 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE ASSESS EE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 41, MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 24.01.2018 FOR THE ASSESSMENT YEAR 2012 - 13 IN TREATING THE INTEREST INCOME OF SOCIETY AS INTEREST INCOME OF THE ASSESSEE. 2. BRIEFLY STATED THE FACTS ARE THAT, ASSESSEE I S ENGAGED IN THE BUSINESS OF HOUSING PROJECTS. ASSESSING OFFICER ON PERUSAL OF ITS/AIR DETAILS 2 ITA NO. 2315/MUM/2018 (A.Y: 2012 - 13) M/S. BHOOMI REALTORS NOTICED THAT ASSESSEE RECEIVED INTEREST INCOME OF .20,97,846/ - FROM THE FIXED D EPOSITS HELD WITH INDUSIND BANK . HOWEVER, HE NOTICED THAT THIS INTEREST HAS NOT BEEN ACCOUNTED FOR IN THE RETURN OF INCOME. ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THIS SHOULD NOT BE TREATED AS INCOME OF THE ASSESSEE. THE ASSESSEE CONTENDED THAT THE SAID INTEREST PERTAIN S TO THE F IXED DEPOSIT HELD BY BHOOMI REALTORS ACCOUNT BUILDING MAINTENANCE, BHOOMI REALTORS ACCOUNT CORPUS FUND AND THE INTEREST ON THESE FIXED DEPOSITS BELONGS TO SOCIETY AND THE AMOUNTS WERE HANDED OVER TO THE SOCIETY ALONG WITH THE INTEREST THEREON, AND HENCE THE SAID INTEREST DID NOT BELONG TO THE ASSESSEE BUT WE RE PART AND PARCEL OF THE SOCIETY MONEY AND HENCE NOT REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IT WAS CONTENDED THAT BEING THE PROMOTER OF THE SAID SOCIETY PERMANENT ACCOUNT NUMBER HAS TO BE GIVEN TO THE BANK AND THEREFORE, ASSESSEE HAS GIVEN I TS PAN DETAILS TO THE BANK. THE FUNDS WERE ONLY IN THE CUSTODY OF THE ASSESSEE WHICH BELONGS TO THE SOCIETY AND THE ENTIRE CORPUS FUND ALONG WITH INTEREST ACCRUED BELONGS TO THE SOCIETY AND IT WAS ALSO CLEARLY MENTIONED ON THE FACE OF THE TDS CERTIFICATE ALSO. NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE THE ASSESSING OFFICER TREATED THE INTEREST INCOME OF THE SOCIETY AS INTEREST INCOME OF THE ASSESSEE. ON APPEAL THE LD. CIT(A) SUSTAINED THE AC TION OF THE ASSESSING OFFICER. 3 ITA NO. 2315/MUM/2018 (A.Y: 2012 - 13) M/S. BHOOMI REALTORS 3. LD. COUNSEL FOR THE ASSE SSEE SUBMITS THAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT V. M/S. EVERSHINE BUILDERS PVT. LTD., IN ITA.NO. 2827/ MUM/20 18 DATED 01.02.2010 WHEREIN IT WAS HELD THAT THE CORPUS FUND BELONGING TO THE BUILDI NG SOCIETY CANNOT BE ASSESSED IN THE HANDS OF THE BUILDER. LD. COUNSEL FOR THE ASSESSEE REFERRING TO SECTION 5 OF MAHARASHTRA OWNERSHIP FLATS ( REGULATION OF THE PROMOTION OF CONSTRUCTION, SALE, MANAGEMENT AND TRANSFER) ACT, 1963 SUBMITS THAT THE PROMOTOR SHALL MAINTAIN A SEPARATE ACCOUNT IN ANY BANK OF SUMS TAKEN BY HIM FROM PERSONS INTENDI NG TO BUY THE FLATS, ADVANCES OR DEPOSITS FOR FORMATION OF COOPERATIVE SOCIETY AND IF THE VIOLATION OF ANY SUCH AS ACTS , THE ASSESSEE IS PUNISH ABLE U/S. 13 OF THE SAID ACT. THEREFORE, IT IS SUBMITTED THAT THE CORPUS FUND AND INTEREST OF THE SOCIETY BELONGS ONLY TO THE SOCIETY AND NOT TO THE ASSESSEE AND THEREFORE, NO PART OF THE INTEREST SHALL BE ASSESSED IN THE HANDS OF THE ASSESSEE. 4. LD. DR V EHEMENTLY SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW. 5. HEARD RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISION OF THE COORDINATE BENCH IN THE CASE OF ACIT V. M/S. EVERSHINE BUILDERS PVT. LTD., (SUPRA), I FIND THAT THE ISSUE IS SQUARELY 4 ITA NO. 2315/MUM/2018 (A.Y: 2012 - 13) M/S. BHOOMI REALTORS COVERED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH WHEREIN IT HAS BEEN HELD AS UNDER: - THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DT.16.1.08 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2 002 - 03 TAKING FOLLOWING EFFECTIVE GROUND OF APPEAL. 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.6,17,050/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CORPUS FUND COLLECT ED BY THE ASSESSEE DURING THE YEAR WHEN THE ASSESSEE IS OFFERING THE INTEREST EARNED ON CORPUS FUND FOR TAXATION AND THE CORPUS FUND IS NOT TRANSFERRED TO THE SOCIETY EVEN AFTER A LONG PERIOD OF COMPLETION OF PROJECTS. 2. AT THE TIME OF HEARING BOTH PARTI ES HAVE AGREED THAT THE ISSUE UNDER CONSIDERATION IS COVERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEES GROUP CASE IN ACIT VS. M/S. SEAGREEN EVER SHINE BUILDERS PVT. LTD. IN ITA NO.3287/MUM/2008 FOR ASS ESSMENT YEAR 2004 - 05 DATED 13TH MARCH, 2009, THEREFORE, THE ISSUE MAY BE DECIDED ACCORDINGLY. 3. WE HAVE CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE COMPANY ENGAGED IN THE BUS INESS OF BUILDING CONSTRUCTION, DISTRIBUTION OF FILMS AND HIRING OF STUDIO EQUIPMENTS, FILED RETURN DECLARING AN INCOME OF RS.6,29,547/ - . DURING THE COURSE OF ASSESSMENT PROCEEDING IT WAS INTERALIA OBSERVED BY THE AO THAT THE ASSESSEE HAD COLLECTED A SUM O F RS.10/ - PER SQ.FT. FROM THE FLAT BUYERS AT THE TIME OF SALE OF FLAT AS CONTRIBUTION TOWARDS THE FUND CALLED CORPUS FUND FOR THE VARIOUS PROJECTS COMPLETED BY THE ASSESSEE IN VASAI CITY. THE AO AFTER CONSIDERING THE ASSESSEES REPLY WHICH WAS THE SAME AS SUBMITTED IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2001 - 02, WHEREIN IN THE ASSESSMENT THE SAID CORPUS FUND WAS TREATED AS NOTHING BUT SALE CONSIDERATION OF THE FLATS SOLD BY THE ASSESSEE IN THE AY 2001 - 02, FOLLOWED THE SAME CONCLUSION AND ADDED THE AM OUNT OF RS.6,17,050/ - COLLECTED BY THE ASSESSEE AS CORPUS FUND, AS ASSESSEES BUSINESS INCOME. ON APPEAL, THE LD. CIT(A) WHILE CONCURRING WITH THE DECISION OF LEARNED SETTLEMENT COMMISSION THAT THIS WOULD NOT FORM PART OF ASSESSEES INCOME IN VIEW OF THE C LEAR PENAL LIABILITY PRESCRIBED U/S.13 OF THE MOFA, 1963 FOR KEEPING THESE ACCOUNTS OF CORPUS FUND SEPARATELY AND TRANSFER TO THE SOCIETY, DELET ED THE ADDITION MADE BY THE AO. 4. IN M/S. SEAGREEN EVER SHINE BUILDERS PVT. LTD.(SUPRA), THE TRIBUNAL ON THE ID ENTICAL ISSUE WHILE UPHOLDING THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION HELD VIDE PARA - 4 OF ITS ORDER DT.13TH MARCH 2009 AS UNDER: 4. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE AND THE LD. COUNSEL, WE ARE OF THE CONSIDERED OPINION THAT THE ORDER OF THE LD. CIT(A) IS TO BE UPHELD. IT IS THE FACT THAT THE ASSESSEE RECEIVED AFORESAID AMOUNT TOWARDS CORPUS FUND WHICH WAS SEPARATELY KEPT TO BE HANDED OVER TO THE SOCIETY BEING FORMED AND FOR THE AMOUNT COLLECTED THE ASSESSEE ACTS AS TRUSTEE FO R THE COOPERATIVE SOCIETIES TILL THE SOCIETIES ARE FORMED. SINCE THE ASSESSEE IS FOLLOWING THE PROVISIONS OF THE MAHARASHTRA OWNERSHIP OF FLATS ACT, 1963, THE CORPUS FUND CANNOT BE TREATED AS INCOME OF THE ASSESSEE. ACCORDINGLY ORDER OF THE LD. CIT(A) ON T HIS ISSUE IS UPHELD. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL(SUPRA), HOLD THAT THE CORPUS FUND OF RS.6,17,050/ - COLLECTED BY THE ASSESSEE FOLLOWING THE PROVISIONS OF 5 ITA NO. 2315/MUM/2018 (A.Y: 2012 - 13) M/S. BHOOMI REALTORS MAHARASHTRA OWNERSHIP OF FLATS ACT, 1963, IS NOT THE INCOME OF THE ASSESSEE AND ACCORDINGLY WE ARE INCLINED TO UPHOLD THE FINDING OF THE LD. CIT(A) IN DELETING THE SAME. THE GROUNDS TAKEN BY THE REVENUE ARE THEREFORE REJECTED . 6. ON A PERUSAL OF THE ORDER OF THE TRIBUNAL, IT CAN BE OBSERVED THAT THE CORPUS FUND MAINTAINED BY THE BUILDER IN A SEPARATE ACCOUNT WHICH BELONGS TO THE SOCIETY CANNOT BE THE INCOME OF THE ASSESSEE . THEREFORE, WHEN THE CORPUS FUND ITSELF CANNOT BE TREATED AS INCOME OF THE ASSESSEE , T HE BUILDER, I N MY VIEW THE INTEREST ACCRU ED THEREON ALSO CANNOT BE ASSESSED IN THE HANDS OF THE BUILDER. THUS, R ESPECTFULLY FOLLOWING THE SAID DECISION, I DIRECT THE ASSESSING OFFICER TO DELETE THE INTEREST INCOME ASSESSED IN THE HANDS OF THE ASSESSEE AND BELONG TO BUILDING SOCIETY . GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 12 TH APRIL , 2019 SD / - (C.N. PRASAD) JUDICIAL MEMBER MUMBAI / DATED 12 / 0 4 / 201 9 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM