ITO 18(1)(2), MUMBAI V. THE LOYAL CO OPERATIVE HSG SOCIETY LTD, MUMBAI

ITA 3441/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8077 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: SATISH R MODI
• Keywords: Gift; Opportunity of being heard

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND VIVEK VARMA, (JM) . . , , ./I.T.A. NO.3441/MUM/2013 ( / ASSESSMENT YEAR : 2009-10) INCOME TAX OFFICER, 18(1)(2), 1 ST FLOOR, ROOM NO.104, PIRAMAL CHAMBER, LALBAUG, , MUMBAI-400012 / VS. M/S THE LOYAL CO-OPERATIVE HOUSING SOCIETY LTD., EDEN HALL, DR. ANNIE BESENT ROAD, WORLI, MUMBAI-400018. ( / APPELLANT) .. ( / RESPONDENT) ./ ! ./PAN/GIR NO. :AAAAT5649M ' / APPELLANT BY SHRI PITAMBAR DAS # ' /RESPONDENT BY SHRI SATISH R MODI $ % # &' / DATE OF HEARING : 11.8.2014 () # &' /DATE OF PRONOUNCEMENT : 17.10.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 7.2.2013 PASSED BY LD CIT(A)-29, MUMBAI AND IT RELA TES TO THE ASSESSMENT YEAR 2009-10. 2. THE SOLITARY ISSUE URGED IN THIS APPEAL IS WHETH ER THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT THE AMOUNT OF RS. 90,74, 000/- RECEIVED BY THE ASSESSEE FROM ONE OF ITS MEMBER IS NOT ASSESSABLE TO TAX. 3. FACTS RELATING TO THE ABOVE SAID ISSUE ARE STATE D IN BRIEF. THE ASSESSEE IS A CO-OPERATIVE HOUSING SOCIETY. DURING THE YEAR UND ER CONSIDERATION THE I.T.A. NO.3441/MUM/2013 2 ASSESSEE HAS RECEIVED FOLLOWING AMOUNTS FROM THE P URCHASERS OF THE FLATS NUMBERED ASR-1 AND R-2: A) TRANSFER FEE RS.50,000/-; B) LIFT FUND RS. 5,00,000/-; AND C) REPAIRS AND MAINTENANCE FUND RS.85,49,000/- THUS AGGREGATING TO RS.90,99,000/-. THE ABOVE SAID FLATS, VIZ., R-1 AND R-2 WERE PURCHASED BY A COMPANY NAMED M/S THAKKAR INVESTMEN TS PVT LTD. BESIDES THE ABOVE, THE ASSESSEE ALSO RECEIVED TRANSFER FEE OF R S.25000/- FROM THE PURCHASER OF FLAT NO. B-2.. THUS, THE AGGREGATE AMOUNT RECEI VED BY THE ASSESSEE WAS RS.91,24,000/-. THE ASSESSEE CLAIMED ENTIRE AMOUNT S AS EXEMPT UNDER PRINCIPLE OF MUTUALITY. 4. HOWEVER, THE AO BY PLACING RELIANCE ON THE DE CISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SIND CO -OP HOUSING LTD (2009) 317 ITR 47 (BOM), HELD THAT THE TRANSFER FEE EXCEEDING THE PRESCRIBED LIMIT OF RS.25,000/- IS LIABLE TO TAX. THE AO TOOK THE VIEW THAT THE CONTRIBUTIONS RECEIVED TOWARDS LIFT FUND AND REPAIRS AND MAINTENANCE FUND IS AKIN TO TRANSFER FEE AND SINCE THE AGGREGATE AMOUNT HAS EXCEEDED RS.25,000/- , HE HELD THAT THE EXCESS AMOUNT IS TAXABLE. ACCORDINGLY, THE AO ALLOWED D EDUCTION OF RS.25,000/- IN RESPECT OF TWO FLATS(INSTEAD OF 3 FLATS) AND ASSES SED THE BALANCE AMOUNT OF RS.90,74,000/- AS INCOME OF THE ASSESSEE. 5. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) , WHO HELD THAT THE CONTRIBUTIONS MADE BY M/S THAKKAR INVESTMENT PVT LTD TOWARDS LIFT FUND AND REPAIRS AND MAINTENANCE FUND ARE VOLUNTARY CONTRIBU TIONS. HE FURTHER HELD THAT THE SAID CONTRIBUTIONS HAVE BEEN MADE VOLUNTARILY IN PURSUANCE OF APPEAL MADE IN GENERAL BODY MEETING HELD ON 1.6.1986. ACCORD INGLY, HE HELD THAT THE VOLUNTARY CONTRIBUTIONS ARE NOT TAXABLE AS PER THE DECISION OF THE HONBLE MUMBAI HIGH COURT IN THE CASE OF MITTAL COURT PREMISES CO-OPERATIVE SOCIETY V/S ITO (2010) 320 ITR 414. ACCORDINGLY, THE LD. CIT(A) HELD THAT THE ENTIRE CONTRIBUTIONS RECEIVED BY THE ASSESSEE FROM ITS ME MBERS IS COVERED UNDER THE CONCEPT OF MUTUALITY AND HENCE NOT LIABLE TO TAX. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. I.T.A. NO.3441/MUM/2013 3 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. WE HAVE ALREADY NOTICED THAT THE AO HAS TAKEN THE VIE W THAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM ITS MEMBERS IN EXCESS OF PRESC RIBED LIMIT IS TAXABLE AND THE ASSESSING OFFICER HAS CONSIDERED ENTIRE CONTRIBUTIO NS AS TRANSFER FEE. HOWEVER, THE LD. CIT(A) HAS TAKEN THE VIEW THAT CONTRIBUTION S MADE TOWARDS LIFT FUND AND REPAIRS AND MAINTENANCE FUND AND HENCE THEY ARE NOT TRANSFER FEES. FURTHER HE HAS HELD THAT THE SAID CONTRIBUTIONS ARE COVERED BY THE CONCEPT OF MUTUALITY AND HENCE NOT TAXABLE. WE NOTICE THAT THE LD. CIT(A) H AS RENDERED HIS DECISION ON THE BELIEF THAT THE SAID CONTRIBUTIONS MADE BY M/S THAKKAR INVESTMENTS PVT LTD. WERE VOLUNTARY IN NATURE. 7. IN THE CASE OF SIND CO-OP HOUSING LTD (SUPR A), WE NOTICE THAT THE QUESTION THAT WAS CONSIDERED BY THE HONBLE BOMBAY HIGH COUR T RELATES TO THE TAXABILITY OF TRANSFER FEE RECEIVED FROM THE MEMBERS. ON THE BAS IS OF FACTS PREVAILING IN THAT CASE, THE HONBLE HIGH COURT HELD THAT THE CONCEPT OF MUTUALITY SHALL APPLY TO TRANSFER FEE. IT IS PERTINENT TO NOTE THAT THE SIN D CO-OP HOUSING LTD WAS A RESIDENTIAL CO-OPERATIVE HOUSING SOCIETY. IN ANOTHE R CASE, VIZ. MITTAL COURT PREMISES CO-OPERATIVE SOCIETY (SUPRA) CONSIDERED BY THE HONBLE BOMBAY HIGH COURT, THE ASSESSEE THEREIN WAS NOT A RESIDENTIAL HOUSING SOCIETY. IN THE CASE OF MITTAL COURT PREMISES CO-OPERATIVE SOCIETY ( SUPRA) ALSO, THE HONBLE HIGH COURT HAS CONSIDERED THE ISSUE OF TAXABILITY OF TR ANSFER FEE AND NON-OCCUPANCY CHARGES, WHEREIN THE HONBLE HIGH COURT HELD THAT THE PRINCIPLE OF MUTUALITY SHALL APPLY TO BOTH THE RECEIPTS CITED ABOVE. THE HONBLE HIGH COURT, FURTHER HELD THAT THE MEMBERS ARE NOT PROHIBITED FROM GIFTING AN Y AMOUNT TO THE SOCIETY TOWARDS ITS OBJECTS AND THE PRINCIPLES OF MUTUALITY WOULD NOT SEIZE ON ACCOUNT OF THIS ASPECT. THE RATIO OF THE ABOVE SAID DECISIO N IS THAT THE AMOUNTS GIFTED BY THE MEMBERS TO THE SOCIETY WOULD ALSO FALL IN THE C ATEGORY OF VOLUNTARY CONTRIBUTION. 8. COMING TO THE FACTS OF THE PRESENT CASE, WE NOTI CE THAT THE ASSESSEE HAS RECEIVED A SUM OF RS.75,000/- AS TRANSFER FEES IN R ESPECT OF THE THREE FLATS TRANSFERRED DURING THE YEAR UNDER CONSIDERATION. THE ABOVE SAID TRANSFER FEE IS NOT TAXABLE IN VIEW OF THE DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT REFERRED ABOVE. IN ADDITION TO THE TRANSFER FEE, THE ASSESSEE HAS RECEIVED A SUM I.T.A. NO.3441/MUM/2013 4 OF RS. 5,00,000/- TOWARDS LIFT FUND AND RS.85,49, 000/- TOWARDS REPAIRS AND MAINTENANCE FUND FROM A PARTY M/S THAKKAR INVEST MENTS PVT LTD, WHO HAD PURCHASED TWO FLATS BEARING NUMBER R-1 AND R-2. WE NOTICE THAT THE LD. CIT(A) HAS RENDERED THE DECISION ON THE PRESUMPTION THAT THE ABOVE SAID AMOUNTS WERE VOLUNTARY CONTRIBUTION. HOWEVER, FROM THE RECORD, WE NOTICE THAT NEITHER THE AO NOR THE LD. CIT(A) HAS MADE ANY I NQUIRY WITH M/S THAKKER INVESTMENTS PVT LTD TO FIND OUT THE NATURE AND PUR POSE OF THE CONTRIBUTIONS, ALSO WHETHER THE ABOVE SAID CONTRIBUTION IS VOLUNTARY OR NOT OR WHETHER SUCH COLLECTION IS WITH ANY COMMERCIAL PURPOSE. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAVE RECEIVED ONLY THE TRANSFER FEE OF RS.25,000/- FROM PURCHASER OF ANOTHER FLAT BEARING NO.B-2. THE ASSESSEE SOCIETY DID NOT COLLE CT ANY AMOUNT OTHER THAN TRANFER FEE FROM THE ABOVE SAID PERSON. UNDER THES E CIRCUMSTANCES, IT IS NOT UNDERSTANDABLE AS TO WHY M/S THAKKAR INVESTMENT PVT . LTD ALONE HAS CONTRIBUTED RS.90.49 LAKHS TO THE ASSESSEE SOCIETY AND FURTHER IT DEFIES THE LOGIC OF HUMAN PROBABILITY ALSO. FROM THE RECORD, WE NOTICE THAT M/S THAKKER INVESTMENT PVT LTD HAS CONTRIBUTED ANOTHER SUM OF RS.10.00 LAKHS IN TH E SUCCEEDING YEAR TOWARDS LIFT FUND. WE NOTICE FROM THE RECORD THAT THE ASSE SSEE DID NOT FURNISH ANY DOCUMENT TO SHOW THAT IT WAS VOLUNTARY CONTRIBUTION . ACCORDINGLY, WE ARE OF THE VIEW THAT THE TAXABILITY OF RS.90.49 LAKHS IS DEPEN DENT UPON THE RESULT OF FURTHER INVESTIGATION AS DISCUSSED ABOVE. UNDER THESE CIRC UMSTANCES, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE AO. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THE IS SUE OF RS.90.49 LAKHS RECEIVED FROM M/S THAKKAR INVESTMENT PVT LTD AND RESTORE TH E SAME TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THE TAXABILITY OF THE S AME AFRESH BY DULY CONDUCTING THE NECESSARY INVESTIGATION WITH M/S THAKKAR INVE SMENT PVT.LTD. AS WELL AS WITH THE ASSESSEE SOCIETY AND ALSO SUCH OTHER ENQUIRIES AS MAY BE REQUIRED AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW. THE A SSESSEE SHOULD ALSO BE GIVEN NECESSARY OPPORTUNITY OF BEING HEARD. I.T.A. NO.3441/MUM/2013 5 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 17TH OCT , 2014. () $ * +, 17TH OCT, 2014 ) # -% . SD SD ( / VIVEK VARMA) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER $ % MUMBAI: 17TH OCT,2014. . . ./ SRL , SR. PS !'# $#%! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. $ /& ( ) / THE CIT(A)- CONCERNED 4. $ /& / CIT CONCERNED 5. 0- &1 , ' 1 , $ % / DR, ITAT, MUMBAI CONCERNED 6. -2 3% / GUARD FILE. 4 $ / BY ORDER, TRUE COPY 5 (ASSTT. REGISTRAR) ' 1 , $ % /ITAT, MUMBAI