BINA KAPUR ( LEGAL HEIR OF LATE DILIP KAPUR), MUMBAI V. ITO 18(1)(1), MUMBAI

ITA 428/MUM/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62353 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-04-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 19-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARASARTH NAIK
• Keywords: Gift
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS.428 AND 429/MUM/2012 (ASSESSMENT YEARS: 2003-04 AND 2004-05) SMT. BINA KAPUR (LH OF LATE DILIP KAPUR), 03 KISHORI COURT, WORLI SEA FACE, MUMBAI -400 030 .. ASSESSEE VS INCOME TAX OFFICER 18(1)(1), MUMBAI .. REVENUE PAN : AAEPK 7176 M APPELLANT BY: SHRI RAKESH KAPOOR REVENUE BY: SHRI PARASARTH NAIK DATE OF HEARING: 24.04.2012 DATE OF PRONOUNCEMENT: 30.04.2012 O R D E R R.S. PADVEKAR, JM: IN THESE TWO APPEALS THE ASSESSEE HAS CHALLENGED TH E IMPUGNED ORDERS OF THE LD. CIT (A)-29, MUMBAI DATED 08.11.20 11 FOR THE A.YS. 2003-04 AND 2004-05 RESPECTIVELY. THE COMMON ISSUE IN BOTH THE APPEALS IS WHETHER THE A.O. WAS JUSTIFIED IN MAKING THE ADDITION OF ` 1,71,000/- AND ` 1,12,000/- IN RESPECT OF THE AMOUNT RECEIVED FROM CO- OPERATIVE SOCIETY IN WHICH THE ASSESSEE IS A MEMBER FOR THE A.Y. 2003- 04 AND 2004-05 RESPECTIVELY. 2. IN BOTH THE ASSESSMENT YEARS, THE A.O. REOPENED THE ASSESSMENTS BY ISSUING THE NOTICE U/S.148. IN THE A.Y. 2003-04 THE A.O. HAS OBSERVED THAT M/S. NEW INDIA CHS LTD. WHICH IS A SO CIETY OF THE LAND OWNERS AND THE ASSESSEE LATE SHRI DILIP KAPUR IS A MEMBER OF THE SAID SOCIETY. THE SOCIETY HAS GIVEN GIFT OF ICICI BONDS , GOLD & SILVER COINS, GOLD BISCUITS TO THE CARTEL ETC. AND ALSO PAID COMP ENSATION TOWARDS ITA 428 & 429/MUM/2012 SMT. BINA KAPUR (LH OF LATE DILIP KAPUR) 2 SUFFERING ON ACCOUNT OF FAILURE OF VERSOVA SEWAGE P UMPING STATION I. E. ` 1 LAKH EACH, COMPENSATION FOR LOSS SUFFERED BECAUS E OF HEAVY RAINS ON 26.07.2005, ` 10 LAKHS EACH FOR RENOVATION, REPAIRS AND BEAUTIFI CATION OF BUILDINGS, ` 5 LAKHS EACH TERMITE TREATMENT, ETC. SO FAR AS PR ESENT ASSESSEE IS CONCERNED, THE A.O. HAS OBSERVED THAT T HE ASSESSEE HAS RECEIVED ` 2,05,900 IN THE FORM OF GOLD COINS, ICICI BONDS, S ILVER ITEMS ETC. THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS RECEIVED ONLY ` 1,61,000/- WHICH INCLUDES ICICI BOND OF ` 50,000/-. THE ASSESSEE CLAIMED THAT SAID AMOUNT IS EXEMPT ON THE PRINCI PLES OF MUTUALITY. THE A.O. REJECTED THE CLAIM OF THE ASSESSEE AND BRO UGHT TO TAX ` 1,71,000/- AS INCOME OF THE ASSESSEE. IN THE A.Y . 2004-05 AGAIN THE A.O. HAS BROUGHT TO TAX ` 1,12,000/- REJECTING THE CLAIM OF EXEMPTION ON THE PRINCIPLES OF MUTUALITY. THE ASSESSEE CHA LLENGED THE IMPUGNED ADDITIONS BEFORE THE LD. CIT (A) BUT WITHOUT SUCCES S. NOW, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. I HAVE HEARD THE PARTIES AND PERUSED THE RECORDS . I FIND THAT THE ISSUE STANDS COVERED IN BOTH THE APPEALS IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT C BENCH, MUMBAI (DIVISIO NAL BENCH) IN THE CASE OF DY. CIT, MUMBAI VS. SHRI KARTIK M. PATEL IN ITA NO.3911/MUM/2010 ORDER DATED 27.02.2012 WHO IS ALSO THE MEMBER OF THE SAME SOCIETY I.E. M/S. NEW INDIA CHS LTD. THE O PERATIVE PART OF THE ORDER OF THE TRIBUNAL IS AS UNDER: 7. WE HAVE HEARD PERUSED THE COMPILATION FILED BY THE ASSESSEE. THE ASSESSEE HAS FILED THE COPIES OF THE RESOLUTION PASSED BY THE SOCIETY. SO FAR AS AMOUNT OF ` 10 LAKHS PAID TO THE ASSESSEE TO MEET THE DAMAGES IS CONCERNED, WE FIND THAT THE SAME IS DULY SUPPORTED BY THE RESOLUTION OF THE SOCIETY DATED 14.09.2005 (PAGE NO.17 TO 20). SO FAR AS ` 6 LAKHS IS CONCERNED, WE FIND THAT EVEN THE BYE-LAWS OF THE SOCIETY, (COPY PLACED ON P AGE NO.27 TO 56) PERMITS THE SAID PAYMENT VIDE CLAUSE NO.66. SO FAR AS NEW INDIA SOCIETY IS CONCERNED, WHILE COMPLETING ASSESSMENT, ADDITIONS WERE MADE IN THE HANDS OF SAID SOCIETY FOR DISTRIBUTING ` 10 LAKHS TO ITA 428 & 429/MUM/2012 SMT. BINA KAPUR (LH OF LATE DILIP KAPUR) 3 CERTAIN MEMBERS TOWARDS THE COMPENSATION OF LOSS IN CURRED DUE TO DEVASTATING FLOODS WHICH OCCURRED ON 26.07.2005 AND HENCE, THE ASSESSEE SOCIETY INCOME WAS HELD TAXABLE AND NOT CO VERED UNDER THE MUTUAL BENEFITS. WHEN THE SOCIETYS CASE REACH ED BEFORE THE TRIBUNAL IT WAS HELD THAT THE INCOME OF THE NEW IND IA SOCIETY WAS COVERED UNDER THE PRINCIPLES OF MUTUALITY AND MEREL Y SOME OF THE MEMBERS WERE PAID OR DISTRIBUTED ` 10 LAKHS TO COMPENSATE THE LOSS INCURRED DUE TO DEVASTATING RAIN OCCURRED ON 2 6.6.2005, IT CANNOT BE SAID THAT THE ACTIVITIES OF THE SAID SOCI ETY WERE OUT OF THE PRINCIPLES OF THE MUTUALITY (COPY OF THE TRIBUNAL O RDER AT PAGES 6 TO 40) IN ITA NOS.5846, 5847, 5448/M/200.. DATED 31.01 .2011. IN OUR OPINION, THE AMOUNTS RECEIVED BY THE ASSESSEE C ANNOT BE TREATED AS AN INCOME WITHIN THE MEANING OF SEC.4 OF THE INCOME-TAX ACT WHICH IS CHARGING PROVISION. ADMITTEDLY, THE E NTIRE INCOME OF THE NEW INDIA SOCIETY IS COVERED UNDER THE PRINCIPL ES OF MUTUALITY WHICH HAS BEEN CONFIRMED BY THE TRIBUNAL ALSO IN CA SE OF NEW INDIA SOCIETY FOR THE A.YS. 2001-02, 2002-03 AND 20 05-06. THE ASSESSEE HAS PAID OUT OF THE COMMON FUNDS AND ON TH E PRINCIPLES OF MUTUALITY THE AMOUNT RECEIVED BY THE ASSESSEE CA NNOT BE TREATED AS A BENEFIT IN NATURE OF PROFIT OR INCOME AS ASSES SEE IS ALSO PAYING MAINTENANCE CHARGES AND OTHER LEVIES TO THE SOCIETY . WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT (A). WE, ACCORDINGLY, CONFIRM THE SAME. 8. THE LD. COUNSEL SUBMITS THE DECISIONS OF THE TR IBUNAL IN THE CASE OF NEW INDIA SOCIETY WERE CHALLENGED BY THE RE VENUE BEFORE THE HONBLE JURISDICTIONAL HIGH COURT AND THE APPEA LS FILED BY THE REVENUE HAVE BEEN DISMISSED. THE LD. COUNSEL FILE D THE COPIES OF THE TRIBUNAL ORDER OF THE HONBLE HIGH COURT IN THE CASE OF NEW INDIA SOCIETY LTD. DATED 09.09.2011 AND 09.11.2011 RESPECTIVELY WHICH ARE PLACED ON RECORD. 9. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ITA 428 & 429/MUM/2012 SMT. BINA KAPUR (LH OF LATE DILIP KAPUR) 4 4. AS THE FACTS ARE IDENTICAL IN THE CASE OF THE PR ESENT ASSESSEE, I, THEREFORE, FOLLOWING THE ORDER OF THE TRIBUNAL IN T HE CASE OF SHRI KARTIK PATEL (SUPRA) ALLOW GROUNDS IN BOTH THE APPEALS AND DIRECT THE A.O. TO DELETE IMPUGNED ADDITIONS. 5. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 0TH APRIL 2012. SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 30TH APRIL 2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) 29, MUMBAI. 4) THE CIT -18, MUMBAI. 5) THE D.R. SMC BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN