ITO 12(3)(1), MUMBAI V. MITTAL TOWER PREMISES CO-OP SOCIETY LTD, MUMBAI

ITA 6345/MUM/2009

• Counselvise Citation: 634519914 RSA 2009
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 05-09-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 09-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI KIRAN
• Assessee Lawyers: RAHUL K HAKANI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL, (JUDICIAL MEMBER) AND SHRI RAJENDRA SINGH,(ACCOUNTANT MEMBER) ITA NO.6345/MUM/2009 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER-12(3)(1) ROOM NO.102, AAYAKAR BHAVAN M.K. ROAD MUMBAI-20. ..( APPELLANT ) VS. M/S. MITTAL TOWER PREMISES CO-OP. SOCIETY LTD. BASEMENT, MITTAL TOWER, 210, NARIMAN POINT, MUMBAI-400 021. ..( RESPONDENT ) P.A. NO. (AAAAM 2052 M) APPELLANT BY : SHRI RAVI KIRAN RESPONDENT BY : SHRI RA HUL K. HAKANI DATE OF HEARING : 5.9.2011 DATE OF PRONOUNCEMENT : 5 TH SEPTEMBER, 2011 O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 25.9.2009 OF CIT(A) FOR THE ASSESSMENT YEAR 2005-06 . THE REVENUE IN THIS APPEAL HAS RAISED DISPUTES ON TWO DIFFERENT GROUNDS WHICH RELATE TO ADDITION ON ACCOUNT OF TRANSFER FEES AND NON-OCCUPANCY CHARG ES. 2. BRIEFLY STATED, FACTS OF THE CASE ARE THAT THE A SSESSEE COLLECTED A SUM OF RS.8,34,093/- BEING NON-OCCUPANCY CHARGES FROM M EMBERS WHO HAD LET OUT FLATS. THE ASSESSEE ALSO RECEIVED A SUM OF RS. 13,00,800/- AS TRANSFER ITA NO.6345/M/09 A.Y:05-06 2 FEES FROM MEMBERS WHO HAD TRANSFERRED THEIR FLATS DURING THE YEAR. THE AO OBSERVED THAT THE SOCIETY WAS CHARGING MAINTENANCE CHAR GES FROM THE MEMBERS WHEREAS IN CASE OF MEMBERS WHO WERE NOT OCCUPYING THE FLATS, NON-OCCUPANCY CHARGES WERE BEING CHARGED AT A VER Y HIGH RATE. THESE NON-OCCUPYING MEMBERS HAD LET OUT THEIR FLATS AT A VERY HIGH RENT AND THEREFORE, WERE MAKING PROFITS OUT OF COMME RCIAL EXPLOITATION. THE PRINCIPLE OF MUTUALITY WAS, THEREFORE, NOT APPLI CABLE AS THE PRINCIPLE OF EQUALITY WAS BROKEN. FURTHER, SOCIETY WAS ALSO MAKING PROFITS FROM SUCH MEMBERS WHO HAD LET OUT THEIR FLATS. HE, THEREFORE, TREATED THE NON-OCCUPANCY CHARGES AS INCOME OF THE ASSESSEE SOCIETY. SIMILARLY THE AO ALSO TREATED THE TRANSFER FEES AS INCO ME OF THE SOCIETY FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE TRI BUNAL IN THE CASE OF M/S. WALKESHWAR TRIVENI CO-OPERATIVE SOCIETY LTD. V S. ITO (267 ITR 86). BOTH THE ADDITIONS MADE BY THE AO WERE DISPUTE D BY THE ASSESSEE. THE CIT(A) OBSERVED THAT BOTH THE ISSUES HAD BE EN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2002-03 AND 2003-04. THEREFORE, FOLLOW ING THE DECISION IN THE EARLIER YEARS, CIT(A) DELETED THE ADDI TION MADE BY AO AGGRIEVED BY WHICH REVENUE IS IN APPEAL BEFORE THE TR IBUNAL. 3. BEFORE US THE LD. AR FOR THE ASSESSEE SUBMITTED THAT T HE ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF TH E TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 IN ITA ITA NO.6345/M/09 A.Y:05-06 3 NO.6828/M/2008. THE LD. DR FAIRLY CONCEDED THAT THE ISSUE WAS COVERED BY THE DECISION OF THE TRIBUNAL. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING ADDITION ON ACCOUN T OF NON- OCCUPANCY CHARGES RECEIVED BY THE ASSESSEE SOCIETY FROM THE MEMBERS WHO HAD LET OUT THEIR FLATS AND ALSO ADDITION ON ACCOUNT OF TRANSFER FEE RECEIVED FROM MEMBERS WHO HAD TRANSFERRED THEIR FLATS. BOTH THESE ISSUES HAVE BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2004-05 IN ITA NO.6828/M/2008 IN FAVOUR OF THE ASSESSEE. WE ALSO FIND THAT THE ISSUES ARE COVERED BY T HE JUDGMENTS OF HONBLE JURISDICTIONAL HIGH COURT. THE HO NBLE HIGH COURT OF BOMBAY IN THE CASE OF SIND CO-OPERATIVE HOUSIN G SOCIETY LTD. (317 ITR 47) HAVE HELD THAT TRANSFER FEE RECEIVED BY THE SOCIETY AS PER ITS BYE-LAWS BOTH FROM INCOMING AND OUTGOING MEMBERS I S MEANT FOR UTILIZATION EXCLUSIVELY FOR THE BENEFIT OF MEMBERS AN D IT HAS NO ELEMENT OF TRADE OR COMMERCIALITY AND THUS WILL BE COVERED BY T HE PRINCIPLE OF MUTUALITY. SIMILARLY HONBLE HIGH COURT IN THE CASE OF MITTAL COURT PREMISES CO-OPERATIVE SOCIETY LTD. (184 TAXMAN 292) HA VE HELD THAT NON OCCUPANCY CHARGES WILL ALSO BE COVERED BY PRINCIPLE OF MUTUALITY AND WILL NOT BE TAXABLE. RESPECTFULLY FOLLOWING THESE JUDGMENTS WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) IN DELETING THE ADDITIONS AND THE SAME IS THEREFORE, UPHELD. ITA NO.6345/M/09 A.Y:05-06 4 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5.9.2011. SD/- SD/- (D.K. AGARWAL) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 5.9.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.