ITO 5(1)(4), MUMBAI V. HILL PROPERTIES LTD, MUMBAI

ITA 7051/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3704 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Department
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 20-11-2014
• Court: TRIBUNAL
• Department Lawyers: FARUKH IRANI
• Assessee Lawyers: S K MISRA
• Keywords: Benefit of exemption
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER ./I.T.A. NO.7051/M/2014 (AY: 2009 - 2010) ITO - 5(1)(4), AAYAKAR BHAVAN, R.NO.569, 5 TH FLOOR, M.K. ROAD, MUMBAI 400 020. / VS. M/S. HILL PROPERTIES LTD., HILL PARK ESTATE, A.G. BELL ROAD, MALBAR HILL, MUMBAI 400 006. ./ PAN : AABCH 7578 L ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI S.K. MISRA, DR / REVENUE BY : SHRI FARUKH IRANI, AR / DATE OF HEARING : 16.06.2016 / DATE OF PRONOUNCEMENT : 12 .08.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 20.11.2014 IS AGAINST THE ORDER OF THE CIT (A) - 9, MUMBAI DATED 13.12.2013 FOR THE ASSESSMENT YEAR 2011 - 2012. IN THIS APPEAL, ASSESSEE RAISED TWO GROUNDS AND THEY READ AS UNDER: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE SHARE TRANSFER FEES OF RS. 20 LAKHS NOMINEE COMPANY CHARGES OF RS. 29 LAKHS AND NON - REFUNDABLE SECURITY DEPOSIT OF RS. 70,000/ - RECEIVED BY THE ASSSESSEE COMPANY ARE EXEMPT FROM INCOME TAX ON PRINC IPLE OF MUTUALITY. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN NOT ADJUDICATING THE ADDITION MADE ON ALTERNATE GROUND THAT EVEN IF IT IS ASSUMED THAT THE PRINCIPLE OF MUTUALITY APPLIES TO THE ASSESSEE, THE SHARE TRANSFER FEES AND NOMINEE OCCUPANCY CHARGES ARE TAXABLE IN THE HANDS OF THE ASSESSEE AS IT HAS BEEN COLLECTED IN EXCESS AGAINST THE DIRECTIVE OF GOVT. OF MAHARASHTRA WHICH SHOWS THAT THE IMPUGNED INCOME IS TAINTED BY COMMERCIALITY. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN UNLISTED PUBLIC COMPANY, OWNING PREMISES ON WHICH FIVE RESIDENTIAL BUILDINGS ARE CONSTRUCTED. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 19,45,784/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 90,75,480/ - . DURING THE ASSESSMENT, AO NOTICED THAT ASSESSEE 2 COLLECTED (I) SHARE TRANS FEES OF RS. 20 LAKHS; (II) NOMINEE OCCUPANCY CHARGES OF RS. 29.75 LAKHS; (III) NON - REFUNDABLE SECURITY DEPOSIT O F RS. 70,000/ - AND (IV) TENNIS COURT FEES OF RS. 1,32,500/ - AND THE SAME WERE CLAIMED AS EXEMPT ON THE GROUND OF PRINCIPLE OF MUTUALITY. AO DENIED THE SAID CLAIMED BY HOLDING THAT THE PRINCIPLE OF MUTUALITY APPLIES TO THE COOPERATIVE BODIES ONLY. ASS ESSEE, BEING A COMPANY, IS NOT ENTITLED TO CLAIM THE BENEFIT OF EXEMPTION ON THIS GROUND. ACCORDINGLY, AO MADE THE ADDITIONS ON ACCOUNTS OF SHARE TRANSFER FEES OF RS. 20 LAKHS; NOMINEE OCCUPANCY CHARGES OF 29.75 LAKHS; SECURITY DEPOSIT FOR REPAIR OF RS. 7 0,000/ - AND TENNIS COURT FEES OF RS. 1,32,500/ - . AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) PARTLY ALLOWED THE APPEAL AND GRANTED RELIEF TO THE ASSESSEE ON ACCOUNTS OF THE SHARE TRANSFER FEES OF RS. 20 LAKHS NOMINEE COMPANY CHARGES OF RS. 29 .75 LAKHS AND NON - REFUNDABLE SECURITY DEPOSIT OF RS. 70,000/ - RECEIVED BY THE ASSSESSEE . AGGRIEVED WIT H THE SAID DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE TRIBUNAL, LD DR FOR THE REVENUE RELIED ON THE ORDER OF THE AO. 5. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE HEAVILY REL IED ON THE ORDER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE FURTHER MENTIONED THAT THE GROUNDS RAISED BY THE REVENUE ARE IDENTICAL TO THAT OF THE ONES ADJUDICATED BY THE ITAT, MUMBAI IN THE ASSESSEES OWN CASE VIDE ITA NO.2999/M/2012 (2009 - 2010), DATED 20.12.2013. A COPY OF THE SAID DECISION OF THE TRIBUNAL IS PLACED BEFORE US. FURTHER, ASSESSEE ALSO FILED VARIOUS DECISION OF THE TRIBUNAL IN ITS SUPPORT. IT IS THE PRAYER OF THE LD COUNSEL THAT CONSIDERING THE CO VERED NATURE OF THE ISSUES, THE GROUNDS RAISED BY THE REVENUE ARE REQUIRED TO BE DECIDED IN THE SAME LINES AS ADJUDICATED BY THE TRIBUNAL IN THE ABOVE CITED ASSESSEES OWN CASE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHOR ITIES AS WELL AS THE CITED DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE 3 (SUPRA), WHEREIN ONE US (AM) IS A PARTY TO THE SAID ORDER, AND ALSO THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE SAID DECISION OF THE TRIBUNAL (SUPRA), DATED 20.12.201 3, WE FIND, PARA 5 OF THE SAID TRIBUNALS ARE IS RELEVANT IN THIS REGARD. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SAME IS EXTRACTED AS UNDER: - 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) DATED 3.4.2013. ON PERUSAL OF THE SAID TRIBUNALS ORDER, WE FIND THAT PARA 4 IS RELEVANT IS RELEVANT IN THIS REGARD AND THE SAME READS AS UNDER: 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT ALL THE THREE ISSUES RAISED IN THIS APPEAL OF THE REVENUE ARE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDERS OF THE TRIBUNAL FOR THE EARLIER YEARS, WHEREIN SIMILAR ISSUES H AVE BEEN CONSISTENTLY DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE . IN ONE OF SUCH ORDERS PASSED FOR THE IMMEDIATELY PRECEDING AY I.E., 2007 - 2008, THE COORDINATE BENCH OF THIS TRIBUNAL VIDE ITS ORDER DATED 21.10.2011 PASSED IN ITA NO. 6381/M/2010 HAS HELD THAT TRANSFER FEES RECEIVED BY THE COMPANY BEING A MUTUAL CONCERN, WHETHER FROM OUT COMING OR INCOMING MEMBERS IS NOT LIABLE TO TAX BECAUSE OF PRINCIPLE OF MUTUALITY . THE TRIBUNAL ALSO HELD THAT THE REFUNDABLE SD HAVING BEEN COLLECTED BY THE ASSESSE E COMPANY FROM ITS MEMBERS ARE ALSO EXEMPT FROM TAX AS THE PRINCIPLES OF MUTUALITY ARE CLEARLY APPLICABLE TO THE SAID CHARGES . AS REGARD THE NOMINEE OCCUPANCY CHARGES, THE TRIBUNAL RELIED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF MIT TAL COURT PREMISES COOPERATIVE SOCIETY LTD. VS. ITO [2009] 184 TAXMAN 292 (BOM.) TO HOLD THAT PRINCIPLES OF MUTUALITY ARE APPLICABLE EVEN TO THE NOMINEE OCCUPANCY CHARGES ALTHOUGH THE SAME WERE RECEIVED FROM THE TENANTS WHO ARE NOT THE MEMBERS OF THE ASSESSEE COMPANY . AS THE ISSUES INVOLVED IN THE YEAR UNDER CONSIDERATION AS RAISED IN THE PRESENT APPEAL FILED BY THE REVENUE AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THAT OF AY 2007 - 2008, WE RESPECTFULLY ALLOW THE ORDER OF THE CO ORDINATE BENCH OF THIS TRIBUNAL PASSED IN ASSESSEES OWN CASE FOR THE AY 2007 - 2008 AND UPHOLD THE IMPUGNED ORDER OF THE LD CIT (A) GIVING RELIEF TO THE ASSESSEE ON THESE ISSUES. THE APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. 7. CONSIDERING TH E ABOVE, WE ARE OF THE OPINION THAT ALL THE THREE ISSUES RAISED BY REVENUE I.E., (I) SHARE TRANSFER FEES RECEIVED BY THE ASSESSEE COMPANY, ON TRANSFER OF FLATS; (II) NOMINEE OCCUPANCY CHARGES AND (III) NON - REFUNDABILITY OF SECURITY DEPOSITS ARE SQUARELY CO VERED, IN FAVOUR OF THE ASSESSEE, BY THE SAID ORDER OF THE TRIBUNAL (SUPRA) DATED 20.12.2013 . IT IS ALSO EVIDENT THAT SIMILAR ISSUES HAVE BEEN CONSISTENTLY DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. CONSIDERING THE SETTLED NATURE OF THE ISSUES IN VOLVED IN THE GROUNDS RAISED BY REVENUE, WE ARE OF THE OPINION THAT THEY SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNC ED IN THE OPEN COURT ON 1 2 T H AUGUST, 2016. S D / - S D / - ( C.N. PRASAD ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 2 .08.2016 4 . . ./ OKK , SR. PS / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI