TWINSTAR JUPITER CO-OP HSG SOC., LTD, MUMBAI V. ITO 12(2)(4), MUMBAI

ITA 5027/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54982 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2005-2006
• Appeal Filed On: 17-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.5027/MUM/2010 (ASSESSMENT YEAR: 2005-06) TWINSTAR JUPITER CO-OP. HSG. SOC. LTD., 41, CUFFE PARADE, MUMBAI -400 005 ....... APPELLANT VS ITO -12(2)(4), 123, AAYAKAR BHAVAN, MARINE LINES, MUMBAI -400 002 .....RESPONDENT PAN: AAABT 0015 E APPELLANT BY: NONE RESPONDENT BY: SHRI V.V. SHASTRI DATE OF HEARING: DATE OF PRONOUNCEMENT: 08.08.2011 19.08.2011 O R D E R PER R.S. PADVEKAR, JM: IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A)-23, MUMBAI DATED 18.03.2010 FOR THE A.Y. 2005-06. 2. IN THIS CASE THE ASSESSEE HAS FILED AN APPLICATI ON FOR ADJOURNMENT BUT SAME WAS REJECTED AS APPARENTLY IT WAS SEEN THAT THE ISSUES ARISING FROM THE APPEAL ARE COVERED AND HENC E, THIS APPEAL IS DISPOSED OFF AFTER HEARING THE LD. D.R. ITA 5027/MUM/2010 TWINSTAR JUPITER CO-OP. HSG. SOC. LTD. 2 3. THE FIRST ISSUE IS IN RESPECT OF THE ADDITION OF ` 3,50,000/- TOWARDS TRANSFER FEES RECEIVED FROM THE OUTGOING ME MBERS OF THE ASSESSEE-SOCIETY. 4. THE FACTS WHICH REVEALED FROM THE RECORD ARE AS UNDER. THE ASSESSEE IS CO-OPERATIVE HOUSING SOCIETY. THE RETU RN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ASSESSMENT W AS COMPLETED U/S.143(3). IT WAS ALSO NOTICED BY THE A.O. THAT T HE ASSESSEE HAS COLLECTED ` 7,50,000/- TOWARDS VOLUNTARY CONTRIBUTION ON TRANS FER OF FLATS RECEIVED FROM THE OUTGOING MEMBERS AND THE AI D AMOUNT WAS CREDITED TO THE GENERAL RESERVES IN THE BALANCE-SHE ET AND CLAIMED EXEMPTION RELYING ON THE PRINCIPLES OF MUTUALITY. THE A.O. HAD NOTED THAT AS PER THE AGREEMENT WITH MEMBERS AND PURCHASE RS OF THE FLATS, THE TRANSFER FEE IS TO BE BORNE 50-50%. THE A.O., THEREFORE, MADE THE ADDITION OF ` 3,75,000/- THAT WAS IN RESPECT OF THE CONTRIBUTION FEE RECEIVED FROM THE PURCHASERS OF THE FLAT I.E. TRANS FEREE. THE ASSESSEE CHALLENGED THE SAID ADDITION BEFORE THE LD. CIT (A) . THE LD. CIT (A) WAS NOT CONVINCED WITH THE PLEA OF THE ASSESSEE THA T THOUGH THE ASSESSEE WAS RELIED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SINDH CHS LTD. 317 ITR 47(BOM) . IN VIEW OF THE LD. CIT (A) THE DECISION IN THE CASE OF SINDH CHS L TD.(SUPRA) IS NOT APPLICABLE TO THE ASSESSEES CASE. THE LD. CIT (A) FURTHER OBSERVED THAT UP TO LIMIT ONLY, THE TRANSFER FEE IS EXEMPT W ITHIN THE FRAMEWORK OF THE BYE-LAWS. THE LD. CIT (A) FURTHER OBSERVES THAT THE HONBLE HIGH COURT HAS NOT CONSIDERED THE APPLICABILITY OF A NOTIFICATION ISSUED BY THE GOVT. OF MAHARASHTRA AS THE ASSESSMEN T ORDER IN THE SAID CASE WAS PRIOR TO THE DATE OF THE GOVERNMENT N OTIFICATION DATED 9.08.2001. HE, THEREFORE, HELD THAT UPTO THE LIMIT OF ` 25,000/- RECEIVED PER TRANSFER IS DELETED AND ANY EXCESS OF ` 25,000/- THE SAME IS CONFIRMED. NOW, THE ASSESSEE IS IN APPEAL BEFOR E US. ITA 5027/MUM/2010 TWINSTAR JUPITER CO-OP. HSG. SOC. LTD. 3 5. THE SHORT CONTROVERSY IS ROWING AROUND WHETHER T HE TRANSFER FEE RECEIVED FROM THE INCOMING MEMBERS IS EXEMPT ON THE PRINCIPLES OF MUTUALITY IN THE CASE OF CO-OPERATIVE HOUSING SOCIE TIES. 6. IN THE CASE OF SINDH CHS LTD (SUPRA) THE HONBLE HIGH COURT MADE IT CLEAR THAT IN THE SAID CASE THE BYE-LAWS PR OVIDE THAT THE AMOUNT HAS TO BE PAID BY THE TRANSFEROR MEMBER. IN THE PRESENT CASE, NOWHERE IT IS THE CASE OF THE A.O. THAT THERE IS A PROVISION THAT ONLY THE TRANSFEROR HAS TO BEAR THE AMOUNT OF THE TRANSF ER FEES. WE, FURTHER, FIND THAT NOWHERE IT IS THE CASE OF THE A. O. THAT NO COMMERCIALITY IS INVOLVED IN THE OBJECTS OR ACTIVIT IES OF THE ASSESSEE- SOCIETY AS THE ASSESSEE HAS CREDITED THE AMOUNT TO THE GENERAL RESERVE FUNDS TO BE USED FOR THE REPAIRS AND MAINTENANCE OF THE SOCIETY. THEIR LORDSHIPS HAVE ALSO CONSIDERED THE NOTIFICATION GIV EN BY THE GOVERNMENT OF MAHARASHTRA AND THE REFERENCE MADE IS TO ONLY TO EXTENT OF ARGUMENT OF THE PARTIES TO THE ON GOVT NO TIFICATION DATED 9.8.2001. AS PER THE NOTIFICATION DATED 10.12.1989 IF THE BYE-LAWS ARE AMENDED THEN ONLY THE SOCIETY COULD NOT CHARGE WHAT WAS SET OUT IN THE NOTIFICATION. 7. IN THE PRESENT CASE, ULTIMATELY, THE TRANSFER FE E RECEIVED FROM THE MEMBERS HAS MERGED WITH THE COMMON PULL OF FUND S AND THERE IS NO COMMERCIAL MOTIVE. IN OUR OPINION, ASSESSEES C ASE IS SQUARELY COVERED BY SINDH CHS LTD. (SUPRA). WE, ACCORDINGLY DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND DIRECT THE A.O. TO DE LETE THE ENTIRE ADDITION. ACCORDINGLY, FIRST ISSUE IN THIS APPEAL IS ALLOWED. 8. THE NEXT ISSUE IS REGARDING ADDITION TOWARDS THE PENAL INTEREST OF ` 35,000/-. 9. WE FIND THAT THE PENAL INTEREST IS COLLECTED FRO M ITS MEMBERS ONLY ON ACCOUNT OF DELAY IN PAYMENT OF THE DUES OF THE SOCIETY. IN OUR OPINION, THE SAID ADDITION CANNOT BE SUSTAINED AS I T IS COVERED ON THE ITA 5027/MUM/2010 TWINSTAR JUPITER CO-OP. HSG. SOC. LTD. 4 PRINCIPLES OF MUTUALITY AND AS PER THE RATION LAID DOWN IN THE CASE OF SINDH CHS LTD. (SUPRA). WE ACCORDINGLY, DELETE THE SAME. 10. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 9TH AUGUST 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 19TH AUGUST 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)23, MUMBAI 4) THE CIT-XII, MUMBAI. 5) THE D.R. H BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 5027/MUM/2010 TWINSTAR JUPITER CO-OP. HSG. SOC. LTD. 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 02.08.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 02.08.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER