ITO 21(2)(4), MUMBAI V. THE GREATER BOMBAY CHS LD, MUMBAI

ITA 3844/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78983 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 23-02-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 31-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Assessee Lawyers: K R LAKSHMI NARAYANAN
• Keywords: Gift; Competent authority
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL G, BENC H MUMBAI .., ! ' # # # # $$ , ' BEFORE SHRI B.R.BASKARAN, AM & SHRI SANJAY GARG, JM ./ ITA NOS.3844 TO 3846/MUM/2012 ( % % % % / ASSESSMENT YEARS :2002-03, 2003-04 & 2004-05) ITO-21(2)(4), MUMBAI VS. THE GREATER BOMBAY CHS LTD., NUPUR, GULMOHAR CROSS ROAD NO.4, JVPD SCHEME, MUMBAI-400 049. & ! ./ ' ./ PAN/GIR NO. : AAAAT 7754 R ( &( / APPELLANT ) .. ( )*&( / RESPONDENT ) + ++ + , , , , /REVENUE BY : MR. R.K.SAHU -. + ++ + , , , , /ASSESSEE BY : MR.K.R.LAKSHMINARAYANAN + ./! / DATE OF HEARING : 19 TH MAY, 2014 01% + ./! / DATE OF PRONOUNCEMENT : 23 RD MAY, 2014 ' 2 ' 2 ' 2 ' 2 / O R D E R PER B.R.BASKARAN (A.M.) : ALL THESE APPEALS, FILED AT THE INSTANCE OF REVENUE , ARE DIRECTED AGAINST THE ORDERS PASSED BY LEARNED CIT(A)-32, MUM BAI AND THEY RELATE TO THE ASSESSMENT YEARS 2002-03, 2003-04 & 2 004-05, RESPECTIVELY. 2 . SINCE THE ISSUE URGED IN ALL THESE APPEALS IS IDE NTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. ITA NOS.3844 TO 3846 /12 2 3 . THE SOLITARY ISSUE URGED IN ALL THESE APPEALS IS WHETHER THE LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT THE TR ANSFER FEE RECEIPTS ARE NOT TAXABLE IN THE HANDS OF THE ASSESSEE UNDER THE PRINCIPLES OF MUTUALITY. 4 . FACTS RELATING TO THE ISSUE BEFORE US ARE STATED IN BRIEF :- THE ASSESSEE IS A CO-OPERATIVE HOUSING SOCIETY REG ISTERED UNDER CO-OPERATIVE SOCIETIES ACT. THE ASSESSEE HAS RECEIVED VOLUNTARY CONTRIBUTIONS, WHICH ARE IN THE NATURE OF TRANSFER FEES RECEIVED FROM SOME MEMBERS (TRANSFERORS) ON TRANSFE R OF THEIR PLOTS, IN ALL THE THREE YEARS AND THEY WERE CREDITED TO WELF ARE AND AMENITIES FUND. THE AO, BY REFERRING TO THE DECISION OF JUR ISDICTIONAL HIGH COURT IN THE CASE OF SIND CO-OPERATIVE SOCIETY (317 ITR 4 7), TOOK THE VIEW THAT THE TRANSFER FEE CITED ABOVE IS TAXABLE IF THE ASSESSEE RECEIVES THE TRANSFER FEE IN EXCESS OF THE LIMITS PRESCRIBED BY THE STATE GOVERNMENT FOR TRANSFERRING RIGHTS, SHARES IN SHARE CAPITAL AN D FLATS/GALA IN A COOPERATIVE SOCIETY ETC. THE AO NOTICED THAT THE A SSESSEE HAS COLLECTED TRANSFER FEES IN EXCESS OF THE LIMITS PRE SCRIBED BY THE STATE GOVERNMENT. ACCORDINGLY THE AO TOOK THE VIEW THAT TRANSFER FEE RECEIVED BY THE ASSESSEE IS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES, SINCE THE ASSESSEE HAS COLLECTED FEES IN E XCESS OF THE LIMITS PRESCRIBED BY THE STATE GOVERNMENT. ACCORDINGLY, HE REOPENED THE ASSESSMENTS RELATING TO THE ASSESSMENT YEARS 2002-0 3 & 2003-04 AND ASSESSED THE TRANSFER FEES AS INCOME IN THE HANDS O F THE ASSESSEE. IN ASSESSMENT YEAR 2004-05, THE TRIBUNAL HAD SET ASIDE THE ISSUE TO THE ITA NOS.3844 TO 3846 /12 3 FILE OF THE A.O, VIDE ITS ORDER DATED 26-11-2009. I N THE SET ASIDE PROCEEDINGS, THE AO ASSESSED THE TRANSFER FEES AS T HE INCOME OF THE ASSESSEE. IN THE APPELLATE PROCEEDINGS, LEARNED CIT (A) DELETED THE ADDITIONS BY PLACING RELIANCE ON THE DECISION OF TH E HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MITTAL COURT PREMISES CHS LIMITED, 320 ITR 414 (BOM) AND ALSO ON THE DECISION DATED 16-9-2011 RENDERED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DAMODAR BHUWAN CHS LTD, PASSED IN ITA NO.1610/MUM/2010 . AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A), THE REVENUE HAS FILED ALL THE THREE APPEALS BEFORE US. 5 . LEARNED D.R PLACED HEAVY RELIANCE ON THE DECISION RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F M/S SIND CO-OP HOUSING SOCIETY, 317 ITR 47 (MUM), ON WHICH THE AO HAD PLACED RELIANCE. LEARNED DR INVITED OUR ATTENTION TO THE FOLLOWING OBSERVATIONS MADE BY THE AO IN THE ASSESSMENT YEAR RELATING TO ASSESSMENT YEAR 2002-03:- IN EXERCISE OF THE POWERS CONFERRED BY SECTION 79A OF THE MAHARASHTRA CO-OP ACT, 1960, THE STATE GOVERNMENT H EREBY ISSUES ORDER IN PUBLIC INTEREST, AS UNDER:- 1. CIRCULAR NO HOUSING/TRANSFER OF GALA/FEE/39 DATE D 27.11.1989 ISSUED BY THE COMMISSIONER OF COOPERATIO N, COOPERATIVE SOCIETIES MAHARASHTRA STATE, PUNE, IS H EREBY CANCELLED. 2. THE RATE OF PREMIUM TO BE CHARGED AT THE TIME OF TRANSFERRING RIGHTS, SHARE IN SHARE CAPITAL AND FLA T/GALA IN A CO-OP HSG SOCIETY SHOULD BE DECIDED IN THE GENERAL MEETING OF THE SOCIETY. HOWEVER, THE RATE OF PREMIU M SO DECIDED IN A GENERAL MEETING SHOULD NOT EXCEED MAXI MUM LIMIT PRESCRIBED AS UNDER:- ITA NOS.3844 TO 3846 /12 4 PLACE RATE OF PREMIUM TO BE CHARGED MUNICIPAL CORPORATION RS.25,000/- A CLASS MUNICIPALITIES RS.20,000/- B CLASS MUNICIPALITIES RS.15,000/- C CLASS MUNICIPALITIES RS.10,000/- GRAM PANCHAYAT (RURAL AREA) RS.5,000/- ABOVE ORDER WILL COME INTO EFFECT IMMEDIATELY. ISSUED UNDER THE NAME AND ORDER OF GOVT. OF MAHARAS HTRA.' 3. THE ABOVE NOTIFICATION IS UNAMBIGUOUSLY CLEAR OF THE FACT THAT TRANSFER FEES TO BE CHARGED BY A SOCIETY WITHIN THE LIMITS OF A MUNICIPALITY SHOULD NOT EXCEED RS.25,000/-. THE ASS ESSEE HAVE TOKEN A SECOND PLEA STATING THAT, THE NOTIFICATION IS APPLICABLE ONLY TO FLAT OWNERS SOCIETY END NOT TO PLOT OWNERS SOCIE TY. THIS CONTENTION OF THE ASSESSEE ALSO CANNOT BE ACCEPTED. 4. IT IS CLEAR FROM THE NOTIFICATION THAT THE GOVT. OF MAHARASHTRA SEEKS TO RESTRICT THE SOCIETY FROM CHARGING THE TRA NSFER FEE/PREMIUM FOR TRANSFERRING RIGHTS, SHARES IN SHAR E CAPITAL AND FLATS/GALA IN A COOPERATIVE SOCIETY ETC. THEREFORE, THE EXPRESSION 'RIGHTS & SHARES IN SHARE CAPITAL' WOULD INCLUDE AN Y ASSET HELD BY VIRTUE OF HOLDING THE RIGHTS/SHARES. A PLAIN READIN G WOULD THEREFORE SUGGEST THAT IT IS APPLICABLE FOR TRANSFER OF NOT O NLY THE FLATS/GALAS IN A COOPERATIVE SOCIETY BUT ALSO TO TRANSFER OF RI GHTS OR SHARES IN THE SOCIETY, MEANING THAT THE INTENTION OF THE NOTI FICATION IS TO INCLUDE IN ALL TRANSFER OF ALL KINDS OF ASSETS / RI GHTS / SHARES IN A COOPERATIVE HOUSING SOCIETY. HENCE IT 'IS CLEAR THA T THE NOTIFICATION WILL APPLY TO A PLOT OWNER SOCIETIES ALSO EVEN IF T HE WORD 'PLOT' HAS NOT BEEN SPECIFICALLY MENTIONED IN THE NOTIFICATION RESTRICTING THE TRANSFER FEE APPLICABLE FOR TRANSFER OF SUCH SHARE, IRRESPECTIVE OF THE FACT THAT THE UNDERLINE ASSET IN SUCH SHARES WA S A FLAT OR A PLOT. RATHER ABSENCE OF A SEPARATE NOTIFICATION FOR A PLOT SOCIETY SUPPORTS THE CONTENTION OF THIS NOTIFICATION AS APP LICABLE TO TRANSFER OF ALL KINDS OF ASSETS/RIGHTS/SHARES IN A CO-OP HSG. SOC. IRRESPECTIVE WHETHER THE ASSETS HELD BY VIRTUE OF S HARES IS A PLOT OR A FLAT. IF SUCH INTERPRETATION IS NOT GIVEN, THE N IT WILL RESULT IN ABSURDITY IN AS MUCH AS BOTH SOCIETIES ARE GOVERNED BY THE SAME MODEL BYE LAWS UNDER THE SAME ACT. BUT IN CASE OF T RANSFER OF FLAT, THERE IS A RESTRICTION CHARGING TRANSFER FEES OF RS .25,000/- BUT IN CASE OF A PLOT THERE WOULD BE NO LIMIT. SINCE THE L ANDS HAVE BEEN ALLOTTED BY GOVT. TO THIS COOPERATIVE HOUSING SOCIE TY FOR THE BENEFIT OF MEMBERS AND RESTRICTION IN TRANSFER FEE HAVING IMPOSED BY THE GOVT. AGAIN FOR THE BENEFIT OF MEMBERS ONLY TO PROTECT THEM FROM UNREASONABLY HIGH DEMAND FOR TRANSFER FEE BY T HE SOCIETY IN TRANSFERRING THEIR MEMBERSHIP, THE OBJECTIVES OF TH E GOVT. IN GIVING INCENTIVES AND PROTECTING THE RIGHTS OF MEMBERS SHA LL BE DILUTED IF IT WERE TO BE ACCEPTED, THAT THE SOCIETY WAS FREE T O CHARGE ANY AMOUNT FROM THE MEMBERS SOLELY FOR THE REASON THAT IT IS NOT A FLAT SOCIETY BUT A PLOT OWNER'S SOCIETY. ITA NOS.3844 TO 3846 /12 5 5. THOUGH THE ASSESSMENT WAS REOPENED ON THE BASI S OF THE DECISION OF WALKESHWAR TRIVENI CO-OP HOUSING SOCIET Y LTD REPORTED IN 88 ITD 159 (MUM), THE HONBLE MUMBAI HIGH COURT HAVE RECENTLY PASSED AN ORDER IN THE CASE OF M/S SIND CO-OP HSG S OC REPORTED IN 317 ITR 47 (MUM). IN THE SAID CASE, THE HONBLE HI GH COURT OF MUMBAI HAVE DECIDED THE ISSUE OF TRANSFER FEE RECEI VED BY CO- OPERATIVE HOUSING SOCIETY AT LENGTH. IN THE SAID J UDGMENT, THE HONBLE HIGH COURT HAVE CATEGORICALLY MENTIONED THA T THE SOCIETY CANNOT RECEIVE MORE THAN PERMITTED IN THE GOVT. NOT IFICATION DATED 9/8/2001. THE HONBLE HIGH COURT FURTHER MENTIONS THAT IF AN AMOUNT IS RECEIVED MORE THAN WHAT IS CHARGEABLE UND ER THE BYE LAWS OR GOVT. DIRECTIONS, THE SOCIETY IS BOUND TO R EPAY THE SAME AND IF IT IS RETAINED, THEN THE AMOUNT WILL BE IN THE N ATURE OF PROFIT MAKING AND THE SAID AMOUNT WILL BE EXIGIBLE TO TAX. 6 . ON THE CONTRARY, LEARNED AR SUBMITTED THAT THE LE ARNED CIT(A) PLACED RELIANCE ON THE SUBSEQUENT DECISION OF HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF MITTAL COURT PREMISES CHS LTD. (SUPRA), WHEREIN IT WAS HELD THAT THE PRINCIPLES OF MUTUALIT Y WOULD APPLY EVEN TO THE COLLECTIONS MADE IN EXCESS OF THE PRESCRIBED LI MITS. LEARNED AR FURTHER SUBMITTED THAT THE ASSESSEE HAS COLLECTED T HE TRANSFER FEES IN ACCORDANCE WITH THE BYE-LAWS OF THE ASSESSEE-SOCIET Y AND HENCE IT CANNOT BE SAID THAT THE ASSESSEE SOCIETY HAS COLLEC TED EXCESS AMOUNT. ACCORDINGLY HE SUBMITTED THAT THE DECISION RENDERED BY THE HONBLE MUMBAI HIGH COURT IN THE CASE OF M/S SIND CO-OP HSG SOCIETY (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE INSTA NT CASE. HE FURTHER SUBMITTED THAT THE DECISION OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF MITTAL COURT PREMISES CHS LTD (SUPRA) HAS BEEN FOLLOWED BY CO-ORDINATE BENCHES OF MUMBAI TRIBUNAL IN VARIOU S CASES. HE SUBMITTED THAT THE LD CIT(A) HAS FOLLOWED THE DECIS ION RENDERED BY THE MUMBAI HIGH COURT IN THE CASE OF MITTAL COURT PREMISES CHS LTD (SUPRA) AND ALSO THE DECISIONS RENDERED BY THE MUMB AI TRIBUNAL IN ITA NOS.3844 TO 3846 /12 6 VARIOUS CASES TO COME TO THE CONCLUSION THAT THE PR INCIPLE OF MUTUALITY SHALL APPLY TO THE ENTIRE AMOUNT OF TRANSFER FEES R ECEIVED BY THE ASSESSEE SOCIETY. 7 . WE HAVE HEARD RIVAL CONTENTIONS AND CAREFULLY PER USED THE RECORD. WE NOTICE THAT THE AO HAS ASSESSED THE TRA NSFER FEES AS THE INCOME OF THE ASSESSEE, ONLY ON THE GROUND THAT THE AMOUNT COLLECTED BY THE ASSESSEE WAS MORE THAN THE LIMIT PRESCRIBED BY THE STATE GOVERNMENT UNDER THE COOPERATIVES ACT. HOWEVER, AC CORDING TO THE ASSESSEE THAT IT HAS COLLECTED THE TRANSFER FEE AT THE RATES PRESCRIBED UNDER ITS BYE LAWS. A CAREFUL PERUSAL OF THE DECIS ION RENDERED IN THE CASE OF SIND CO-OPERATIVE SOCIETY (SUPRA) WOULD SHO W THAT THE HIGH COURT IS EXPRESSING ITS VIEW ON THE AMOUNT COLLECTE D IN EXCESS OF THE LIMITS PRESCRIBED UNDER THE BYE LAWS OR GOVERNMENT DIRECTIONS. IN THE INSTANT CASE, THE CASE OF THE AO WAS THAT THE TRANS FER FEE COLLECTED BY THE ASSESSEE WAS IN EXCESS OF THE LIMITS PRESCRIBED BY THE GOVERNMENT, BUT THE AO DID NOT EXAMINE AS TO WHETHE R THE SAME WAS IN EXCESS OF THE LIMITS PRESCRIBED UNDER THE BYE LA WS. HOWEVER, ACCORDING TO THE ASSESSEE, IT HAS COLLECTED THE TRA NSFER FEES AS PER ITS BYE LAWS ONLY. 8 . BEFORE US, THE LD D.R PLACED STRONG RELIANCE ON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. KUMBAKONAM MUTUAL BENEFIT FUND LTD (1964)(53 ITR 24 1) AND SUBMITTED THAT THE HONBLE APEX COURT HAS HELD THAT THE PRINCIPLES OF MUTUALITY WILL NOT APPLY TO DIVIDEND DISTRIBUTED TO SHARE HOLDERS, EVEN ITA NOS.3844 TO 3846 /12 7 THOUGH THE BUSINESS WAS CARRIED ON WITH THE SHARE H OLDERS ONLY BY WAY OF ACCEPTING DEPOSITS AND GIVING LOANS. HOWEVER, WE ARE OF THE VIEW THAT THE ABOVE SAID DECISION IS NOT APPLICABLE TO T HE FACTS OF THE INSTANT CASE. AS POINTED OUT BY LD A.R, IN THE INSTANT CAS E, THERE IS COMPLETE IDENTITY BETWEEN THE CONTRIBUTORS AND PARTICIPATORS OF THE COMMON FUND. FURTHER, IN THE CASE OF KUMBAKONAM MUTUAL BENEFIT FUND LTD (SUPRA), THE HONBLE SUPREME COURT HAS SPECIFICALLY NOTICED THAT THE POSITION OF THE ASSESSEE THEREIN WAS NO DIFFERENT FROM THAT OF AN ORDINARY BANK AND ITS INCOME WAS INCOME FROM BUSINESS AND WAS THEREFO RE TAXABLE. ACCORDINGLY, THE APEX COURT HELD THAT THE POSITION OF THE SHARE HOLDER IN KUMBAKONAM MUTUAL BENEFIT FUND LTD IS NO DIFFERENT FROM THAT OF A SHARE HOLDER IN A BANKING COMPANY. IN THE INSTANT CASE, IT IS CLAIMED THAT THE ASSESSEE DID NOT CARRY ON ANY TYPE OF BUSI NESS ACTIVITY. 9 . THE QUESTION THAT WAS CONSIDERED BY LD CIT(A) WAS - WHETHER THE PRINCIPLE OF MUTUALITY SHALL APPLY TO THE TRANSFER FEES EVEN IF IT IS IN EXCESS OF THE LIMITS PRESCRIBED BY THE STATE GOVERN MENT. THE LD CIT(A), BY FOLLOWING THE DECISION RENDERED BY HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF MITTAL COURT PREMISES CHS LTD. (SUPRA), HAS HELD THAT THE PRINCIPLE OF MUTUALITY WOULD NOT CEASE ON ACCOUNT OF CHARGING OF EXCESS AMOUNT. THE LD CIT(A) HAS ALSO NOTICED THAT THE COORDINATE BENCHES OF MUMBAI TRIBUNAL HAS EXPRESSED IDENTICAL VIEW. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE R ELEVANT OBSERVATIONS MADE BY THE CIT(A) IN HIS ORDER PASSED FOR ASSESSMENT YEAR 2004-05 :- ITA NOS.3844 TO 3846 /12 8 3.3 I HAVE CAREFULLY CONSIDERED THE FACT OF THE CAS E AND ARGUMENTS ADVANCED BY LD. A.R. HON. TRIBUNAL HAD S ET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH SP ECIFIC DIRECTIONS TO EXAMINE THE FOLLOWING ISSUES : 1) IS IT MANDATORY FOR THE HOUSING SOCIETY TO AMEND ITS RULES IN LINE WITH THE MAHARASHTRA CO-OPERATIVE HOUSING S OCIETY ACT READ WITH NOTIFICATION GIVEN THEREIN?, 2) WHETHER THE BYE-LAWS OF THE ASSESSEE SOCIETY PLA CE ANY RESTRICTION ON THE QUANTUM OF TRANSFER FEE RECEIVAB LE? 3) IS THE OUTER LIMIT OF RS 25,000/- TRANSFER FEE S PECIFIED IN THE NOTIFICATION OF THE STATE GOVERNMENT MANDATORILY AP PLICABLE IRRESPECTIVE OF WHETHER AMENDMENT TO THE BYE-LAWS I S MANDATORY OR NOT? IT IS NOTED THAT IN THE ASSESSMENT ORDER U/S 143(3) R/W 254 THE AO HAS NOT AT ALL EXAMINED THE ABOVE QUESTIONS RAISED BY [TAT AND HE HAS MADE ADDITION ON GROUNDS THAT THE LIMIT OF R S 25,000 WAS APPLICABLE TO ALL KINDS OF SOCIETIES AND HENCE THE PRINCIPLES OF MUTUALITY WAS LOST WHEN THE APPELLANT RECEIVED TRAN SFER FEES OR CONTRIBUTIONS MORE THAN PRESCRIBED LIMIT OF GOVT. O F MAHARASHTRA IN NOTIFICATION DATED 9/8/2001. THOUGH, I AGREE THA T THE NOTIFICATION WOULD APPLY TO PLOT OWNER'S SOCIETY ALSO BUT TO FUL FILL THE DIRECTIONS OF THE ITAT, A REFERENCE WAS MADE BY THIS OFFICE DU RING APPELLATE PROCEEDINGS TO THE COMMISSIONER COOPERATION & REGIS TRAR, COMPETENT AUTHORITY GOVT. OF MAHARASHTRA, VIDE THIS OFFICE LETTER DATED 8/12/2011 SEEKING CLARIFICATION WITH REFERENC E TO NOTIFICATION DATED 9/8/2001 AS UNDER: 'PLEASE REFER TO NOTIFICATION NO.SGY-2001/CIR NO. 1 88/ 14- S DATED 09-08-2001 ISSUED BY DY. SECRETARY GOVERNME NT OF MAHARASHTRA CO OP AND TEXTILE DIVISION (COPY ENCLOS ED). PLEASE ALSO REFER TO THE MODEL BYE LAWS OF CO-OPERA TIVE SOCIETIES WHICH HAVE BEEN APPROVED BY THE COMMISSIO NER OF FOR COOPERATION AND REGISTRAR CS, MS PUNE UNDER HIS LETTER NO. CCR/ PUNE/ MODEL BYE-LAWS 2001 DATED 02- 07- 2001. IN ORDER TO EXAMINE THE TAX IMPLICATIONS UNDE R THE INCOME TAX ACT IN RESPECT OF TRANSFER PREMIUM CHARG ED BY THE CO-OP HSG. SOCIETIES THERE ARE SOME ISSUES WHIC H NEED A CLARIFICATION FROM YOUR GOOD OFFICE. THESE ARE EN UMERATED AS UNDER : I) EITHER IT IS MANDATORY FOR THE CO-OP HSG. SOC. F ORMED PRIOR TO THE NOTIFICATION OF MODEL BYE LAWS ON 02-07-2001 TO AMEND THEIR BYE LAWS AS PER THE NEW MODEL BYE LAWS. (II) IF IT IS MANDATORY AND THE SOCIETIES FAIL TO A MEND THEIR BYE- LAWS THEN WHAT ARE THE CONSEQUENCES TO THE SOCIETY UNDER THE MAHARASHTRA CO-OPERATIVE SOCIETY ACT, 1960. ITA NOS.3844 TO 3846 /12 9 III) WHETHER THE NOTIFICATION DATED 09-08-2001 REST RICTING MAXIMUM AMOUNT OF TRANSFER PREMIUM WHICH CAN BE CHARGED BY A CO-OP HSG. SOC. IS APPLICABLE TO FLAT OWNERS HSG. SOC. ONLY OR IT IS APPLICABLE TO ALL KINDS OF HSQ. SOCIETIES INCLUDING THE PLOT OWNER CO-OP HSU SOC. (IV) IN CASE THE SAID NOTIFICATION DATED 09-08-2001 IS NOT APPLICABLE TO PLOT OWNERS HSG. SOC. THEN WHAT IS TH E MAXIMUM AMOUNT OF TRANSFER PREMIUM WHICH IS PERMITT ED TO BE CHARGED BY SUCH PLOT OWNER CO-OP HSG. SOCIETIES WHEN A MEMBER TRANSFERS HIS PLOT OF LAND TO A THIRD PERSON . (V) IN CASE NOTIFICATION IS APPLICABLE TO THE PLOT OWNERS SOCIETY ALSO THEN WHETHER THE FLAT OWNERS SOCIETY IS EXEMPT ED FROM THE CEILING OF TRANSFER PREMIUM FIXED AS PER THE AB OVE NOTIFICATION MERELY ON THE GROUNDS THAT SUCH SOCIET IES WERE FORMED PRIOR TO 02-07-2001 AND NOT YET AMENDED THEI R BYE LAWS AS PER THE MODEL BYE LAWS. THE POINT WISE REPLY TO ABOVE 5 QUESTIONS RAISED WA S RECEIVED ON 22/2/2012 FROM COMPETENT AUTHORITY I.E THE COMMISSI ONER COOPERATION & REGISTRAR, GOVT. OF MAHARASHTRA, PUNE IN MARATHI, WHOSE ENGLISH TRANSLATION IS AS UNDER: PT. NO 1 &2: VIDE THIS OFFICE NOTIFICATION DATED 2. 07.2001 ALL THE SOCIETIES WERE INFORMED TO ACCEPT/ TAKE COGNIZANCE OF THE NEW MODEL BYE LAWS. REVISIONS HAVE BEEN MADE FROM TIME TO TIME AND THE REVISED BYELAWS HAVE BEEN IMPLEMENTED W.E.F . 13.03.2009 AND IT IS BINDING ON ALL COOP SOCIETIES TO IMPLEMENT AND MAKE THE NECESSARY CHANGES IN THEIR BYE LAWS. PT NO 3 THE TERMS MENTIONED IN THE GOVERNMENT DECIS ION DATED 09/08/2001 IS APPLICABLE TOWARDS THE FLAT TYPE CO-O PERATIVE HOUSING SOCIETIES AS WELL AS APPLICABLE IN CASE OF ALL TYPES OF CO- OPERATIVE HOUSING SOCIETIES. PT NO 4: SINCE IT IS APPLICABLE TO ALL THE COOP SOC IETIES HENCE THE QUESTION DOES NOT ARISE PT NO 5: IT IS BINDING TO APPLY THE REVISED BYE LAW S. FURTHER THE NOTIFICATION DATED 9/8/2001 IS APPLICABLE TO SOCIET IES REGISTERED PRIOR TO 02.07.2001 ALSO. HENCE, NO QUESTION ARISES FOR GIVING ANY CONCESSION AT ALL SD/- (COMMISSIONER FOR CO-OPERATION & REGISTRAR) GOVT. OF MAHARASHTRA, PUNE THE PERUSAL OF THE ABOVE CLARIFICATIONS SUGGEST THA T THE MODEL BYE LAWS AFTER BEING REVISED FROM TIME TO TIME ARE MAND ATORY TO BE ADOPTED AFTER 13/3/2009 EVEN BY THE COOP SOCIETIES WHICH WERE FORMED PRIOR TO 2/7/2001 AND THAT THE NOTIFICATION DATED 9/8/2001 ITA NOS.3844 TO 3846 /12 10 RESTRICTING THE TRANSFER FEE IS APPLICABLE TO ALL K IND OF COOPERATIVE SOCIETIES. THE APPELLANT SOCIETY WAS INCORPORATED ON 9/12/1947 WHICH WAS MUCH BEFORE THE MODEL BYE LAWS WERE NOTIFIED. FROM THE BYE-LAWS OF THE SOCIETY, IT IS NOTED THAT THERE IS NO CLAUSE RESTRICTING THE AMOUNT OF TRANSFER FEE CONTRIBUTION ETC TO BE CHARG ED FROM MEMBERS. EVEN AFTER NOTIFICATION OF MODEL BYE LAWS WHICH PRESCRIBE FOR LIMIT OF TRANSFER FEE AS PER CEILINGS FIXED BY GOVT. FROM TIME TO TIME, NO AMENDMENT TO ORIGINAL BYE LAW S OF APPELLANT SOCIETY HAVE BEEN MADE. THE CLARIFICATION ISSUED BY GOVT. OF MAHARASHTRA NOW ALSO STATES THAT FOR COOPERATIVE SO CIETIES IT WAS MANDATORY TO ADOPT THE NEW MODEL BYE LAWS W.E.F 13/ 3/2009 ONLY. THUS IT WAS NOT MANDATORY FOR APPELLANT TO ADOPT MO DEL BYE LAWS NOR WAS ANY CEILING PLACED IN THE ORIGINAL BYE LAWS OF THE APPELLANT SOCIETY. PAYMENTS WERE MADE UNDER THE BY E LAWS OF THE SOCIETY WHICH CONSTITUTED A CONTRACT BETWEEN SO CIETY AND ITS MEMBERS AND IF ANY AMOUNT WAS RECEIVED MORE THAN WH AT WAS CHARGEABLE UNDER THE BYE LAWS, THEN ONLY THE PRINCI PLE OF MUTUALITY WOULD BE LOST, HENCE IT CANNOT BE SAID TH AT THE APPELLANT SOCIETY VIOLATED THE MODEL BYE LAWS IN THE PREVIOUS YEAR RELEVANT TO AY 2004-05 BY NOT ADOPTING THE NEW MODEL BYE LAW S AND NOT AMENDING THE BYE LAWS RESTRICTING THE AMOUNT OF TRA NSFER FEE WHICH COULD BE CHARGED BY THE SOCIETY. IN THE RELEV ANT YEAR THE SOCIETY WAS FREE TO CHARGE TRANSFER FEE AS APPROVED BY ITS MANAGING COMMITTEE WITHOUT AMENDING ITS BYELAWS TIL L 13/3/2009. IT HAS BEEN FURTHER CLARIFIED BY COMPETENT AU THORITY GOVT. OF MAHARASHTRA THAT THE LIMIT OF RS.25,000/ - AS PER N OTIFICATION DATED 9/8/2001 IS APPLICABLE TO ALL KINDS OF COOPERATIVE SOCIETIES INCLUDING THE PLOT OWNER SOCIETY ALSO. THOUGH THE N OTIFICATION DATED 9/8/2001 IS APPLICABLE TO PLOT OR FLAT SOCIET Y BOTH BUT AS ALREADY DISCUSSED, THE NEW MODEL BYE LAWS BECAME MA NDATORY W,E.F 13/3/2009 ONLY HENCE TILL 13/3/2009 IT WILL N OT LEAD TO ANY VIOLATION OF PRINCIPLES OF MUTUALITY OR ANY LAW OF GOVT. UNTIL THE SOCIETY HAS AMENDED ITS BYE LAWS AND PLACED RESTRIC TION CLAUSES IN ITS BYE LAWS LIMITING THE TRANSFER FEE PRIOR TO 13/3/2009. HENCE ON THIS GROUND ALSO THE TRANSFER FEE RECEIVED BY AP PELLANT IN EXCESS OF RS 25,000 WOULD NOT LOSE THE CHARACTER OF INCOME GOVERNED BY MUTUALITY. FURTHER, THE DECISIONS RELIE D BY LD. AR IN THE CASE OF OF MITTAL COURT PREMISES CO-OPERATIVE S OCIETY LTD 320 ITR 414(BOM) ALSO SUPPORTS THIS VIEW WHEREIN THE CO URT HAD DECIDED THAT 'APART FROM THAT, EVEN ASSUMING THAT T HE GOVERNMENT NOTIFICATIONS WERE APPLICABLE, IF THE SO CIETY COULD NOT HAVE CHARGED EXCESS AMOUNT, IT WOULD HAVE TO BE REF UNDED TO THE MEMBERS. A MEMBER IS NOT PROHIBITED FROM GIFTING AN Y AMOUNT TO THE SOCIETY FOR THE OBJECTS OF THE SOCIETY. THE PRI NCIPLE OF MUTUALITY WOULD NOT CEASE ON ACCOUNT OF THOSE ASPEC TS. AT THE HIGHEST, AUTHORITIES UNDER THE CO-OPERATIVE SOCIETI ES ACT AND RULES, IF ANY ACTION IS TAKEN, MAY DIRECT AN ADDITI ONAL AMOUNT TO BE REFUNDED. THE SIMILAR VIEW IS TAKEN BY MUMBAI IT AT IN THE CASE OF ITO V. ABHILASHA CHS LTD (ITA NO.683/MUM/20 10) AND ITA NOS.3844 TO 3846 /12 11 IN THE CASE OF ITO VS. GRAND PARADI CHS LTD. (ITA-521/MUM/2010). RECENTLY IN THE DECISION DATED 16/9/2011 IN CASE OF DAMODAR BHUWAN CBS LTD IN ITA NO 1610/MUM/2 010,THE ITAT MUMBAI AFTER CONSIDERING THE BOMBAY HIGH COURT DECISION IN CASE OF MITTAL COURT PREMISES CHS LTD HAS OBSERVED THAT 'THE RESTRICTION ON THE QUANTUM OF RECEIPT BY AN AS SOCIATION FORM ITS MEMBER PRESCRIBED BY ANY OTHER LAW REGULAT ING THE RELATIONSHIP BETWEEN MEMBERS AND ITS ASSOCIATION WI LL NOT BE RELEVANT WHILE TAXING RECEIPTS UNDER THE ACT. 1N OTHER WORDS PRIVILEGE OF MUTUALITY WILL NOT CEASE TO EXIS T IN RESPECT OF RECEIPTS FROM MEMBERS BY ANY ASSOCIATION BEYOND THE QUANTUM RESTRICTED BY ANY LAW REGULATING THE RELATIONSHIP BETWEEN MEMBERS AND ITS ASSOCIATION'. THUS, RESPECTFULLY FOLLOWING THE JUDICIAL DECISIONS , I HOLD THAT THE PRINCIPLE OF MUTUALITY SHALL APPLY TO APPELLANT SOC IETY ON FACTS AND CIRCUMSTANCES OF THE CASE EVEN IF THE NOTIFICATION WAS HELD TO BE APPLICABLE FOR PLOT OWNER'S SOCIETY AND ACCORDINGLY THE ADDITION OF TRANSFER FEES OF RS. 32,36,926/- AS INCOME FROM OTH ER SOURCES IS NOT SUSTAINABLE. I DIRECT A.O TO DELETE THE ADDITIO N OF RS. 32,36,926/ - . 10 . ON A CAREFUL PERUSAL OF THE ORDER OF THE LEARNED CIT(A), WE NOTICE THAT THE FIRST APPELLATE AUTHORITY HAS CONSIDERED T HE IMPUGNED ISSUE IN DETAIL AND HAS TAKEN A CONSCIOUS DECISION BY FOLLOW ING THE DECISION RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT A ND ALSO BY THE COORDINATE BENCHES. HENCE, WE DO NOT FIND ANY REASO N TO INTERFERE WITH ITS ORDER IN ALL THE THREE YEARS. 11 . IN THE RESULT, ALL THE APPEALS FILED BY REVENUE ARE DISMISSED. - .3 + 4 5 !- + . 67 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD MAY, 2014. ' 2 + 01% ! 5 8'3 23 RD MAY,2014 1 + $ SD/- SD/- ( $$ ) (SANJAY GARG) ( . . ) (B.R.BASKARAN) ' ' ' ' / JUDICIAL MEMBER ! ! ! ! ' ' ' ' / ACCOUNTANT MEMBER MUMBAI ; 8' DATED 23/05/2014 ). . /PKM , . / PS ITA NOS.3844 TO 3846 /12 12 ' 2 ' 2 ' 2 ' 2 + ++ + ) )) ).9 .9 .9 .9 : 9%. : 9%. : 9%. : 9%. / COPY OF THE ORDER FORWARDED TO : ' 2 ' 2 ' 2 ' 2 / BY ORDER, ; ;; ; / 6 6 6 6 ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. &( / THE APPELLANT 2. )*&( / THE RESPONDENT. 3. < ( ) / THE CIT(A), MUMBAI. 4. < / CIT 5. 94$ ). , , / DR, ITAT, MUMBAI 6. $= > / GUARD FILE. *9. ). //TRUE COPY//