NEW UDYOG MANDIR PREMISES COOPERATIVE SOC.LTD., MUMBAI V. ITO ,15 (1)(3), MUMBAI

ITA 5616/MUM/2007

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6329 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 27-08-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI R.K. PANDA (A.M.) ITA NO.5616/MUM/2007 ASSESSMENT YEAR : 2004-2005 NEW UDYOG MANDIR PREMISES COOPERATIVE SOC. LTD. 7, MOGUL LANE, NEAR JOHNSON & JOHNSON, MAHIM (W), MUMBAI - 400 016. PAN : AAAAN2358R I.T.O. 16(1)(3) 1 ST FLR., MATRU MANDIR, GRANT ROAD, MUMBAI. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : SHRI SURENDRA KUMAR (D.R.) O R D E R PER R.K. PANDA, A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 12.06.2007 OF THE CIT(A)-XV, MUMBAI RELATING TO AS SESSMENT YEAR 2004-05. 2. THIS APPEAL WAS FIRST DISMISSED BY THE TRIBUNAL VIDE ORDER DATED 26.03.2008 AND WAS RECALLED VIDE ORDER DATED 25.09. 2008. THEREAFTER, THE TRIBUNAL PASSED THE ORDER ON 14.11.2008 DISMISSING THE APPEAL FILED BY THE ASSESSEE. THE ASSESSEE FILED THE MISCELLANEOUS AP PLICATION ON THE GROUND THAT THE DECISION OF THE TRIBUNAL IS BASED UPON INC ORRECT APPRECIATION OF FACTS AND THE ORDER SUFFERS FROM MISTAKE APPARENT F ROM THE RECORD. THE TRIBUNAL VIDE ORDER DATED 09.02.2010 RECALLED ITS O RDER AND THE CASE WAS FIXED FOR HEARING ON 04.06.2010. HOWEVER, DUE TO NON PROSECUTION THE TRIBUNAL AGAIN DISMISSED THE APPEAL. SUBSEQUENTLY, VIDE ORDER DATED 13.10.2010 THE ORDER WAS RECALLED. HENCE, THIS IS A RECALLED MATTER. 3. IN GROUND OF APPEAL NO.1, THE ASSESSEE HAS CHALL ENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE EXCESS TRANSFER PREMIUM CO LLECTED FROM MEMBERS OF SOCIETY ABOVE ` 25,000/- AS EXIGIBLE TO TAX. ITA NO.5616/MUM/2007 ASSESSMENT YEAR : 2004-2005 2 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE SOCIETY RECEIVED TRANSFER FEE OF ` 50,000/- FOR THE TRANSFER OF UNIT NO.207. THE PUR CHASER HAD PAID ` 25,000/- ON 22.04.2003 AND THE SELLER HAD ALSO PAI D ` 25,000/- ON THE SAME DATE. THE ASSESSEE CLAIMED THE SAME AS COVERED UNDER THE PRINCIPLE OF MUTUALITY AND NOT TAXABLE. THE ASSES SING OFFICER RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF REGENT CHAM BERS PREMIUM CO-OP. SOC. LTD. VS. I.T.O. [82 ITD 13] (2002) (MUM), HELD THAT THE SAME IS TAXABLE. 4.1. IN APPEAL, THE LEARNED CIT(A) FOLLOWING THE DE CISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF WALKESHWAR TRIVENI CO-O P HSG. SOC. LTD. VS. I.T.O. (2004) [88 ITD 159] (MUM) (SB), HELD THAT TH E EXCESS PREMIUM COLLECTED BY THE MEMBERS OF THE SOCIETY IS TO BE TA XED KEEPING THE SAME OUT OF PURVIEW OF CONCEPT OF MUTUALITY. HE ACCORDINGL Y, CONFIRMED THE ACTION OF THE ASSESSING OFFICER. WHILE DOING SO AS AGAINST D ISALLOWANCE OF ` 25,000/- HE BROUGHT TO TAX THE ENTIRE AMOUNT OF ` 50,000/-. AGGRIEVED BY SUCH ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE FILED A COP Y OF THE ORDER OF THE TRIBUNAL IN THE CASE THE ASSESSEE SOCIETY VIDE I.T. A. NO.4609/MUM/08 ORDER DATED 30.03.2010 FOR THE ASSESSMENT YEAR 2005-06. REFERRING TO GROUND OF APPEAL NO.1 OF THE SAID ORDER, HE DREW THE ATTENTIO N OF THE BENCH TO THE ISSUE RELATING TO EXCESS TRANSFER PREMIUM COLLECTED BY THE MEMBERS OF THE SOCIETY ABOVE ` 25,000/-. THEREAFTER, HE DRAW THE ATTENTION OF T HE BENCH TO PARA 9 OF THE ORDER AND SUBMITTED THAT THE NOTIFICA TION ISSUED BY THE GOVERNMENT OF MAHARASHTRA IS ONLY APPLICABLE IN RES PECT OF THE RESIDENTIAL HOUSING SOCIETY. HE DREW THE ATTENTION OF THE BEN CH TO PARA 10 OF THE ORDER, AND SUBMITTED THAT THE TRIBUNAL AFTER CONSID ERING VARIOUS DECISIONS INCLUDING THE DECISION OF THE JURISDICTIONAL HIGH C OURT IN THE CASE OF MITTAL COURT PREMISES CO-OP SOC. LTD (SUPRA) AND IN THE CA SE OF SIND CO-OP HSG. SOC. LTD. HAS HELD THAT THE ENTIRE AMOUNT RECEIVED IN RESPECT OF THE TRANSFER OF THE GALAS AS WELL AS THE ADMISSION FEES CANNOT F ORM THE PART OF THE TOTAL INCOME OF THE ASSESSEE ON THE PRINCIPLE OF MUTUALIT Y. HE SUBMITTED THAT SINCE THE ASSESSEE IS NOT A RESIDENTIAL CO-OP HOUSI NG SOC. THEREFORE IN VIEW OF THE DECISION OF THE TRIBUNAL THE GROUND RAISED B Y THE ASSESSEE HAS TO BE ALLOWED. ITA NO.5616/MUM/2007 ASSESSMENT YEAR : 2004-2005 3 6. THE LEARNED DR, ON THE OTHER HAND, FAIRLY CONCEE DED THAT THE ABOVE GROUND IS DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL. 7. AFTER HEARING BOTH THE SIDES, I FIND IDENTICAL I SSUE HAD COME UP BEFORE THE TRIBUNAL IN THE ASSESSEES OWN CASE IN THE SUBS EQUENT ASSESSMENT YEAR AND THE TRIBUNAL AFTER CONSIDERING VARIOUS DECISION S INCLUDING THE DECISION IN THE CASE OF MITTAL COURT PREMISES CO-OP SOC. LTD . (SUPRA), AND SIND CO-OP HSG. SOC. LTD. (SUPRA), HAS HELD THAT THE NOTIFICAT ION ISSUED BY THE GOVERNMENT OF MAHARASHTRA IS APPLICABLE ONLY IN RES PECT OF RESIDENTIAL HOUSING SOCIETY. ACCORDINGLY, IT HAS BEEN HELD TH AT THE ENTIRE AMOUNT IN RESPECT OF TRANSFER OF THE GALAS AS WELL AS ADMISSI ON FEES CANNOT FORM THE PART OF THE TOTAL INCOME OF THE ASSESSEE ON THE PRI NCIPLE OF MUTUALITY. SINCE THE ASSESSEE IN THE INSTANT CASE, IS NOT A RE SIDENTIAL HOUSING SOCIETY AND IS AN INDUSTRIAL CO-OP HSG. SOC. AS STATED BY T HE LEARNED COUNSEL FOR THE ASSESSEE AND NOT CONTROVERTED BY THE LEARNED DR, TH EREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE, I H OLD THAT THE ENTIRE AMOUNT OF TRANSFER FEE OF ` 50,000/- IS NOT EXIGIBLE TO TAX ON THE PRINCIPLE O F MUTUALITY. THE ORDER OF THE CIT(A) IS ACCORDINGLY SET ASIDE AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 7. GROUND OF APPEAL NO.2 BY THE ASSESSEE READS AS U NDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) XV, MUMBAI ERRED IN COMPUTING T HE TAXABLE INCOME ON ACCOUNT OF INTEREST ON ARREARS OF MEMBERS OF THE SOCIETY AT ` 3,63,265/- ON LATE PAYMENT OF THEIR OUTSTANDING @ 21 FOR THE YEAR UNDER CONSIDERATION. 8. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE HAS RECEIVED INTEREST FROM MEMBERS AT ` 3,63,265/- TOWARDS LATE PAYMENT OF THEIR OUTSTANDI NGS. IT WAS SUBMITTED THAT THE INTEREST HAS BEEN RECOVER ED FROM THE MEMBERS TOWARDS LATE PAYMENT OF THEIR OUTSTANDING AND IS NO T TAXABLE ON THE BASIS OF PRINCIPLE OF MUTUALITY. HOWEVER, THE ASSESSING OF FICER HELD THAT THE INTEREST ITA NO.5616/MUM/2007 ASSESSMENT YEAR : 2004-2005 4 ON LATE PAYMENT DOES NOT CONSTITUTE REGULAR CONTRIB UTION FROM ALL THE MEMBERS. THEREFORE, PRINCIPLE OF MUTUALITY IS NOT APPLICABLE IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE CASE OF REGENT CHAM BERS PREMISES CSL. IN APPEAL, THE CIT(A) UPHELD THAT ACTION OF THE ASSESS ING OFFICER. AGGRIEVED BY SUCH ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 9. AFTER HEARING BOTH THE SIDES, I FIND IDENTICAL I SSUE CAME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06. WE FIND THE TRIBUNAL VIDE ITA NO.4609/MUM/08 ORDER DATED 30 .03.2010 AT PARA 13 OF THE ORDER HAS DISCUSSED THE ISSUE AND DELETED SU CH ADDITION BY HOLDING AS UNDER: 13. WE HAVE HEARD THE PARTIES. THE LEARNED COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE PRINCIPLE LAID DOWN BY THE HONBLE HIGH COURT OF BOMBAY IN RESPECT OF TRANSFER AND ADMISSION FEES IN THE CASE SIND CO-OP HSG. SOC. (SU PRA) AND MITTAL COURT PREMISES CO-OP SOC. LTD. (SUPRA) ARE A LSO APPLICABLE TO THE INTEREST RECOVERED FROM THE DEFAU LTER MEMBERS. THE LEARNED COUNSEL ALSO RELIED ON THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. GO VINDA CHOUDHURY AND SONS (203 ITR 881) TO CANVASS THE PRO POSITION THAT INTEREST INCOME HAS DIRECT NEXUS WITH THE FEES COLLECTED FROM THE MEMBERS. IN OUR OPINION, THE PRINCIPLES O F MUTUALITY ARE APPLICABLE TO THE INTEREST RECOVERED BY THE ASS ESSEE SOCIETY FROM ITS OWN MEMBERS. ULTIMATELY, THERE IS NO COM MERCIALITY INVOLVED IN THE ACTIVITIES OF THE ASSESSEE SOCIETY AND HENCE, THE FIRST REQUIREMENT OF THE MUTUALITY IS FULFILLED. T HE NEXT QUESTION IS WHETHER THE PARTICIPANT AND CONTRIBUTORS ARE IDE NTIFIABLE AND BELONG TO THE SAME CLASS IN THE CASE OF CO-OPERATIV E HOUSING SOCIETY LEARNED. IN THIS CASE, THE DEFAULTERS ARE THE MEMBERS OF THE CO-OPERATIVE HOUSING SOCIETY AND HENCE, IT I S A SAME CLASS OF THE MEMBERS. MOREOVER, THE INTEREST COLLE CTED BY THE SOCIETY IS A VERY COMPENSATORY IN NATURE AND IT HAS DIRECT NEXUS WITH THE DUES RECOVERABLE FROM THE MEMBERS. WE ARE, THEREFORE, OF THE OPINION THAT THE TEST LAID DOWN B Y THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF SIND CO-OPPERAT IVE HOUSING SOCIETY (SUPRA) ARE APPLICABLE AND HENCE, T HE INTEREST RECEIVED/RECOVERED FROM THE DEFAULTING MEMBERS CANN OT BE INCLUDED IN THE TOTAL INCOME OF THE SOCIETY. WE, T HEREFORE, DIRECT THE ASSESSING OFFICER TO DELETE THE SAME AND ACCORD INGLY, GROUND NO.2 IS ALLOWED. 10. RESPECTFULLY, FOLLOWING THE DECISION OF THE TRI BUNAL IN ASSESSEES OWN CASE AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGH T TO MY NOTICE, THE GROUND OF THE ASSESSEE IS ALLOWED. ITA NO.5616/MUM/2007 ASSESSMENT YEAR : 2004-2005 5 11. GROUND OF APPEAL NO.3 AND 4 BEING GENERAL IN NA TURE ARE DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 26 TH DAY OF NOVEMBER, 2010. SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 26.11.2010 JANHAVI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- , MUM BAI 4. COMMISSIONER OF INCOME TAX, CITY- , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH , MUMB AI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI