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

ITA 7198/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7403 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: misc
• Appeal Filed On: 07-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: FARUKH IRANI

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , AM & SH. SANDEEP GOSAIN, JM ./ I.T.A. NO 7198/MUM/2016 ( / ASSESSMENT YEAR: 2013 - 14 ) ITO 5(1)(4 ) , R. NO. 509 , 5 TH FLOOR, AAYAKARBHAVAN, M.K. ROAD, MUMBAI - 400020 . / VS. HILL PROPERTIES LTD. HILL PARK ESTATE, A. G. BELL ROAD, MALABAR HILL, MUMBAI - 400006 . ./ ./ PAN NO. AA BCH7578L ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI M. C. OMI NINGSHEN, DR / RESPONDENTBY : SHRI FARUKHIRANI, AR / DATE OF HEARING : 16 .04 .1 8 / DATE OF PRONOUNCEMENT : 01.05.18 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE REVENUE IS AGAINST THE ORDER OF LD. CIT (APPEAL) 10 , MUMBAI DATED 2 6.09.16 F OR AY 20 13 - 14 ON THE GROUNDS MENTIONED HEREIN BELOW: - 2 I.T.A. NO. 7198 /MUM/201 6 HILL PROPERTIES LTD. 1. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LDCIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE WITHOUT CONSIDERING THE FACTS THAT THE PRINCIPLES OF MUTUALITY APPLIES ONLY TO CO - OPERATIVE SOCIETIES AND DOES NOT APPLY TO CORPORATE ENTITY. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LDCIT(A) HAS ERRED IN HOLDING THAT SHARE TRAN SFER FEES OF RS. 25,50,000/ - ON TRANSFER OF FLATS, NOMINEE OCCUPANCY CHARGES OF RS. 10,00,000/ - FROM NON - MEMBERS (TENANTS) AND NON - REFUNDABLE SECURITY DEPOSIT OF RS. 3,27,500/ - FOR REPAIRS TO FLATS RECEIVED BY THE ASSESSEE COMPANY ARE EXEMPT FROM INCOME - TA X ON THE PRINCIPAL OF MUTUALITY WHICH APPLIES ONLY TO CO - OPERATIVE SOCIETIES AND DOES NOT APPLY TO A CORPORATE ENTITY?' 3. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LDCIT(A) HAS ERRED IN NOT ADJUDICATING THE ADDITION MADE ON ALTERN ATE GROUND THAT EVEN IF IT IS ASSUMED THAT THE PRINCIPAL 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? 3 I.T.A. NO. 7198 /MUM/201 6 HILL PROPERTIES LTD. 2. THE B RIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN UNLISTED PUBLIC COMPANY, OWING PREMISES ON W HICH FIVE RESIDENTIAL BUILDINGS ARE CONSTRUCTED. EVERY MEMBER OF THE ASSE SSEE COMPANY IS ENTITLED TO RENT FREE OCCUPATION OF A FLAT AND IS OBLIGED TO PAY A DUE PROPORTION OF ALL EXPENSES AND OUTGOINGS NECESSARY FOR THE MAINTENANCE, UPKEEP, RUNNING AND MANAGEMENT OF THE COMPANYS PROPERTY. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED 20.09.13 DECLARING TOTAL INCOME AT RS. 25,17,465/ - . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND AFTER SERVING STATUTORY NOTICES AND SEEKING REPLY OF THE ASSESSEE, ORDER OF ASSESSMENT U/S 143(3)WAS PASSED ON 30.09.15 BY AO T HEREBY DETERMINING TOTAL INCOME AT RS. 65,05,420/ - BY MAKING ADDITION S/DISALLOWANCES. AGGRIEVED BY THE ORDER OF AO , THE ASSESSEE PREFERRED THE APPEAL BEFORE LD. CIT AND THE LD. CIT (A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES PARTLY ALLOWED THE APPEA L FILED BY THE ASSESSEE. 4 I.T.A. NO. 7198 /MUM/201 6 HILL PROPERTIES LTD. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREINABOVE. GROUND NO. 1 TO 3 . 3. SINCE A LL THE GROUNDS RAISED BY THE REVENUE ARE INTER - RELATED AND INTER - CONNECTED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN ALLOWING THE APPEAL OF THE ASSESSEE WITHOUT CONSIDERING THE FACTS THAT THE PRINCIPLES OF MUTUALITY APPLIES ONLY TO CO - OPERATIVE SOCIETIES AND DOES NOT APPLY TO CORPORATE ENTITY , T HEREFORE , WE T HOUGHT IT FIT TO DECIDE ALL THE ABOVE GROUNDS OF THE PRESENT CONSOLIDATED ORDER. 4. WE HAVE HEARD THE COUNSEL FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS ORDERS PASSED BY THE REVENUE AUTHORITIES. W E FIND T HAT LD. CIT(A) HAS DECIDED THE ABOVE ISSUES RAISED BY THE REVENUE IN PARA NUMBER 2 TO 4 OF ITS ORDER. WE FIND THAT LD. CIT(A) AFTER APPRECIATING THE FACTS OF THE PRESENT CASE AND WH ILE RELYING UPON THE ORDERS OF 5 I.T.A. NO. 7198 /MUM/201 6 HILL PROPERTIES LTD. HONBLE ITAT HAD RIGHTLY ALLOW ED THE GROUNDS RAISED BY THE ASSESSEE. AFTER CAREFUL CONSIDERATION OF THE FACTS , WE FIND THAT THERE ARE SERIES OF ORDERS PASSED IN FAVOUR OF ASSESSEE BY THE HONBLE ITAT AND EVEN THE HONBLE ITA T IN APPEAL FILED BY THE REVENUE IN ITA NO. 7051/MUM/2014 FOR ASSESSMENT YEAR 2009 - 10 DECIDED ON 12.08.16, HAS CATEGORICALLY HELD THAT ALL THE THREE ISSUE RAISED BY THE REVE NUE I.E. SHARE TRANSFER FEE RECEIVED BY THE ASSESS EE COMPANY ON TRANSFER OF FLAT, NOMINEE OCCUPANCY CHAR GES AND NON - REFUNDABLE SECURITY DEPOSITS ARE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. IT WAS CATEGORICALLY HELD BY THE LD. CIT(A) THAT SIMILAR ISSUE S HAD ALREADY BEEN DECIDED BY THE T RIBUNAL IN FAVOUR OF ASSESSEE AND RIGHTLY RELIED UPON THE ORDERS PASSED BY THE CO ORDINATE B ENCH OF HONBLE ITAT IN ASSESSEE'S OWN CASE . T HEREFORE , CONSIDERING THE FACTS OF THE PRESENT CASE, WE ARE OF THE OPINION THAT SINCE THE COORDINATE BENCH OF HONBLE ITAT HAD ALREADY DECIDED THE ISSUE IN FAVOUR OF ASSESSEE AND THEREFORE RESPECTFU LLY FOLLOWING THE ORDERS OF THE COORDINATE BENCH AND IN 6 I.T.A. NO. 7198 /MUM/201 6 HILL PROPERTIES LTD. ORDER TO MAINTAIN JUDICIAL CONSISTENCY AND JUDICIAL DISCIPLINE , WE DISMISS THE SE GROUND S RAISED BY THE REVENUE. 5 . IN THE NET RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST MAY , 2018 SD/ - SD/ - ( R . C. SHARMA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 01 . 0 5 .201 8 SR.PS . DHANANJAY / 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 F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI