M/s. MEHERINA CO. OP. HSG. SOCIETY, MUMBAI V. ITO 16(2), MUMBAI

ITA 7804/MUM/2004

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8966 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 24-01-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 29-10-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Keywords: Principle of natural justice
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI. BEFORE SHRI R.V.EASWAR, PRESIDENT AND SHRI R.K.PANDA, ACCOUNTANT MEMBER I.T.A. NO.7804/MUM/2004 (ASSESSMENT YEAR : 2000-01) MEHERINA CO-OP. HSG. SOCIETY LTD., C-51, NEPEAN SEA ROAD, MUMBAI-400 026. PAN:AAAAM3083G VS. THE INCOME TAX OFFICER- 16(2)(1), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. YOGESH THAR RESPONDENT BY : MR. SUMEET KUMAR, SR. DR O R D E R PER R.V.EASWAR, PRESIDENT: THIS IS AN APPEAL BY THE ASSESSEE RELATING TO THE ASSESSMENT YEAR 2000-01. THE ASSESS EE IS A CO- OPERATIVE HOUSING SOCIETY ASSESSED AS AN ASSOCIATIO N OF PERSONS. THE APPEAL ARISES OUT OF THE ASSESSMENT ORDER FRAME D ON 26.09.2003 UNDER SECTION 143(3) READ WITH SECTION 1 48 OF THE INCOME TAX ACT. 2. THE FIRST GROUND IS THAT THERE HAS BEEN A VIOLAT ION OF THE RULES OF NATURAL JUSTICE. THUS GROUND HAS NOT BEEN PRESSED AND IS DISMISSED AS SUCH. 3. THE SECOND GROUND IS AGAINST THE ADDITION OF RS.10,10,000/- AS INCOME FROM TRANSFER FEES. IT IS STATED THAT THESE ARE VOLUNTARY CONTRIBUTIONS RECEIVED FROM THE MEMBERS AT THE TIME OF TRANSFER OF THE FLAT. IT IS STATED THAT THE CONTRIBUTIONS HAVE BEEN MADE TOWARDS COMMON AMENITIES AND CONTING ENCY FOUND TO BE USED WHOLLY AND EXCLUSIVELY FOR THE BEN EFIT OF THE MEMBERS. THE TRANSFER FEES HAVE BEEN RECEIVED FROM THE TRANSFERORS OF TWO FLATS DURING THE RELEVANT PREVIO US YEAR. THE ITA NO.7804/MUM/04 2 QUESTION WHETHER SUCH TRANSFER FEES CAN BE ASSESSED IN THE HANDS OF THE HOUSING SOCIETY OR SHOULD BE ALLOWED E XEMPTION ON THE PRINCIPLE OF MUTUALITY HAS BEEN DECIDED IN FAVO UR OF THE ASSESSEE BY THE JUDGEMENT OF THE HONBLE BOMBAY HIG H COURT IN THE CASE OF SIND CO-OPERATIVE HOUSING SOCIETY VS. I TO (2009) 317 ITR 47. THERE ARE SEVERAL ORDERS OF THE MUMBAI BENCHES OF THE TRIBUNAL WHICH HAVE FOLLOWED THE AFORESAID JUDG EMENT AND DECIDED THE ISSUE IN FAVOUR OF THE CONCERNED ASSESS EES. A LIST OF SUCH ORDERS HAS BEEN GIVEN BY THE ASSESSEE IN THE F ORM OF A CHART AND THE COPIES OF SUCH ORDERS HAVE ALSO BEEN FILED. RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT AND CONSISTENT WITH THE V IEW TAKEN BY THE MUMBAI BENCHES OF THE TRIBUNAL, WE DIRECT THE ASSESSING OFFICER TO EXCLUDE THE AMOUNT OF RS.10,10,000/- FRO M THE ASSESSMENT. THE GROUND IS ALLOWED. 4. GROUND NO.3 RELATES TO THE ASSESSMENT OF RS.15,0 27/- RECEIVED BY THE ASSESSEE ON ACCOUNT OF GARDEN MAINT ENANCE. HERE ALSO THE PRINCIPLE OF MUTUALITY APPLIES AS HAS BEEN HELD BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASS ESSMENT YEAR 2001-02 AND 2003-04 IN ITA NO.7805/MUM/2004 AND ITA NO.5527/MUM/2006 RESPECTIVELY. COPIES OF THESE ORDE RS HAVE BEEN FILED IN THE PAPER BOOK. RESPECTFULLY FOLLOWIN G THEM, WE DIRECT THE ASSESSING OFFICER TO EXCLUDE THE GARDEN MAINTENANCE RECEIPTS FROM THE ASSESSMENT. THE GROUND IS ALLOWED . 5. THE FOURTH GROUND IS DIRECTED AGAINST THE ASSESS MENT OF INTEREST OF RS.6,55,265/- RECEIVED BY THE ASSESSEE. THE QUESTION IS WHETHER THE PRINCIPLE OF MUTUALITY APPLIES TO TH IS RECEIPT ALSO. THE VIEW TAKEN BY THE DEPARTMENTAL AUTHORITIES IS T HAT THE INTEREST IS RECEIVED FROM A THIRD PARTY AND HENCE T HE PRINCIPLE OF MUTUALITY DOES NOT APPLY. THIS VIEW HAS NOT FOUND F AVOUR WITH THE TRIBUNAL WHICH HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2001-02 AND 2003- 04 AS PER ITA NO.7804/MUM/04 3 THE ORDERS CITED SUPRA. THE ASSESSEE HAS ALSO CITED AND FILED THE COPIES OF FOUR ORDERS OF THE MUMBAI BENCHES OF THE TRIBUNAL IN WHICH THE SAME VIEW HAS BEEN TAKEN. RESPECTFULLY FO LLOWING THE ORDERS OF THE TRIBUNAL IN THE ASSESSEES OWN CASE A S ALSO THE OTHER ORDERS, WE HOLD THAT THE PRINCIPLE OF MUTUALI TY APPLIES TO THE RECEIPT OF THE INTEREST AND ACCORDINGLY DIRECT THE ASSESSING OFFICER TO EXCLUDE THE SAME FROM THE ASSESSMENT. TH E GROUND IS ALLOWED. 6. GROUND NO.5 HAS BEEN TAKEN WITHOUT PREJUDICE TO GROUND NOS. 2 TO 4. IT IS TO THE EFFECT THAT IF THE TRANSF ER FEES, GARDEN MAINTENANCE RECEIPTS AND INTERESTS ARE ASSESSABLE T O TAX, THE ASSESSING OFFICER SHOULD ALLOW DEDUCTION IN RESPECT OF THE EXPENDITURE INCURRED TO EARN THE SAME. SINCE WE HAV E HELD THAT THE AFORESAID THREE ITEMS OF RECEIPTS ARE EXEMPT ON THE PRINCIPLE OF MUTUALITY, THE QUESTION OF ALLOWING ANY EXPENDIT URE TO EARN THOSE RECEIPTS DOES NOT ARISE. ACCORDINGLY THE GRO UND IS DISMISSED AS ACADEMIC. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF JANUARY, 2011. SD/- ( R.K. PANDA ) SD/- ( R.V.EASWAR ) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DATED 24 TH JANUARY, 2011. SOMU COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-MC-XVI, MUMBAI. 4. THE CIT(A)-XVI, MUMBAI 5. THE DR J BENCH /TRUE COPY/ BY ORDE R ASSTT. REGISTRAR, I.T.A.T, MUMBAI