ITO 16(1)(2), MUMBAI V. HIGH LAND CHS LTD, MUMBAI

ITA 6564/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1070 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 20-07-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 24-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAYANK PRIYADARSH
• Assessee Lawyers: DR K SHIVARAM

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI T.R. SOOD ,(AM) ITA NO.6564/MUM/2009 ASSESSMENT YEAR : 1999-2000 THE INCOME TAX OFFICER-16(1)(2) MATRU MANDIR MUMBAI-400 007. ..( APPELLANT ) VS. M/S. HIGH LAND CHS LTD. LAND MARK CARMICHEAL ROAD MUMBAI-26. ..( RESPONDENT ) P.A. NO. (AAABH 0003 J) APPELLANT BY : SHRI MAYANK PRIYADARSH RESPONDENT BY : DR. K. SHIVARAM O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 28.10.2009 PASSED BY THE LD. CIT(A) FOR T HE ASSESSMENT YEAR 1999-00. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE I S A CO- OPERATIVE HOUSING SOCIETY HAVING INCOME FROM SOCIETY ACTIV ITIES AND INCOME FROM OTHER SOURCES. DURING THE COURSE OF ASSESSMENT IT WAS INTERALIA OBSERVED BY THE ASSESSING OFFICER THAT ASSESSEE HAS TAKEN A ITA NO.6564/M/09 A.Y:99-00 2 SUM OF RS.16,20,000/- FROM NEW INCOMING MEMBERS AS TRANSF ER FEES FOR TRANSFERRING THE FLAT IN THEIR NAMES. THOUGH THE SOCIETY CLAIMED THAT IT WAS A VOLUNTARY CONTRIBUTION FROM THE MEMBER S TO THE WELFARE FUND. HOWEVER, IN VIEW OF THE DECISION OF THE MUMBAI ITAT SPECIAL BENCH IN THE CASE OF WALKESHWAR TRIVENI CO-OP HOUSING SO CIETY LTD., VS. ITO DATED 4.7.2003, ASSESSING OFFICER WAS OF THE VIEW THAT THIS AMOUNT IS TAXABLE NOT COVERED ON THE PRINCIPLE OF MUTU ALITY AND ACCORDINGLY HE ADDED RS.16,20,000/- AS INCOME FROM BUSINE SS. ON APPEAL, THE ASSESSEE CONTENDED THAT THIS AMOUNT WAS RECEIV ED AS VOLUNTARY CONTRIBUTION FROM AN INCOMING MEMBER AND IT IS COVERED UNDER THE PRINCIPLE OF MUTUALITY. THE RELIANCE WAS AL SO PLACED ON THE LATEST DECISION OF HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF SIND CO-OPERATIVE HOUSING SOC. VS. INCOME TAX OFFICER SINCE REPO RTED IN (2009) 317 ITR 47(BOM.) WHEREIN IT HAS BEEN HELD THA T THE TRANSFER FEE RECEIVED FROM THE INCOMING MEMBERS BY THE HOUSING S OCIETIES IS EXEMPT UNDER THE PRINCIPLE OF MUTUALITY. THE LD. C IT(A) WHILE OBSERVING THAT IN THE SAID CASE THEIR LORDSHIPS OBSERVED T HAT ANY AMOUNTS RECEIVED IN EXCESS OF RS.25,000/- WOULD BE HELD T O BE TAXABLE, FOLLOWED THE SUBSEQUENT DECISION OF HON'BLE JUR ISDICTIONAL HIGH COURT IN M/S. SHYAM CHS AND SUPRABHAT CHS DATED 1.10.2 009 WHEREIN IT HAS BEEN HELD THAT ALL THE AMOUNTS RECEIVE D BY THE CHS ON ITA NO.6564/M/09 A.Y:99-00 3 THE GROUNDS OF TRANSFER CHARGES ARE EXEMPT UNDER THE P RINCIPLE OF MUTUALITY, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT(A) ERRED IN FOLLOWING THE DECISI ON OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF M/S. SHYAM CHS AND SUPRABHAT CHS WHEREIN IT HAS BEEN HELD THAT ALL AMOUNTS RECEIVED BY THE CHS ON THE GROUNDS OF TRANSFER CHARGES ARE EXEMPT UNDER THE PRINCIPLE OF MUTUALITY. THE DECISION IS NOT ACCEPTED BY THE DEPARTMENT AND A SLP HAS BEEN PROPOSED AGAINST THE SAID ORDER. 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.16,20,000/- RECEIVED FROM THE INCOMING MEMBERS A S VOLUNTARY CONTRIBUTION TREATING IT AS EXEMPT UNDER THE PRINCIPLE OF MUTUALITY. 3. THE LD. CIT(A) FAILED IN APPRECIATING THAT THE CONTRIBUTIONS BY THE OUTGOING AND INCOMING MEMBERS ARE SUBJECT TO PRINCIPLE OF MUTUALITY. 4. AT THE TIME OF HEARING THE LD. DR SUPPORTS THE OR DER OF THE ASSESSING OFFICER. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE WH ILE RELYING ON THE ORDER OF THE LD. CIT(A) ALSO RELIED ON THE JU DGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SHYAM CO-OPERA TIVE HOUSING SOCIETY LTD. VS. CIT IN INCOME TAX APPEAL NO.92, 93 AND 206 OF 2008 DATED 17.7.2009 TO SUBMIT THAT THE ASSESSEE'S CAS E IS PRIOR TO THE GOVERNMENT CIRCULAR DATED 9.8.2001, THEREFORE, THE LD. CIT(A) FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT SUP RA, HAS RIGHTLY ITA NO.6564/M/09 A.Y:99-00 4 DELETED THE ADDITION MADE BY THE ASSESSING OFFICER . HE ALSO PLACED ON RECORD THE SAID DECISION OF THE HONBLE BOMBAY HIGH COUR T. HE, THEREFORE, SUBMITS THAT THE ORDER PASSED BY THE LD. CIT (A) BE UPHELD. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE. IT IS ALSO NOT IN DISPUTE THAT THE IMPUGNED ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F HON'BLE JURISDICTIONAL HIGH COURT SUPRA, WHEREIN ON THE ISSUE OF TAXABILITY OF TRANSFER FEES RECEIVED BY THE ASSESSEE SOCIETY IT HAS BEEN OBSERVED AND HELD AS UNDER :- IN INCOME TAX APPEAL NO.92,93,206 OF 2008 IN ADDITION IT IS SUBMITTED THAT THE DEMANDS ARE IN RE SPECT OF THE ASSESSMENT YEARS 1999-2000, 2000-2001, 2001- 2002. THE TRANSFER PREMIUM WAS CHARGED BASED ON TH E GOVERNMENT CIRCULAR DATED 27.11.1989 AND 20.12.1989 . IT IS SUBMITTED THAT CLAUSE 40(D)(7) OF THE MODEL BYE LAWS DRAFTED ON 2.7.2001 AND THE CIRCULAR DATED 9.8 .2001 WERE, THEREFORE, NOT APPLICABLE TO THE CASE OF THE APPELLANT. BY OUR JUDGMENT DATED 17 TH JULY, 2009 IN INCOME TAX APPEAL NO.931 OF 2004 IN THE CASE OF SIND COOP. HSG. SOC. VERSUS THE INCOME TAX OFFICER, WE HAVE HELD TH AT BOTH CONTRIBUTIONS BY THE OUTGOING AND INCOMING MEMBERS ARE SUBJECT TO PRINCIPLE OF MUTUALITY. WE HAVE ALSO DISCUSSED THE EFFECT OF THE GOVERNMENT CIRCULA R DATED 27.11.1989 AND 20.12.1989. IN THE LIGHT OF T HAT, THE QUESTION HAS TO BE ANSWERED IN THE AFFIRMATIVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT O N RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE JUDGMENT OF HON 'BLE ITA NO.6564/M/09 A.Y:99-00 5 JURISDICTIONAL HIGH COURT UPHOLD THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. THE GROUND S TAKEN BY THE REVENUE ARE THEREFORE, REJECTED. 7. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.7.2010. SD/- SD/- (T.R. SOOD) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 23.7.2010. 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. ITA NO.6564/M/09 A.Y:99-00 6 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 20.7.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 21.7.10 SR.PS/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 23.7.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 26.7.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER