TECHNOPOLIS CO-OP. PREMISES SOCIETY LTD., MUMBAI V. DCIT 25 (1), MUMBAI

ITA 7079/MUM/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 9391 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 07-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILASH GAIKWAD
• Keywords: Opportunity of being heard
• Section: 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, M UMBAI BEFORE SHRI SHAMIM YAHYA, AM ITA NO.7079/MUM/2018 (ASSESSMENT YEAR: 2014-15) TECHNOPOLIS CO-OP. PREMISES SOCIETY LTD. TECHNOPOLIS KNOWLEDGE PARK, MAHAKALI CAVES ROAD, CHAKALA, ANDHERI (E), MUMBAI-400 093 VS. DY. CIT-25(1) MUMBAI PAN/GIR NO. AACAT 1104 H ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI SATISH MODY RESPONDENT BY : SHRI KAILASH GAIKWAD DATE OF HEARING : 14.10.2020 DATE OF PRONOUNCEMENT : 04.01.2021 O R D E R PER SHAMIM YAHYA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST ORDER OF LEARNED CIT (A)-53, MUMBAI DATED 07.09.2018 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2. THE GROUNDS OF APPEAL READ AS UNDER: BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, TECHNOPOLIS PREMISES CO- OPERATIVE SOCIETY LTD. (HEREINAFTER REFERRED AS APP ELLANT) RESPECTFULLY CRAVES LEAVES TO PREFER AN APPEAL AGAINST THE ORDER DATED SEPTEMBER 7, 2018 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 53, UNDER SECTION 253 OF THE INCOME TAX INCOME TAX ACT, 1961, 1961 (ACT) ON THE FOLLOWING GROUND: GROUND NO.1: ADDITION IN RESPECT OF RENT INCOME REC EIVED 1.1 ON THE FATS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED COMMISSIONER OF (APPEAL)- 53, (LEARNED CIT(A)) HAS ERRED IN ADDING A SUM OF RS.11,78,100/- ON ACCOUNT OF RENT INCOME RECEIVED BY THE APPELLANT FROM TWO OF I TS MEMBERS UNDER SECTION 22 OF THE INCOME TAX ACT,1961 (ACT'). 1.2 IN DOING, SO THE LEARNED CIT(A) ERRED IN THE DISREG ARDING THE CONCEPT OF MUTUALITY. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING O FFICER CALLED FOR THE DETAILS OF INCOME AND EXPENDITURE INCURRED DURING THE YEAR. IT WAS FOUND THAT THE ASSESSEE HAD 2 ITA NO. 7079/MUM/2018 (A.Y. 2014-15) RECEIVED RENT OF RS.11,78,100/- FROM M/S. SAMSARA S HIPPING PVT. LTD. AND M/S. TATA POWER CO. LTD. WHICH WAS NOT OFFERED TO TAX. HOWEVE R, ON SIMILAR FACTS, RS.2,00,000/- RECEIVED FOR GYM CHARGES AND RS.2,000/- AS RENT FRO M M/S. TATA POWER CO. LTD. WAS OFFERED TO TAX. FOR NOT OFFERING OF RS.11,78,100/- TO TAX, THE ASSESSEE CLAIMED THAT THESE WERE THE CONTRIBUTION OF THE MEMBERS, WHICH CANNOT BE TREATED AS INCOME CHARGEABLE TO TAX. THE A.O. HELD THAT PAYMENTS RECEIVED FROM SAME ENTITY WAS NOT OFFERED TO TAX IN ONE INSTANCE AND CLAIMED NOT TAXABLE IN ANOTHER INSTANC E WHICH CANNOT BE ALLOWED. THE A.O. ALSO DID NOT ACCEPT THE CLAIM OF MUTUALITY IN RESPE CT OF THE PAYMENT RECEIVED FROM THE TWO PARTIES. ACCORDINGLY, THE AMOUNT OF RS.11,78,100/- WAS ADDED TO THE INCOME. THE A.O. OBSERVED THAT THE LEASING OUT OF TWO PREM ISES TO TWO MEMBERS PRECLUDE THE OTHER MEMBER FROM ENJOYING THE PRIVILEGE GIVEN TO THEM BY THE APPELLANT AND THAT THERE IS NO QUALIFICATION OF LEASE TO RESTRICT THIS PRIVILEGE ALLOWING BY WAY OF ROTATION OR LOTTERY OR ANY OTHER MEANS BY WHICH ALL THE MEMBERS OF THE APPELLANT GETTING EQUAL OPPORTUNITY FOR ENJOYING THIS PRIVILEGE. HENCE, THE A.O. CONCLUDED THAT THE CONCEPT OF MUTUALITY DOES NOT APPLY TO THE TRANSACTION OF LEAS ING OUT TWO PREMISES TO ITS TWO MEMBERS. 4. UPON ASSESSEES APPEAL, THE LEARNED CIT APPEALS REJECTED THE ASSESSEES CONTENTION BY OBSERVING AS UNDER: 6. FROM THE BACKGROUND DETAILS CALLED, AS PER THE A PPELLANT, THE TECHNOPOLIS KNOWLEDGE PARK (TKP) BUILDING IS A JOINT VENTURE BE TWEEN M/S. NELCO LTD. (LAND OWNER) AND M/S. TATA HOUSING DEVELOPMENT COMPANY LTD. (DEV ELOPER). THE PROPERTY COMPRISES OF BUILT-UP AREA OF 351805 SQ. FT. WITH 121 UNITS. IT COMPRISES OF A BASEMENT, GROUND AND FIVE FLOORS. THE PROJECT COMMENCED IN 1997 AND TKP WAS REGISTERED AS TECHNOPOLIS PREMISES CHS LTD. IN 2010. 7. IT IS NOTED THAT THE AMOUNT OF RS.11,78,100/- IS REFLECTED UNDER RENT AND OTHER CHARGES UNDER CONTRIBUTION FROM MEMBERS IN SCHEDUL E I OF THE INCOME AND EXPENDITURE ACCOUNT. THE APPELLANT HAS NOT ADDRESSED WHY, HOW A ND WHAT PREMISES WERE RENTED TO M/S.SAMSARA SHIPPING PVT. LTD. AND M/S. TATA POWER CO. LTD. HOW AND WHY OTHER MEMBERS OF THE SOCIETY DO NTO HAVE ACCESS TO THE FA CILITIES RENTED IS NOT DISCLOSED. THE OTHER INCOME DOES INCLUDE RENTAL INCOME WHICH IS OFFERED TO TAX. WHILE THE MUTUALITY PRINCIPLE IS WELL UNDERSTOOD, THE APPELLANT HAS NOT SHOWN WITH FACTUAL DETAILS HOW THE SAME IS APPLICABLE TO THESE RENTS. THESE MEMBERS AR E NOT ENTITLED TO THE CONCERNED PROPERTY BASED ON THEIR OWNERSHIP AS IS APPARENT FR OM THE FACT THAT THE AMOUNT CHARGED IS RENT AND NOT AS MAINTENANCE CHARGES FOR INSTANCE. J UST BECAUSE IT IS PAID BY A MEMBER DOES NOT MAKE IT COVERED UNDER THE PRINCIPLE OF MUT UALITY. THE GROUND OF APPEAL IS THEREFORE DISMISSED. 3 ITA NO. 7079/MUM/2018 (A.Y. 2014-15) 5. AGAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL BEFOR E THE ITAT. 6. LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED TH E FOLLOWING IN SUPPORT OF THE CLAIM THAT RENT RECEIVED IS EXEMPT ON THE PRINCIPLE OF MUTUALITY. THE ASSESSEE HAS ALSO FILED THE FOLLOWING DOCUMENTS: 1. JUDGEMENT A. VENKATESH PREMISES COOPERATIVE SOCIETY LIMITED HONBLE SUPREME COURT JUDGEMENT ON THE PRINCIPLE OF MUTUALITY B. LOKHANDWALA RESIDENCY TOWERS CHS LTD. HONBLE ITAT MUMBAI FOR THE ISSUE THAT IF RENT IS RECEIVED FROM THE MEMBERS THE PRINCIPLE OF MUTUALITY APPLIES. 2. RENTAL AGREEMENT: A. LETTER ATED 26.03.2012 FROM TATA POWER FOR LEASI NG THREE GALAS. B. LETTERS DATED 01.07.2010 FROM SAMSARA SHIPPING P RIVATE LIMITED FOR RENTING OF SPACE. 7. I HAVE HEARD BOTH THE PARTIES AND CAREFULLY PERU SED THE RECORDS. UPON CAREFUL CONSIDERATION I FIND THAT ASSESSEE HAS SUBMITTED CE RTAIN DETAILS IN SUPPORT OF ITS CLAIM. THESE HAVE NOT BEEN DISCUSSED IN THE ORDERS OF THE AUTHORITIES BELOW. THE LEARNED CIT APPEALS HAS RAISED CERTAIN QUERIES IN HIS APPELLATE ORDER. IT IS NOT DISCERNIBLE THAT HE HAS CONFRONTED THE ASSESSEE WITH THE SAME. HE HAS WRITT EN IN HIS ORDER THAT ASSESSEE HAS NOT SHOWN FACTUAL DETAILS. IN MY CONSIDERED OPINION, UN LESS CIT APPEAL PUTS IT ACROSS TO THE ASSESSEE, THE ASSESSEE CANNOT COMPLY WITH THE LEARN ED CIT APPEALS QUESTIONS WHICH ARE IN CIT APPEALS MIND. IT IS FURTHER NOTED AS ABOVE THAT LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED CERTAIN MATERIALS INCLUDING THE RENTAL AG REEMENTS, COPIES OF BYLAWS , A SKETCH OF THE RENTED PORTION AND CERTAIN CASE LAWS ALSO. 8. I FURTHER NOTE THAT THE ASSESSING OFFICER HAS WO NDERED AS TO HOW THE ASSESSEE HAS NOT EXPLAINED HOW ON SIMILAR REASONING ASSESSEE HAS NOT TREATED THE GYM CHARGES AND RENT OF RS.2 LACS RECEIVED FROM TATA POWER AS EXEMP T. I FIND THAT NO EXPLANATION IN THIS REGARD IS ON RECORD. FURTHERMORE, THE ASSESSEE HAS TRIED TO SUBMIT THAT THE RENTAL INCOME DERIVED BY IT IS EQUIVALENT TO RENT RECEIVED BY A C LUB FROM RENTING ITS ROOMS. IN THIS REGARD, THE OBSERVATION OF THE CIT APPEALS IS GERMA NE THAT IT IS NOT BROUGHT ON RECORD AS TO HOW OTHER MEMBERS CAN ALSO TAKE THE SAID PREMISES O N RENT WHEN THE SAME IS LET OUT THROUGHOUT TO THE SAME PARTY. 4 ITA NO. 7079/MUM/2018 (A.Y. 2014-15) 9. IN MY CONSIDERED OPINION, THESE DOCUMENTS REFERR ED HEREIN ABOVE NEED TO BE REMITTED TO THE FILE OF LEARNED CIT APPEALS TO EXAM INE THE ISSUE AFRESH. ACCORDINGLY, I REMIT THE ISSUE THE FILE OF LEARNED CIT APPEALS. NE EDLESS TO ADD, THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 10. IN THE RESULT, THE APPEAL BY THE ASSESSEE STAND S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1962, BY PLACING THE DETAILS ON THE NOTICE BOARD ON 04.01.20 21 SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI; DATED : 04.01.2021 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI