OBEREY MORRIS, MUMBAI V. ITO 19(3)(3), MUMBAI

ITA 8008/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9456 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 19-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 148

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R.K.GUPTA , J M ITA NO. 8008 / MUM/ 20 1 0 ( ASSESSMENT YEA R : 200 5 - 20 0 6 ) OBEREY MORRIS, 501, HILL GLADE, 7 - A, PALI ROAD, BANDRA (WEST), MUMBAI - 50 VS. ITO 19 (3 )(3) , MUMBAI PAN/GIR NO. : AA FPM 7332 L ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE B Y : MR. VIPUL J. SHAH /REVENUE BY : MR. MOHIT JAIN DATE OF HEARING : 3 RD DEC . , 2012 DATE OF PRONOUNCEMENT : DEC. ,2012 O R D E R THIS IS AN APPEAL PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 20 - 8 - 2010 OF LEANED CIT(A) - 3 0 , MUMBAI RELATING TO THE ASSESSMENT YEAR 200 5 - 0 6 . 2. TH E ASSESSEE IS OBJECTING THE INACTION ON THE PART OF THE LEARNED CIT(A) IN CONFIRMING THE DISALLOWANCE MADE UNDER SECTION 54EC AND NOT DISPOSING OF THE ALTERNATIVE GROUND THAT INCOME HAS ALREADY BEEN ASSESSED IN THE HANDS OF THE ASSESSEE. 3 . THE ASSESSEE IS A REGISTERED MEMBER OF ONE HILL GLADE COOPERATIVE HOUSING SOCIETY LIMITED, SITUATED AT BANDRA. THE SOCIETY ENTERED INTO AN AGREEMENT WITH ON E M/S K. BHATIA ENTERPRISES ON IT A NO. 8008 /20 1 0 2 20 - 12 - 2002 FOR GRANT OF DEVELOPMENT RIGHTS. IN CONSIDERATION FOR THE SAID DEVELOPMENT RIGHTS, THE SAID DEVELOPER AGREED TO REPAIR SOCIETYS BUILDING AND TO PAY A SUM OF RS.1,40,12,700/ - TO THE SOCIETY. IT WAS MUTUALLY AG REED BY THE SOCIETY AND THE SAID DEVELOPER THAT OUT OF TOTAL AMOUNT OF RS. 1,40,12,700/ - , A SUM OF RS. 1,00,000/ - WAS TO BE PAID DIRECTLY TO THE SOCIETY AS CORPUS FUND AND BALANCE AMOUNT OF RS. 1,39,12,700/ - WAS AGREED TO BE DISTRIBUTED AMONG 12 MEMBERS OF TH E SOCIETY AND WAS TO BE PAID DIRECTLY TO EACH OF THE 12 MEMBERS IN PROPORTION OF THEIR AREA IN THE SOCIETYS BUILDING. ACCORDINGLY, THE DEVELOPERS HAD PA I D CONSIDERATION TO EACH OF THE MEMBERS DIRECTLY. BY VIRTUE OF MEMBERSHIP IN THE SOCIETY THE ASSESSEE HA D ALSO RECEIVED AN AMOUNT IN INSTALLMENTS FROM THE SAID DEVELOPER. DURING THE YEAR, THE ASSESSEE HAD RECEIVED A SUM OF RS. 1,00,000/ - ON 20 - 5 - 2004 , RS .2, 87,700/ - ON 13 - 7 - 2004 AND RS. 2,87,700/ - ON 4 - 1 - 2005 , TOTALING TO RS. 6,75,400/ - . SINCE THE AMOUNT WAS REC EIVED BY THE ASSESSEE DURING THE PERIOD RELEVANT TO THE A.Y. 2005 - 06, THE SAME WAS CONSIDERED AS CAPITAL GAINS IN THE A.Y.2005 - 2006 AND ACCORDINGLY THE SAME WAS OFFERED AS INCOME FROM CAPITAL GAINS. THE ASSESSEE HAD INVESTED THE MONEY IN BONDS ELIGIBLE U NDER SECTION 54EC OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE AMOUNT OF RS. 1,00,000/ - AND RS. 2,87,700/ - RECEIVED BY THE ASSESSEE ON 20 - 5 - 2004 AND 13 - 7 - 2004 RESPECTIVELY, HAVE NOT BEEN INVESTED WITHIN SIX MONTHS PERIOD IN SPECIFIED BONDS AS PER SECTION IT A NO. 8008 /20 1 0 3 54EC OF THE ACT FOR CLAIMING EXEMPTION. ACCORDINGLY, AN EXPLANATION WAS SOUGHT FROM THE ASSESSEE. 4 . IN RESPONSE, THE ASSESSEE FILED ITS REPLY, HOWEVER, THE ASSESSING OFFICER FOUND THAT AS PER THE PROVISION OF LAW, THE AMOUNT HAS TO BE INVESTED WITHIN SIX MONTHS AFTER THE RECEIPT OF THE AMOUNT. ACCORDINGLY, HE FOUND THAT THE AMOUNT OF RS. 3,87,700/ - WAS RECEIVED, HOWEVER, THE SAME WAS NOT INVESTED WITHIN SIX MONTHS PERIOD FOR CLAIMING DEDUCTION UNDER SECTION 5 4EC. ACCORDINGLY, TO THIS EXTENT, THE EXEMPTION UNDER SECTIO N 54EC WAS NOT GRANTED. 5 . LEARNED CIT(A) ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 6 . AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, I FOUND THAT THE ASSESSIN G OFFICER AND CIT(A) WERE REASONABLE IN DENYI NG THE EXEMPTION UNDER SECTION 54EC AS THE SAME WAS NOT DEPOSITED WITHIN THE PERIOD OF SIX MONTHS FOR CLAIMING THE EXEMPTION UNDER SECTION 54EC OF THE ACT. ACCORDINGLY, I CONFIRM THE ACTION OF THE LEARNED CIT(A) . 7 . HOWEVER, I FOUND MERIT IN THE ALTERNATIVE GROUND, WHICH WAS NOT DISPOSED BY THE LEARNED CIT(A) THAT THE ENTIRE AMOUNT HAS BEEN ADDED IN THE HANDS OF THE SOCIETY AS THE INCOME AND, THEREFORE, THE SHARE RECEIVED BY THE MEMBER OF THE SOCIETY SHOULD NOT BE T AXED IN THEIR HANDS. A PROCEEDING UNDER SECTION 148 WAS INITIATED IN THE CASE OF SOCIETY AND THE ENTIRE AMOUNT OF RS. 1 . 40 CRORE S OR ODD WAS ADDED AS IT A NO. 8008 /20 1 0 4 INCOME OF THE SOCIETY. LEARNED CIT(A) ALLOWED THE APPEAL OF THE SOCIETY IN PART THAT PART OF THE RECEIPT HAS ALREADY BEEN TAXED IN THE HANDS OF THE REGISTERED MEMBER AND TO THAT EXTENT, THE RELIEF WAS GRANTED TO THE SOCIETY. AS INFORMED BY THE LEARNED AR, APPEAL OF THE DEPARTMENT IS PENDING BEFORE THE TRIBUNAL . 8 . IN VIEW OF THE ABOVE FACTS, I RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO PASS A FRESH ORDER AFTER THE DECISION OF THE TRIBUNAL IN THE CASE OF THE SOCIETY. IF THE TRIBUNAL HELD THAT ENTIRE AMOUNT IS TAXABLE IN THE HANDS OF THE SOCIETY, THEN OF COURSE THE SHARE OF THE REGISTERED MEMBERS SH OULD NO T BE TAXED IN THEIR RESPECTIVE HANDS AS THE SAME WILL AMOUNT TO DOUBLE TAXATION AND IF IT IS HELD THAT THE SHARE TO THE EXTENT, WHICH IS SHARED BY REGISTERED MEMBERS, IS TAXABLE IN THEIR RESPECTIVE HANDS THEN THE ACTION OF THE ASSESSING OFFICER IS CORRECT AS T HE CAPITAL GAIN HAS TO BE ASSESSED IN THE HANDS OF THE RESPECTIVE REGISTERED MEMBERS. I ORDER ACCORDINGLY. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF DEC . 2012. 2012 SD/ - ( ) ( R.K.GUPTA ) / JUDICIAL MEMBER MUMBAI ; DATED : 05 / 1 2 / 2012 . /PKM , PS IT A NO. 8008 /20 1 0 5 COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI