ITO 21(3)(1), MUMBAI V. BIRCHWOOD CO-OP HSG. SOC. LTD, MUMBAI

ITA 6354/MUM/2009

• Counselvise Citation: 635419914 RSA 2009
• Duration Of Justice: 1 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 08-09-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 09-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G C LALKA
• Assessee Lawyers: S K SINGH

Judgement Text

1 ITA NO.6354/MUM/2009 M/S. BIRCHWOOD CHS LTD. 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.6354/MUM/2009 ASSESSMENT YEAR : 2004-05 OFFICE OF THE ITO. - 21(3) - 1, C-11 BLDG, 5 TH FLOOR, PRATYAKSH KAR BHAVAN, BKC, BANDRA (E), MUMBAI-51. VS. M/S. BIRCHWOOD CHS LTD. HIRANANDANI GARDENS, POWAI, MUMBAI-400 076 PAN NO: AAAAB 0541 N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. K. SINGH DEPARTMENT BY : SHRI G. C. LALKA DATE OF HE ARING : 08.09.2011 DATE OF PRONOUNCEMENT : 08.09.2011 O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 18.09.2009 OF THE LD. CIT(A)-32 FOR THE ASSESSMENT YEAR 2004-05. THE ONLY DISPUTE RAISED BY THE REVENUE IN THIS APPEAL IS REG ARDING THE ADDITION MADE BY THE AO ON ACCOUNT OF TRANSFER FEES AND LIFT USAG E CHARGES RECEIVED FROM THE MEMBERS OF THE SOCIETY. 2. BRIEFLY STATED, FACTS OF THE CASE ARE THAT THE A SSESSEE DURING THE YEAR HAD RECEIVED A SUM OF `. 9,83,000/- ON ACCOUNT OF TRANSFER FEES FROM THE MEMBERS AND A SUM OF `. 32,000/- HAD BEEN RECEIVED AS LIFT USAGE CHARGES. 2 ITA NO.6354/MUM/2009 M/S. BIRCHWOOD CHS LTD. THE ASSESSEE HAD CLAIMED THESE AMOUNTS AS EXEMPT ON THE PRINCIPLE OF MUTUALITY. THE AO HOWEVER HELD THAT RULES AND BYLAW S OF THE SOCIETY WERE NOT APPLICABLE IN CASE OF TRANSFEREE OF FLATS TILL THEY ARE ADMITTED AS A MEMBER AND, THEREFORE, PRINCIPLE OF MUTUALITY WAS N OT APPLICABLE IN THE CASE OF TRANSFER FEES RECEIVED FROM THE INCOMING ME MBERS. THE LIFT USAGE CHARGES HAD BEEN RECEIVED BY THE SOCIETY FROM SHIFT ING OF HEAVY LUGGAGE BOTH FROM THE INCOMING AND OUTGOING MEMBERS OF THE SOCIETY AS PER THE RULES OF THE SOCIETY. THE AO HELD THAT IT WAS A MIS CELLANEOUS INCOME OF THE ASSESSEE, NOT COVERED BY THE PRINCIPLE OF THE MUTUA LITY. ACCORDINGLY, HE TREATED BOTH THE SUMS AS INCOME OF THE ASSESSEE CHA RGEABLE TO TAX. IN APPEAL, THE LD. CIT(A) HELD THAT BOTH THE SUMS RECE IVED BY THE ASSESSEE WERE COVERED BY PRINCIPLE OF MUTUALITY AND ACCORDIN GLY, WERE NOT CHARGEABLE TO TAX. AGGRIEVED BY THE SAID DECISION, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECO RDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS WHETHER THE TR ANSFER FEES RECEIVED BY THE SOCIETY AS PER RULES FROM THE TRANSFEREE OF FLA TS AND LIFT USAGE CHARGES RECEIVED FROM BOTH INCOMING AND OUTGOING MEMBERS IS COVERED BY THE PRINCIPLE OF MUTUALITY. ON CAREFUL CONSIDERATION, W E FIND THAT THE ISSUE IS COVERED BY THE JUDGEMENT OF HON'BLE JURISDICTIONAL OF HIGH COURT IN THE CASE OF CIT VS. SINDH CO-OPERATIVE HOUSING SOCIETY (317 ITR 47). IN THE SAID CASE, THE HON'BLE HIGH COURT HELD THAT THE CHARGING OF TRANSFER FEES AS PER THE BY LAWS OF THE SOCIETY BOTH FROM INCOMING AND O UTGOING MEMBERS IS TO BE UTILIZED SPECIFICALLY FOR THE BENEFIT OF THE MEM BERS AND, THEREFORE, IT HAD NO ELEMENT OF TRADE OR COMMERCIALITY AND WILL BE CO VERED BY THE PRINCIPLE OF MUTUALITY. THE SAID DECISION WOULD ALSO APPLY TO TH E CASE OF LIFT USAGE CHARGES, WHICH HAVE BEEN COLLECTED FROM BOTH INCOMI NG AND OUTGOING MEMBERS OF THE SOCIETY FOR SHIFTING OF HEAVY LUGGAG E AT THE TIME OF TRANSFER. 3 ITA NO.6354/MUM/2009 M/S. BIRCHWOOD CHS LTD. OBVIOUSLY, THE AMOUNT HAS TO BE UTILIZED EXCLUSIVEL Y FOR THE BENEFIT OF ALL THE MEMBERS AND, THEREFORE, WILL BE COVERED BY THE PRINCIPLE OF MUTUALITY. WE, THEREFORE, SEE NO INFIRMITY IN THE ORDER OF THE CIT(A) HOLDING THAT THE TRANSFER FEES AS WELL AS LIFT USAGE CHARGES BOTH AR E COVERED UNDER THE PRINCIPLE OF MUTUALITY AND ARE NOT TAXABLE. THE ORD ER OF THE CIT(A) IS ACCORDINGLY UPHELD. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 08.9.2011. SD/- SD/- (D.K. AGARWAL) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI, DATED: 08.09.2011 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, J - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI