THE MODEL CO- OP HSG SOCIETY LTD, MUMBAI V. ITO 16(1)(4), MUMBAI

ITA 4967/MUM/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56074 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-12-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 23-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Assessee Lawyers: D R RAIYANI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE SHIRI RAJENDRA SINGH, A.M. ITA NO. : 4967/MUM/2011 ASSESSMENT YEAR : 2001-02 M/S. THE MODEL CO - OP HSG. SOCIETY LTD. 20, TARDEO ROAD, SAHAKAR NIVAS, MUMBAI-400 034. PAN NO: AAAAT 5020 G VS. ITO, WARD 16 (1)(4), MATRU MANDIR, OPP. BHATIA HOSPITAL, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D. R. RAIYANI RESPONDENT BY : SHRI P.C. MAURYA DATE OF HEARING : 01.12.2011 DATE OF PRONOUNCEMENT : 01.12.2011 ORDER PER RAJENDRA SINGH (AM) : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 03.03.2011 OF THE LD. CIT(A)-27 FOR THE ASSESSMENT YEAR 2001-02. THE ONLY DISPUTE RAISED IS REGARDING THE DISALLOWANCE O F CONTRIBUTIONS RECEIVED BY THE SOCIETY FROM THE MEMBERS. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE SOCIETY DURING THE YEAR HAD COLLECTED A SUM OF `. 2,99,750/- FROM THE MEMBERS. THE SAID AMOUNT CONSISTED A SUM OF `. 86,550/- BEING THE CONTRIBUTION RECEIVED FROM MR MAHESH DESAI, INCOMING MEMBER AND SUMS OF `. 1,24,000/- AND `. 89,250/- FROM MR. HIMANSHU GANDHI AND MR. PRAFULLA DADIA ITA NO :4967/MUM/2011 M/S. THE MODEL CO-OP HSG. SOCIETY LTD. 2 WHO WERE EXISTING MEMBERS OF SOCIETY AT THE TIME OF MAKING THE PAYMENT. THE AO OBSERVED THAT THE NATURE OF CONTRIB UTIONS WAS THE TRANSFER PREMIUM RECEIVED BY THE SOCIETY FROM THE M EMBERS, BUT IT HAD BEEN SHOWN AS CONTRIBUTIONS TO REPAIR FUND. IN TE RMS OF BYE-LAWS OF THE SOCIETY, THE TRANSFER PREMIUM IN EXCESS OF `. 25,000/- COULD NOT BE CHARGED. THE AO ALSO OBSERVED THAT THE INCOMING MEM BER WAS NOT A MEMBER AT THE TIME OF MAKING THE CONTRIBUTION AND, THEREFORE, A SUM OF `. 86,500/- COULD NOT BE ALLOWED AS AN EXEMPTION. IN R ESPECT OF OTHER TWO CONTRIBUTIONS, THE AO ALLOWED ONLY `. 25,000/- EACH AGGREGATING TO `. 50,000/-. THUS THE TOTAL DISALLOWANCE MADE BY THE A O WAS `. 2,49,750/-. 3. IN APPEAL, CIT(A) CONFIRMED THE DISALLOWANCE ON THE GROUND THAT DISALLOWANCE HAD BEEN MADE BY THE AO IN PURSUANCE O F DIRECTIONS OF ITAT AND, THEREFORE, THE SAME WAS IN ORDER. AGGRIEV ED BY THE SAID DECISION THE ASSESSEE IS IN APPEAL BEFORE THE TRIBU NAL. 4. BEFORE ME, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ISSUE WAS COVERED BY THE JUDGMENT OF HON'BLE HIGH COURT O F BOMBAY IN CASE OF SIND CO-OPERATIVE HOUSING SOCIETY (317 ITR 47). IT WAS ACCORDINGLY REQUESTED THAT THE AO MAY BE DIRECTED TO COMPUTE TH E INCOME OF THE SOCIETY IN THE LIGHT OF THE SAID JUDGEMENT. THE LD. DR ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 5. I HAVE PERUSED THE RECORDS AND CONSIDERED THE M ATTER CAREFULLY. THE DISPUTE IS REGARDING THE APPLICABILITY OF THE P RINCIPLE OF MUTUALITY IN RELATION TO THE CONTRIBUTIONS RECEIVED FROM THE INCOMING AND OUT GOING MEMBERS. THOUGH, THE CONTRIBUTION RECEIVED HA S BEEN SHOWN BY THE ASSESSEE AS THE CONTRIBUTION TO REPAIR FUND, THE ACTUAL NATURE OF CONTRIBUTION IS TRANSFER FEES IN RELATION TO THE FL ATS TRANSFERRED BY THEM. THE AO HAS TAXED THE TRANSFER FEES RECEIVED FROM TH E INCOMING ITA NO :4967/MUM/2011 M/S. THE MODEL CO-OP HSG. SOCIETY LTD. 3 MEMBERS ON THE GROUND THAT HE WAS NOT A MEMBER AT T HE TIME OF PAYMENT OF FEES AND, THEREFORE, NOT COVERED BY THE PRINCIPLE OF MUTUALITY. HOWEVER, AS HELD BY HON'BLE HIGH COURT O F BOMBAY IN THE CASE OF SIND CO-OPERATIVE HOUSING SOCIETY (SUPRA), THE TRANSFER FEES RECEIVED BOTH FROM INCOMING AND OUTGOING MEMBERS WH ICH HAS TO BE UTILISED SPECIFICALLY FOR THE BENEFITS OF THE MEMBE RS WILL BE COVERED BY THE PRINCIPLE OF MUTUALITY. THE HON'BLE HIGH COURT HAVE ALSO HELD THAT IF ANY AMOUNT RECEIVED BY THE SOCIETY FROM THE MEMBERS WAS MORE THAN THE AMOUNT CHARGEABLE UNDER THE BYE-LAWS OR THE GOV ERNMENT NOTIFICATION, THE ASSESSEE SOCIETY WAS BOUND TO REP AY THE AMOUNT AND IF IT WAS RETAINED BY THE SOCIETY, IT WILL BE OF THE N ATURE OF PROFIT AND WILL BE CHARGEABLE TO TAX. THUS, IN CASE, ANY CONTRIBUTI ONS HAVE BEEN RECEIVED FROM THE MEMBERS IN EXCESS OF THE AMOUNT C HARGEABLE AS PER THE BYE-LAWS OF THE SOCIETY OR GOVERNMENT NOTIFICAT ION, THE SAME WILL NOT BE COVERED UNDER THE PRINCIPLE OF MUTUALITY. THE AO IS, THEREFORE, DIRECTED TO RE-COMPUTE THE INCOME OF THE SOCIETY AF TER MAKING NECESSARY EXAMINATION IN THE LIGHT OF THE JUDGEMENT OF HON'BL E HIGH COURT OF BOMBAY IN THE CASE OF SIND CO-OPERATIVE HOUSING (SU PRA) AND AFTER ALLOWING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON TO DAY I.E. 1 ST DECEMBER, 2011. SD/- ( RAJENDRA SINGH ) ACCOUNTANT MEMBER MUMBAI, DT: 01/12/2011 ITA NO :4967/MUM/2011 M/S. THE MODEL CO-OP HSG. SOCIETY LTD. 4 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, SMC - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI