SAMBHAV TIRTH CO-OP HSG. SOCIETY LTD, MUMBAI V. ITO WD 16(2)(1), MUMBAI

ITA 2820/MUM/2011

• Counselvise Citation: 282019914 RSA 2011
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 08-05-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 11-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: RAKESH JOSHI

Judgement Text

ITA NO.4925, 2819 TO 2821 OF 2011 SAMBHAV TIRTH COOP.HOUSING SOCIETY LTD MUMBAI PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITAS NO. 4925, 2819, 2820 & 2821/MUM/2011 (ASSESSMENT YEARS: 2003-04, 2004-05, 2005-06 & 200 6-07) SAMBHAV TIRTH COOP. HOUSING SOCIETY LTD 24 BHULABHAI DESAI RD HAJI ALI, MUMBAI 400026 PAN NO: AAAAS 4937 M VS INCOME TAX OFFICER, WARD 16 (2)-1 MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI RAKESH JOSHI DEPARTMENT BY: SHRI V.V. SHASTRI, DR DATE OF HEARING: 07 & 08/05/2012 DATE OF PRONOUNCEMENT: 11/05/2012 O R D E R PER VIVEK VARMA, J.M. THE APPEALS FILED BY THE ASSESSEE IS ARISE S FROM THE ORDER OF CIT (A)-27 MUMBAI DATED 08-03-2011 FOR ASSESSMENT Y EAR 2003-04, AND ORDERS BY CIT(A), MUMBAI 28, DATED 27-01-2011 F OR ASSESSMENT YEARS 2004-05 TO 2006-07. AS THE GROUNDS ARISING IN ALL THE YEARS ARE IDENTICAL, FOR THE SAKE OF BREVITY, WE ARE DISP OSING OF THESE APPEALS THROUGH A CONSOLIDATED ORDER. 2. IN ALL THE IMPUGNED YEARS, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS, WHICH ARE AS FOLLOWS : 1. THE LEARNED CIT (A) HAS ERRED IN CONSIDERING LIC ENSE FEES FROM HUTCHISON MAX TELECOM PVT. LTD FOR RS. 6,12,500/- AND HOARDING CHARGES FROM M/S DEESHA LEASCON PVT. LTD FOR RS. 13,00,000/- UNDER INCOME FROM ITA NO.4925, 2819 TO 2821 OF 2011 SAMBHAV TIRTH COOP.HOUSING SOCIETY LTD MUMBAI PAGE 2 OF 8 OTHER SOURCES INSTEAD OF INCOME FROM HOUSE PROPER TY WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. AS ASSESSEE HAS CORRECTLY CLAIMED, THE SAME N EEDS TO BE DELETED. CONSEQUENTLY DEDUCTION UNDER SECTION 24(I) FOR REPAIRS IS NOT CONSIDERED. 2. THE LEARNED CIT (A) HAS ERRED IN CONSIDERING INC OME FROM HOARDING CHARGES FROM DEESHA LEASCON PVT. LTD. FOR RS. 13,00,000/- AS AGAINST RS. 5,00,000/- ACTUA LLY RECEIVED BY ASSESSEE WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. SAME BE DELETED. BESIDES THE ABOVE GROUNDS, THE ASSESSEE HAS RAISED ANOTHER GROUND IN ASSESSMENT YEARS 2004-05 AND 2006 - 07, AS GROUND NO. 1 : THE LEARNED CIT(A) HAS ERRED IN TREATING CONTRIBUTI ON TO PAINTINGS AND REPAIRS FUND OF RS. 4,00,000 AS TAXAB LE INSTEAD OF EXEMPT WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. AS THESE RECEIPTS ARE EX EMPT FROM TAX ON THE PRINCIPLES OF MUTUALITY, THE ADDITI ON BE DELETED. GROUNDS NO. 1 AND 2 IN ASSESSMENT YEARS 2003-04 AND 2005-06 AND GROUNDS NO. 2 AND 3 IN ASSESSMENT YEARS 2004-05 AND 2006- 07. 3. FROM THE FACTS BORNE OUT OF THE ORDERS OF THE REVEN UE AUTHORITIES AND SUBMITTED BY THE A.R, WE FIND THAT ASSESSEE SOCIETY ENTERED INTO TWO AGREEMENTS ONE WITH HUTCHISON MAX TELECOM PVT. LTD TO SET UP A CELLULAR NETWORK ANTENNAE AND OTHER EQUIPMENT ON THE SPACE ALLOTTED TO THEM ON THE TERRACE OF THE CH S AND ANOTHER TO SET UP HOARDINGS WITH DEESHA LEASCON (P) LTD. (HERE INAFTER REFERRED AS DEESHA). ASSESSEE CLAIMED THE RECEIPTS FROM THE TWO TO BE FROM INCOME FROM HOUSE PROPERTY AND THE REVENUE AUTHORIT IES HELD IT TO BE INCOME FROM OTHER SOURCES. AGGRIEVED, ASSESSEE I S BEFORE THE ITAT. ITA NO.4925, 2819 TO 2821 OF 2011 SAMBHAV TIRTH COOP.HOUSING SOCIETY LTD MUMBAI PAGE 3 OF 8 4. BEFORE US, THE AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE CELLULAR TOWER INSTALLED BY THE COMPANY WAS AGAINST THE RENTAL INCOME IS TO BE TREATED AS INCOME FROM HOUSE PROPER TY. THE AR TO STRENGTHEN HIS ARGUMENTS CITED THE CASE OF CIT VS. BAJAJ BHAWAN OWNERS PREMISES COOP. SOCIETY LTD IN ITA NO. 3183 O F 2010 WHEREIN THE HON'BLE BOMBAY HIGH COURT FOUND THAT THE ITAT H AD FOLLOWED THE DECISION OF SHARADA CHAMBER PREMISES VS. INCOME TAX OFFICER AND INCOME TAX OFFICER VS. CUFFEE PARADE SAINARA PR EMISES COOP. SOCIETY LTD., WHICH HAD NOT BEEN AGITATED BY THE RE VENUE BEFORE THE HON'BLE HIGH COURT AND EVEN THE COUNSEL FOR THE REV ENUE IN THE CASE OF BAJAJ BHAWAN WAS NOT ABLE TO PIN POINT ANY ERROR ON THE DECISION OF THE ITAT ON THE IMPUGNED ISSUE, THE HON 'BLE BOMBAY HIGH COURT THUS DISMISSED THE APPEAL FILED BY THE D EPARTMENT. 5. THE AUTHORIZED REPRESENTATIVE ALSO CITED THE DECISI ONS OF COORDINATE BENCH IN THE CASES OF S. SOHAN SINGH VS. INCOME TAX OFFICER REPORTED IN 16 ITD 272 (DEL.), MATRU ASHISH CHS LTD VS. INCOME TAX OFFICER, ITA NO. 316/MUM/2010; VIJAY SIN GH PATWARDHAN VS. ACIT, ITA NO. 4972/MUM/2010 & MAHALA XMI SHEELA PREMISES CHS LTD VS. INCOME TAX OFFICER, ITA NO. 784 TO 786/MUM/2010. 6. THE AUTHORIZED REPRESENTATIVE POINTED OUT THAT IN T HE CASE OF MATRU ASHISH CHS LTD, THE COORDINATE BENCH HELD IN PARA 6 WE ARE OF THE VIEW THAT THE LETTING OUT OF THE TERRACE HAS TO BE ASSESSED UNDER THE INCOME FROM HOUSE PROPERTY SUBJECT TO DED UCTION UNDER SECTION 24 OF THE ACT AS AGAINST INCOME FROM OTHER SOURCES ASSESSED BY AO . 7. IN THE CASE OF MAHALAXMI SHEELA PREMISES CHS LTD., ITA NO. 784 TO 786/MUM/2010, THE COORDINATE BENCH OF MUMBAI TRIBUNAL, AFTER CITING TO VARIOUS DECISIONS, INCLUDING THE DE CISION OF HON'BLE ITA NO.4925, 2819 TO 2821 OF 2011 SAMBHAV TIRTH COOP.HOUSING SOCIETY LTD MUMBAI PAGE 4 OF 8 BOMBAY HIGH COURT HELD, KEEPING IN VIEW THE AFORESAID FINDING JUDGMENTS OF THE HON'BLE JURISDICTIONAL HIGH COURT, WE SET ASIDE THE ORDER OF THE CIT (A) AND ALLOW THIS GROUND RAISED B Y ASSESSEE DIRECTING AO TO ASSESS THE INCOME IN QUESTION UNDER THE HEAD, INCOME FROM HOUSE PROPERTY . 8. ON THE OTHER HAND THE DR PLACED BEFORE US A WRITTEN SUBMISSION ALONG WITH TWO CITATIONS I.E. IN THE CAS E OF ZAIBUNISSA BEGUM REPORTED IN 151 ITR 320 (AP) AND MUKHERJEE ES TATES (P) LTD VS. CIT REPORTED IN 244 ITR 1 (CAL.), WHEREIN IT WA S HELD, THEREFORE, CONSIDERING THE FINDING OF THE TRIBUNAL THAT THE AS SESSEE HAS LET OUT THE HOARDINGS, THESE ARE NEITHER PART OF THE BUILDI NG NOR THE LAND APPURTENANT THERETO. THEREFORE, PERMITTING SOME COM PANIES TO DISPLAY THEIR BOARDS ON HOARDINGS CANNOT BE TAKEN AS INCOME FROM HOUSE PROPERTY AS HOARDINGS CANNOT BE TREATED AS PART OF THE BUILDING. THE DR THUS PLEADED THAT THE INCOME SHOULD BE ASSESSED FROM OTHER SOURCES AND NOT INCOME FROM HOUSE PROPERTY. 9. IN THE REJOINDER, THE AR SUBMITTED, THAT THE CASE O F CIT VS. ZAIBUNISSA BEGUM REPORTED IN 151 ITR 320 (AP) IS ON A DIFFERENT ISSUE AND HENCE NOT APPLICABLE. SO FAR AS THE CALCU TTA HIGH COURT IS CONCERNED, THE AUTHORIZED REPRESENTATIVE SUBMITTED THAT IN THAT CASE, FACTS ARE DIFFERENT, AS SEEN FROM THE ORDER, THAT, IT WAS THE HOARDING ONLY WHICH WAS LEASED OUT AND NOT THE TERR ACE PORTION. THAT WAS THE REASON WHY THE HON'BLE CALCUTTA HIGH C OURT HELD THAT LETTING OF THE HOARDINGS CANNOT BE TAKEN AS INCOME FROM HOUSE PROPERTY. 10. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATE RIAL AND CITATIONS QUOTED BEFORE US. WE FIND THAT THE ISSUE IS COVERED BY VARIOUS DECISIONS OF THE COORDINATE BENCH OF ITAT A ND ALSO BY THE HON'BLE JURISDICTIONAL HIGH COURT. WE HAVE ALSO PER USED THE TWO ITA NO.4925, 2819 TO 2821 OF 2011 SAMBHAV TIRTH COOP.HOUSING SOCIETY LTD MUMBAI PAGE 5 OF 8 CASE LAWS CITED BY THE DR. WE FIND THAT THE CASE OF CIT VS. ZAIBUNISSA BEGUM REPORTED IN 151 ITR 320 (AP) IS ON A DIFFERENT ISSUE AND HENCE NOT APPLICABLE. WE HAVE ALSO PERUSE D THE DECISION OF HONBLE CALCUTTA HIGH IN THE CASE OF MUKHERJEE E STATES (P) LTD VS. CIT REPORTED IN 244 ITR 1 (CAL.). THE FACTS EMERGIN G IN THAT CASE ARE DIFFERENT, AS SEEN FROM THE ORDER, AND THE FACTS PO INT OUT THAT, IT WAS THE HOARDING ONLY WHICH WAS LEASED OUT AND NOT THE TERRACE PORTION. THAT WAS THE REASON WHY THE HON'BLE CALCUTTA HIGH C OURT HELD THAT LETTING OF THE HOARDINGS CANNOT BE TAKEN AS INCOME FROM HOUSE PROPERTY. 11. ON GOING THROUGH THE FACTS AND THE CASES CITED, WE ARE IN AGREEMENT WITH THE AUTHORIZED REPRESENTATIVE AND BY RESPECTFULLY FOLLOWING THE DECISIONS OF THE COORDINATE BENCH AND THE HONBLE JURISDICTIONAL HIGH COURT OF BOMBAY, TO WHICH WE AR E BOUND WITH, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO IN ALL THE FOUR IMPUGNED ASSESSMENT YEARS TO TREAT THE INCOME AS IN COME FROM HOUSE PROPERTY AND ALLOW ALLOWABLE DEDUCTION(S), AS PRESCRIBED UNDER THE HEAD INCOME FROM HOUSE PROPERTY . 12. THIS GROUND OF APPEAL IS ALLOWED. 13. GROUND NO. 2 IS AGAINST CONSIDERING THE INCOME RECE IVED AT RS. 13,00,000/- AS AGAINST RS. 5,00,000/- ACTUALLY RECEIVED FROM DEESHA LEASON PVT. LTD. 14. ASSESSEE HAD SHOWN RS. 5,00,000/- HAVING RECEIVED FROM DEESHA, WHEREAS THE REVENUE AUTHORITIES HAVE TREATE D RS. 13,00,000/- FOR THE FULL YEAR, CITING THE TERMS OF AGREEMENT THAT RS. 75,000/- ON MAINTENANCE OF HOARDING AND RS. 25,000/- BEING THE RENTAL FOR THE HOARDING. THE REVENUE AUTHORITIES HA VE COMPUTED RS. 13,00,000/- (INSTEAD OF RS. 12,00,000/-) WHICH NEITHER THE DR NOR THE AUTHORIZED REPRESENTATIVE HAS BEEN ABLE TO EXPL AIN AS TO HOW IT WAS RS. 13,00,000/-. IN ANY CASE, THE ISSUE IS WHETHER THE INCOME ITA NO.4925, 2819 TO 2821 OF 2011 SAMBHAV TIRTH COOP.HOUSING SOCIETY LTD MUMBAI PAGE 6 OF 8 ACCRUED/RECEIVED BY ASSESSEE WAS RS. 5,00,000/- OR RS. 12,00,000/- AS HELD BY THE REVENUE AUTHORITIES. 15. IT IS SEEN FROM THE ORDERS OF THE REVENUE AUTHORITI ES THAT THEY HAVE GONE ON THE BASIC PRINCIPLE OF MERCANTILE SYST EM OF ACCOUNTING. ON THE OTHER HAND, THE AUTHORIZED REPRESENTATIVE PL EADED THAT ASSESSEE HAS SHOWN THE CORRECT INCOME. 16. WE HAVE SEEN FROM THE ASSESSMENT ORDER THAT THE DET AILS OF PAYMENTS RECEIVED FROM DEESHA ARE REPRODUCED IN PAG E 4, SHOWING DATE, AMOUNT AND TDS ON THE PAYMENTS MADE. AO HAD A LSO PLACED THE COPY OF TDS IN FORM NO. 16A ISSUED BY DEESHA WH ICH ALSO SHOWS THAT THE PAYMENT WAS RECEIVED FOR RS. 5,00,000/-. THE BENCH ENQUIRED FROM THE AUTHORIZED REPRESENTATIVE AS TO W HY THE PART PAYMENT WAS MADE, IT WAS SUBMITTED BY THE AUTHORIZE D REPRESENTATIVE THAT THERE WAS A CLAUSE IN THE AGREE MENT THAT THE LEASE SHALL BE CONTINUED SUBJECT TO PERMISSION RECE IVED FROM THE BOMBAY MUNICIPAL CORPORATION. SINCE THE PERMISSION WAS NOT THERE, DEESHA STOPPED THE PAYMENT FROM SEPTEMBER 2002, I.E . AFTER HAVING RECEIVED THE RENTALS FROM 01.04.2002 TO 31.08.2008. AT THE TIME OF HEARING, THE AR PLACED A COPY OF CERTIFICATE RECEIV ED FROM DEESHA LEASECON PRIVATE LIMITED, WHICH SAYS THAT THE TOTAL AMOUNT PAID TO SAMBHAV TIRTH CHS ON ACCOUNT OF HOARDING CHARGES. T HE AR ADMITTED THAT THIS CERTIFICATE WAS NOT BEFORE THE R EVENUE AUTHORITIES. 17. HAVING HEARD THE PARTIES, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE OF RENTAL RECEIVED FROM APRIL 2002 T O AUGUST 2002 AND THE REASONS WHY IT WAS STOPPED FROM SEPTEMBER 2002, IF AT ALL IT WAS STOPPED, NEEDS TO BE LOOKED INTO BY THE AO TO COME TO A DEFINITE CONCLUSION THAT THE ASSESSEE CHS HAD ACTUALLY RECEI VED RS. 5,00,000/- AND NOTHING MORE IN THE CURRENT YEAR, BE CAUSE IN THIS ITA NO.4925, 2819 TO 2821 OF 2011 SAMBHAV TIRTH COOP.HOUSING SOCIETY LTD MUMBAI PAGE 7 OF 8 YEAR, THE LIABILITY WAS DENIED BY DEESHA POST 31.08 .2002 AS THE PERMISSION FROM THE MUNICIPAL CORPORATION WAS NOT T HERE. 18. WE, THEREFORE, RESTORE THE ISSUE TO THE FILE OF THE AO, IN ALL THE FOUR IMPUGNED ASSESSMENT YEARS, WHO SHALL MAKE APPR OPRIATE ENQUIRIES FROM THE PARTIES CONCERNED AND FROM THE L OCAL AUTHORITIES, WHO SHALL EXAMINE IN DETAIL THE FACTUAL CIRCUMSTANC ES WITH REGARD TO PAYMENTS MADE BY DEESHA TO THE ASSESSEE CHS AND THE REASONS TO DISCONTINUE PAY THE RENTAL, BEFORE COMING TO A R EASONABLE CONCLUSION, AFTER AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. 19. THIS GROUND OF APPEAL, IN ALL THE FOUR ASSESSMENT Y EARS, FILED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 20. GROUND NO. 1 IN ASSESSMENT YEARS 2004-05 AND 2006-0 7 IS ON THE ISSUE OF MUTUALITY, I.E. CONTRIBUTIONS RECEI VED BY CHS MEMBERS FOR REPAIRS AND PAINTINGS. THIS ISSUE IS NO W COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F SINDH CHS LIMITED VS ITO, REPORTED IN 317 ITR 47, WHEREIN (HE AD NOTES) IT WAS HELD, THUS, THE PRINCIPLE OF MUTUALITY WAS APPLICABLE TO THE ASSESSEE WHICH HAD AS ITS PREDOMINANT ACTIVITY, THE MAINTENA NCE OF THE PROPERTY OF THE SOCIETY WHICH INCLUDED ITS BUILDING (S) AND AS LONG AS THERE WAS NO TAINT OF COMMERCIALITY, TRADE OR BUSIN ESS, THE RECEIPT OF TRANSFER FEES WAS NOT LIABLE TO TAX. THAT A COOPETATIVE HOUSING SOCIETY HAS NO SIMILARIT Y WHATSOEVER WITH PROFESSIONAL ASSOCIATION. SECTION 28(3) OF THE INCO ME ACT, 1961 HAD NO APPLICATION TO THE CASE OF THE ASSESSEE AS IT DE ALS WITH THE INCOME DERIVED BY THE PROFESSIONAL OR SIMILAR ASSOCIATION FROM THE SPECIFIC SERVICES PERFORMED FOR ITS MEMBERS . 19. RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT OF BOMBAY, WE SET ASIDE THE ORDERS OF TH E REVENUE ITA NO.4925, 2819 TO 2821 OF 2011 SAMBHAV TIRTH COOP.HOUSING SOCIETY LTD MUMBAI PAGE 8 OF 8 AUTHORITIES ON THIS ISSUE AND DELETE THE ADDITION M ADE IN THE TWO YEARS. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE AR E TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MAY, 2012. SD/- SD/- (R.S. SYAL) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 11 TH MAY, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI