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

ITA 675/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0853 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 04-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A JAIKARAN
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE S HRI D. K ARUNAKARA . RAO (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 675 /MUM/20 1 4 ASSESSMENT YEAR: 2009 - 2010 M/S TWINSTAR JUPITERCO - OP . SOCIETY LTD., JUPITER APARTMENTS , 41, CUFFE PARADE , MUMBAI - 400020 PAN: AAABT0015E VS. THE INCOME TAX OFFICER WARD 12 (2) (4), ROOM NO. 123 - B, 1 ST FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 4000020 (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ASHOK PATIL (A R ) RESPONDENT BY : SH. A. JAIKARAN (D R) DATE OF HEARING: 17 /04 /201 7 DATE OF PRONOUNCEMENT: 26 / 0 4 /201 7 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST ORDER DATED 20/11/2013 PASSED BY THE LD. CIT (APPEALS) - 23, MUMBAI, FOR THE ASSESSMENT YEAR 2009 - 10, WHEREBY THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT. 1961(FOR SHORT THE ACT) 2. BRIEF FACTS OF TH E CASE ARE THAT THE ASSESSEE A C O - OPERATIVE HOUSING SOCIETY , ENGAGED IN MANAGING, MAINTAINING AND ADMINISTERING THE PROPERTY OF THE SOCIETY AND RAISING FUNDS FOR THE BENEFIT OF ITS MEMBERS FILED ITS RETURN OF 2 I TA NO. 675 /MUM/2014 ASSESSMENT YEAR: 2009 - 2010 INCOME DECLARING THE TOTAL INCOME OF RS. 18,14, 018/ - . THE RETURN WAS PROCESSED AND NOTICE U/S 143 (2) AND 142 (1) OF THE ACT WERE ISSUED AND IN RESPONSE THEREOF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FILED THE DETAILS CALLED FOR. IT WAS NOTICED THAT THE ASSESSEE HAD OFFERED THE AMOUNT OF RS. 2,6 6,282/ - RECEIVED FROM BPL MOBILE COMMUNICATION LTD. AND SIFY LTD. UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND CLAIM DEDUCTION U/S 24 OF THE ACT . HENCE , T HE AO ASKED THE ASSESSEE AS TO WHY THE COMPENSATION RECEIVED FROM BPL MOBILE AND SIFY LTD. SHOULD N OT BE TAXED AS INCOME FROM OTHER SOURCES AND THE CLA I M OF DEDUCTION U/S 24 SHOULD NOT BE DISALLOWED . AFTER RECEIVING REPLY FROM THE ASSESSEE THE AO FOLLOWING THE DECISION OF COMMISSIONER OF INCOME TAX - 12 , PASSED IN THE ASSESSEES OWN CASE FOR THE A.Y. 20 05 - 06 TREATED THE COMPENSATION RECEIVED FROM THE SAID PARTIES AS INCOME FROM OTHER SOURCES AND ALSO DENIED THE DEDUCTION CLAIMED U/S 24 OF THE ACT. 3. FEELING AG GRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE CHALLENGED THE SAME BEFORE THE LD. CIT(A) . THE LD. CIT(A) AFTER HEARING THE ASSESSEE PARTLY ALLOWED THE APPEAL. 4 . STILL A GGRIEVED , THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUNDS: - 1. THE LEARNED CIT (A) ERRED IN COMPUTING THE INCOME OF SERVI CE CHARGES RECEIVED ON LETTING OF PREMISES UNDER THE HEAD INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM HOUSE PROPERTY. 2. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THE FACT THAT THERE WERE TWO SEPARATE AGREEMENTS ONE FOR LETTING OF PREMISES AND AN OTHER FOR THE SERVICES IN THE NATURE OF PROVIDING THE AMENITIES, CAR PARKING SPACE, CLEANING AND SWEEPING FACILITY INCLUDING THE USE OF LIFT AND OTHER SERVICES AND BOTH THE AGREEMENTS WERE EXECUTED AND TERMINATES ON THE SAME DAY. 3 I TA NO. 675 /MUM/2014 ASSESSMENT YEAR: 2009 - 2010 3. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THE FACT THAT THE RENDERING THE SERVICE ARE THE IDENTICAL TO USE OF PREMISES. 4. THE LEARNED CIT (A) ERRED IN CONCLUDING THAT THE ISSUE OF ALLOCATION OF EXPENSES WAS NOT A SUBJECT MATTER OF THE ASSESSMENT NOR THE ISSUE WAS EVER RAISED BY YOUR APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDING WITHOUT CONSIDERING THE FACT THAT YOUR APPELLANT HAS CLAIMED THE SAME VIDE LETTER DATED 23 - 11 - 2011 WHICH WAS PERSONALLY SUBMITTED DURING THE COURSE OF ASSESSMENT ON 29 - 11 - 2011 WHICH WAS PERSONALLY S UBMITTED DURING THE COURSE OF ASSESSMENT ON 29 - 11 - 2011. FURTHER THE APPELLANT HAS CLAIMED PROPORTIONATE DEDUCTION IN THE GROUNDS OF APPEAL FILED BEFORE THE LEARNED CIT (A). 5. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THE FACT THAT THE APPELLANT HAS INCUR RED THE EXPENSES OF WATER AND COMMON ELECTRICITY CHARGES SALARIES, REPAIRS, LIFT CLEANING AND SECURITY CHARGES AGAINST WHICH A SEPARATE RECOVERY OF SERVICE CHARGES WERE MADE FROM PARTIES TO WHOM THE PREMISES ARE GIVEN ON RENT. 6. THE LEARNED CIT (A) ERRED I N NOT ALLOWING THE CLAIM OF YOUR APPELLANT FOR PROPORTIONATE DEDUCTION OF EXPENSES FORM THE INCOME OF SERVICE CHARGES AS PER THE DIRECTION GIVEN BY THE HONBLE ITAT VIDE ORDER DATED 20 - 10 - 2008 PAS S ED UNDER THE APPEAL NO. ITA/3051 TO 3053/MUM/06 AND NO. 784 3/MUM/03 IN THE CASE OF THE APPELLANT FOR THE A.Y. 1998 - 99, 1999 - 2000, 2000 - 01 AND 2001 - 02 AND THE FACTS AND CIRCUMSTANCES ARE IDENTICAL WITH THIS CASE. 7. ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO ONE ANOTHER. 8. YOUR APPELLANT PRAYS THAT: (A) THE DEDUCTION OF PROPORTIONATE EXPENSES INCURRED AGAINST RESPECTIVE SOURCE OF RECEIPTS BE ALLOWED AS PER THE DIRECTION GIVEN BY THE HONBLE ITAT UNDER THE APPEAL NO. ITA/3051 TO 3053/MUM/06 AND NO. 7843/MUM/03 IN THE CASE OF THE APPELLANT FOR THE A.Y. 1998 - 99, 1999 - 200 0, 2000 - 01 AND 2001 - 02. 4 I TA NO. 675 /MUM/2014 ASSESSMENT YEAR: 2009 - 2010 (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAWAL ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL HEREIN AND TO SUBMIT STATEMENTS, DOCUMENTS AND PAPERS AS MAY BE CONSIDERED NECESSARY EITHER AT OR BEFORE THE HEARING OF APPEAL. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE DOES NOT WANT TO CONTEST GROUND NOS. 1 TO 7 OF THE APPEAL . IN VIEW OF THE SUBMISSIONS MADE BY THE LD. COUNSEL GROUND NOS. 1 TO 7 OF THE APPEAL ARE DISMISSED AS NOT PRESSED. 6. AS REGARDS GROUND NO. 8 (A) OF THE APPEAL, TH E LD. COUNSEL SUBMITTED THAT SIMILAR ISSUE HAS BEEN SETTLED BY THE ITAT VIDE ORDER DATED 20.10.2008 IN ASSESSEES OWN CASE ITA NO. 305 1 TO 3053/MUM/2006 AND ITA NO. 7843/MUM/03 FOR THE A.Y S . 1998 - 99 TO 2001 - 02 B Y SETTING ASIDE THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTION TO RE - COMPUTE THE TOTAL INCOME IN ACCORDANCE WITH THE DECISION OF THE HONBLE SUPREME COURT PASSED IN CIT VS. UNITED GENERAL TRUST LTD., 200 ITR 488 (SC) AND SABARKANTHA ZILLA KHARID V SANG LTD. VS. CIT 203 ITR 1027 (SC) . THE LD. COUNSEL FURTHER SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL MAY BE RESTORED BACK TO THE FILE OF THE ASSESSEE TO COMPUTE THE INCOME OF THE ASSESSEE AS PER THE DIRECTIONS GIVEN BY THE ITAT IN THE ASSESSEES OWN APPEAL S FOR THE A.Y. 1998 - 99 TO 200 1 - 0 2 . 7. THE LD. DEPARTMENTAL REPRESENTATIVE DID NOT OPPOSE THE SUBMISSION MADE BY THE LD. COUNSEL FOR THE ASSESSEE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL PLACED BEFORE US. WE NOTICE THA T IN ASSESSEES OWN APPEALS ITA NO. 3051 TO 3053/MUM/06 AND 7843/MUM/03 FOR A.Y. 1998 - 99 TO 2001 - 02, THE CO ORDINATE BENCH OF THE TRIBUNAL HAS RESTORED THE ISSUE TO THE FILE OF AO FOR NECESSARY COMPLIANCE. THE RELEVANT PORTION OF THE ORDER READ S AS UNDER: - 5 I TA NO. 675 /MUM/2014 ASSESSMENT YEAR: 2009 - 2010 5. IT IS NOT DISPUTED BEFORE US THAT THE THREE ITEMS REFERRED TO EARLIER NAMELY A SUM OF RS. 7,60,000/ - ON ACCOUNT OF TRANSFER FESS, RS. 10,56,057/ - ON ACCOUNT OF COMPENSATION FROM RENTING OF PREMISES AND RS. 36,070/ - ON ACCOUNT OF PENAL INT EREST COLLECTED FROM THE MEMBERS ARE LIABLE TO TAX AND NOT EXEMPT ON THE GROUND OF PRINCIPLE OF MUTUALITY. AS POINTED OUT EARLIER, ALL THESE AMOUNTS HAVE BEEN INCLUDED IN THE COMPUTATION OF INCOME. AS RIGHTLY POINTED OUT BY THE REVENUE AUTHORITIES, THE ASS ESSEE THOUGH HAVING INCLUDED THE ABOVE AMOUNTS IN THE GROSS RECEIPTS, HAS CLAIMED DEDUCTION OF THE ENTIRE EXPENSES AGAINST THE RECEIPTS. EXEMPTION UNDER SECTION 80P(2)(C) HAS ALSO BEEN CLAIMED ON THE GROSS RECEIPTS. THE ASSESSING OFFICER HAS OBSERVED THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE RELATING TO THE INCOME WHICH IS NOT CHARGEABLE TO TAX CANNOT BE SET OFF AGAINST THE TAXABLE INCOME. IT HAS FURTHER BEEN HELD THAT THE ASSESSEE IS ALSO ENTITLED TO DEDUCTION UNDER SECTION 80P(2)(C) TO THE EXTENT OF N ET INCOME BY WAY OF INTEREST EARNED FROM OTHER CO - OPERATIVE SOCIETIES. WHEREAS WE ARE IN AGREEMENT WITH THE VIEW EXPRESSED BY THE REVENUE AUTHORITIES THAT DEDUCTION UNDER SECTION 80P(2)(C) IS PERMISSIBLE TO THE ASSESSEE ONLY WITH RESPECT TO THE NET INCOME OF INTEREST AND THAT THE EXPENDITURE WHICH RELATES TO INCOME NOT LIABLE TO TAX CANNOT BE SET OFF AGAINST THE TAXABLE INCOME, WE ARE OF THE VIEW THAT THE TAXABLE INCOME OF THE ASSESSEE HAS GOT TO BE RECOMPUTED ON GROUPING OF EXPENDITURE AGAINST RESPECTIVE S OURCES OF RECEIPTS. IN CASE, IT IS NOT POSSIBLE TO BIFURCATE THE EXPENDITURE, THE ASSESSING OFFICER WOULD BE JUSTIFIED IN APPORTIONMENT OF THE EXPENDITURE BETWEEN TAXABLE AND NON - TAXABLE INCOME ON THE BASIS OF THE FOLLOWING DECISIONS OF THE HONBLE SUPREME COURT: - I) CIT VS. UNITED GENERAL TRUST LTD, 200 ITR 488 (SC) II) SABARKANTHA ZILLA KHARID V. SANGH LTD. VS. CIT, 203 ITR 1027 (SC). WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT (A) AS WELL AS THAT OF THE ASSESSING OFFICER AND RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DETERMINATION OF TAXABLE INCOME OF THE ASSESSEE AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IT IS CLARIFIED THAT THE ISSUE IS REMANDED TO THE ASSESSING OFFICER FOR THE LIMITED PURPOSE OF COMPUTATION OF THE TOTAL INCOME IN ACCORDANCE WITH 6 I TA NO. 675 /MUM/2014 ASSESSMENT YEAR: 2009 - 2010 THE DECISIONS OF THE SUPREME COURT REFERRED TO ABOVE AND DIRECTIONS CONTAINED IN THIS ORDER. 6. FOR THE ASSESSMENT YEARS 1998 - 99 TO 2000 - 01 FOR WHICH ASSESSMENTS HAVE BEEN REOPENED, SIMILAR ACTION IS JUSTIFIED. WE ACCORD INGLY SET ASIDE THE ORDERS OF CIT (A) AS WELL AS THAT OF ASSESSING OFFICER FOR THE AFORESAID ASSESSMENT YEARS ALSO IN REGARD TO DETERMINATION OF TAXABLE INCOME AND DIRECT THE ASSESSING OFFICER TO COMPUTE THE SAME KEEPING IN VIEW THE DIRECTIONS CONTAINED IN THIS ORDER FOR THE ASSESSMENT YEAR 2001 - 02. 9. THE ISSUE RAISED BY THE ASSESSEE IN THE PRESENT CASE IS SIMILAR TO THE COMMON ISSUE INVOLVED IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 1998 - 99 TO 200 1 - 0 2 DISCUSSED ABOVE. T HE C O ORDINATE BENCH OF THE TRIBUNAL HAS RESTORED THE ISSUE IN THE AFORESAID CASES TO THE FILE OF THE AO FOR COMPUTATION OF ASSESSEES INCOME IN ACCORDANCE WITH THE DECISIONS OF THE HONBLE SUPREME COURT REFERRED ABOVE . WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO ORDINATE BENCH, RESTORE THE ISSUE INVOLVED IN THIS CASE TO THE FILE OF AO TO COMPUTE THE INCOME OF THE ASSESSEE IN ACCORDANCE WITH THE DIRECTION S ISSUED BY THE COORDINATE BENCH VIDE ORDER DATED 20.10.2008 PASSED IN ASSESSEES CASE FOR THE ASSESSMENT YEARS 1998 - 99 TO 2001 - 02. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009 - 2010 IS PARTLY ALLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 26 TH APRIL , 2017 . SD/ - SD/ - ( D.K ARUNAKARA . RAO ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 26 / 0 4 / 2017 ALINDRA , PS 7 I TA NO. 675 /MUM/2014 ASSESSMENT YEAR: 2009 - 2010 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI