INCOME TAX OFFICER-23(2)(3), MUMBAI V. MIG CO-OPERATIVE HOUSING SOCIETY LIMITED , MUMBAI

ITA 756/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0416 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 07-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH JAN GP ANGI
• Keywords: Capital receipt; Capital Gains
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI AMARJIT SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 756/MUM/2018 ASSESSMENT YEAR: 2011 - 12 INCOME TAX OFFICER - 23(2)(3), ROOM NO. 110, 1 ST FLOOR, MATRU MANDIR, MUMBAI. VS. MIG CO - OPERATIVE HOUSING SOCIETY LTD., OFFICE SHED BEHIND D - 17, MIG COLONY, BANDRA - EAST, MUMBAI - 400051. PAN NO. AABAM0722B APPELLANT RESPONDENT REVENUE BY : MR. NARENDRA SINGH JAN GP ANGI, CIT DR ASSESSEE BY : MR. YOGESH THAR, AR DATE OF HEARING : 16/12 /2019 DATE OF PRONOUNCEMENT: 16/12/2019 ORDER PER N.K. PRADHAN, A . M . THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2011 - 12. THE APPEAL IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 33, MUMBAI [IN SHORT CIT(A)] ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUND RAISED BY THE REVENUE IN THIS APPEAL IS THAT THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE AMOUNT RECEIVED ON ACCOUNT OF CORPUS FUND AMOUNTING TO RS.3,00,00,000/ - IS TAXABLE UNDER THE HEAD CAPITAL GAINS INSTEAD OF INCOME FROM OTHER SOURCES. MIG CO - OPERATIVE HOUSING ITA NO. 756/MUM/2018 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO - OPERATIVE HOUSING SOCIETY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) ASKED THE ASSESSEE TO EXPLAIN WHY THE AMOUNT OF RS.3,00,00,000/ - RETAINED BY IT AS CORPUS SHOULD NOT BE TAXED . THE ASSESSEE FILED A REPLY. HOWEVER, THE AO WAS NOT CONVINCED WITH THE REPLY OF THE ASSESSEE FOR THE REASON THAT THE CORPUS FUND CANNOT BE A CAPITAL RECEIPT AS THE CONTRIBUTION OF CAPITAL OF AN ORGANIZATION SHOULD COME FR OM THE MEMBERS AND AS THE SUM OF RS.3,00,00,000/ - WAS NOT RECEIVED IN ACCORDANCE WITH THE PERMISSIBLE PARAMETERS OF THE LAW APPLICABLE TO THE SOCIETY AND ALSO NOT IN RESPECT OF GENERATING ANY ASSET AND IS JUST A RECEIPT OF NON - RECURRING THE NATURE, THE SAM E IS TO BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCE. 4. IN APPEAL, THE LD. CIT(A) VIDE ORDER DATED 02.11.2017 HELD THAT : 95. I FIND THAT THE SAME ISSUE CAME FOR CONSIDERATION OF THE HON'BLE TRIBUNAL THE CASE OF MIG CO - OPERATIVE HOUSING SOCIETY GROUP - II LTD. VS ITO (SUPRA), WHEREIN THE SAID SOCIETY HAD RECEIVED A FUND OF RS.3.50 CRORE FROM THE DEVELOPER IN THE RE - DEVELOPMENT SCHE ME. NO TAX WAS OFFERED ON THIS AMOUNT BY CLAIMING IT AS CORPUS FUND OF THE SOCIETY. THE AO, IN THE ASSESSMENT ORDER, TREATED IT AS 'INCOME FROM OTHER SOURCES'. HONBLE TRIBUNAL AFTER APPRECIATION OF THE FACTS HAS HELD THAT THE SAID AMOUNT OF RS.3.5 CRORE R ECEIVED DURING THE YEAR IS TAXABLE BUT UNDER THE HEAD CAPITAL GAIN. RESPECTFULLY FOLLOWING THE DECISION IN THE ABOVE CASE, IT IS HELD THAT PAYMENT OF RS.3 CRORE RECEIVED BY APPELLANT FROM THE DEVELOPER CANNOT BE TREATED AS PAYMENT TOWARDS CORPUS OF THE SOC IETY AND THE SAME WILL BE TAXABLE DURING THE INSTANT YEAR UNDER THE HEAD 'CAPITAL GAIN INSTEAD OF 'INCOME FROM OTHER SOURCES'. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ABOVE ISSUE HAS BEEN DECIDED BY THE ITAT J BENCH, MUMBAI IN AS SESSEES OWN CASE FOR THE IMPUGNED ASSESSMENT YEAR IN ITA NO. 492/MUM/2018. MIG CO - OPERATIVE HOUSING ITA NO. 756/MUM/2018 3 THE LD. DEPARTMENTAL REPRESENTATIVE (DR) ALSO STATES THAT THE ABOVE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE SAID ORDER OF THE TRIBUNAL. 6. WE HAVE HEARD THE RIVA L SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. IN ITA NO. 484/M/2018, THE TRIBUNAL VIDE ORDER DATED 31.07.2017 OBSERVED THAT THE DEVELOPER HAD MADE PAYMENTS TO THE SOCIETY AS WELL AS TO THE MEMBERS A ND THEY HAD OFFERED THE AMOUNTS RECEIVED BY THEM FOR TAXATION; ONCE THE MEMBERS HAD SHOWN THE INCOME RECEIVED BY THEM IN THEIR HANDS THERE CANNOT BE ANY JUSTIFICATION FOR TAXING THE SAME IN THE HANDS OF THE SOCIETY ; NO DOUBLE TAXATION AND NO DOUBLE DEDUCTION IS ONE OF THE WELL RECOGNIZED AND FUNDAM ENTAL PRINCIPLES OF TAXATION ; SIGNING OF AGREEMENT BY THE ME MBERS OR SOCIETY CANNOT BE BASE FOR TAXING OF INCOME ; AS PER THE SCHEME OF THE ACT, INCOME RECEIVED BY ANY PERSON OR INCOME ACCRUED TO HIM HAS TO BE TAXED; IN THE CASE UNDER CONSIDERATION, INCOM E WAS RECEIVED BY THE MEMBERS AND THEY HAD OFFERED THE SAME FOR TAXATION. THE TRIBUNAL, BY FOLLOWING THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. RAJ RATAN CO - OP. HOUSING SOCIETY LTD . (ITA NO. 2292 OF 2001) AND THE ORDER OF THE CO - ORDINATE BENCH IN THE CASE OF MIG CO - OP. HOUSING SOCIETY GROUP - II LTD. V. ITO (ITA NO. 896/MUM/2016) DELETED THE ADDITION OF RS.139,16,46,972/ - AS SHORT TERM CAPITAL GAINS. THE TRIBUNAL FURTHER OBSERVED THAT THE GROUND NUMBER 10 TO 13 IN ITA NO. 492/M/2018 WHICH RELATE TO TAXING RS.3,00,00,000/ - RECEIVABLE BY THE ASSESSEE TOWARDS THE CORPUS AS CAPITAL GAINS ARE NOTHING BUT ALTERNATIVE GROUNDS. ACCORDINGLY, IT HELD THAT AS THE RELIEF HAS BEEN GIVEN TO THE ASSESSEE ON MERITS, THE DISCUSSI ON IN THESE GROUNDS BECOME ACADEMIC. MIG CO - OPERATIVE HOUSING ITA NO. 756/MUM/2018 4 7. CONSIDERING THE ABOVE ORDER OF THE CO - ORDINATE BENCH, WE DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 16/12/2019. SD/ - SD/ - ( AMARJIT SINGH ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 16/12/2019 RAHUL SHARMA, SR. P.S. 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 . /ASSISTANT REGISTRAR ) ITAT, MUMBAI