ITO 12(3)(1), MUMBAI V. BAJAJ BHAVAN OWNERS PREMISES C.S.L., MUMBAI

ITA 8067/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3612 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 01-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M A GOHEL
• Section: 2

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL MUM BAI - B BENCH MUMBAI . . , / ! ! ! ! , BEFORE S/SH. B.R.MITTAL,JUDICIAL MEMBER & RAJE NDRA, ACCOUNTANT MEMBER . / ITA / 8067/M/2011, ' ' ' ' # # # # / ASSESSMENT YEAR 2007 - 08 INCOME TAX OFFICER, 12(3)(1) 114,AAYKAR BHAVAN, M K ROAD MUMBAI-400020 ' VS. BAJAJ BHAVAN OWNERS PREMISES C.S.L. BAJAJ BHAVAN 226,NARIMAN POINT, MUMBAI-400021 PAN: AAATB0644H ( $% / APPELLANT) ( &'$% / RESPONDENT) $% $% $% $% ( ( ( ( / APPELLANT BY : SHRI MANJUNATH KARKIHALLI &'$% ) ( / RESPONDENT BY : SHRI M.A. GOHEL ' ' ' ' ) )) ) *+ *+ *+ *+ / DATE OF HEARING : 18.04.2013 ,-# ) *+ / DATE OF PRONOUNCEMENT : 18.04.2013 ' ' ' ' , 1961 ) )) ) 254(1) *.* *.* *.* *.* / / / / ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. THE PRESENT APPEAL IS DIRECTED AGAINST THE ORDER DT .14.09.2011 PASSED BY THE CIT(A)-23,MUMBAI. FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED BY THE ASSESSING OFFICER (AO): 1.THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW DE LETING THE ADDITION OF RS.2,98,000/- ON ACCOUNT OF TRANSFER FEE / CHARGES. 1 A.WHILE ALLOWING RELIEF AND PLACING RELIANCE ON THE ORDER OF HONBLE TAT DTD 04.11.2009AND THE JUDGMENT OF JURISDICTIONAL HIGH COURT DTD. 7.07.200 9 IN THE CASE OF MITTAL COURT PREMISES CO-OP SOC. LTD, THE ID CIT(A) HAS ERRED IN FACTS AND IN LAW IN NOT APPRECIATING THE FACT THAT THE REVENUE HAS FIL ED SLP AGAINST THE ORDER OF HONBLE HIGH COURT IN THE MITT AL COURT PREMISES CO-OP SOC. LTD, ON THE IDENTICAL ISSUE BEFORE THE HONBLE SUPREME COURT AND THE ISSU E IS SUBJUDICE. 2.THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE AO TO ASSESS THE RENT RECEIPTS OF RS. 16,39,284/- FOR LETTING OUT OF THE TERRACE FOR EREC TING OF ANTENNA AS INCOME FROM HOUSE PROPERTY SUBJE CT TO DEDUCTION U/S. 24. 2 A.WHILE DOING SO, THE LD. CIT(A) HAS IGNORED THE DECISION OF HONBLE HIGH COURT OF CALCUTTA IN CIT VS. MODEI MANUFACTURING CO. PVT. LTD.(1989) 175 ITR 374 AND ALSO HONBLE HAT F BENCH IN ITA NO. 3421/MUM/2009 DTD. 17.09.2010 IN THE CASE OF CIT VS . TWIN STAR JUPITER HSG. SOC. LTD. WHEREIN IT WAS HELD THAT THE RECEIPTS FOR LETTING OUT TERRACE HAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES. 3.THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF TH E ASSESSING OFFICER BE RESTORED. 4.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. ASSESSEE-CO-OPERATIVE SOCIETY HAD FILED ITS RETURN OF INCOME ON 18.10.2007 DECLARING TOTAL INCOME OF RS.10,97,750/-.AO FINALISED THE ASSESSMEN T ORDER U/S.143(3) OF THE ACT ON 29.12.2009, DETERMINING THE TOTAL INCOME AT RS.28,05,380/-. 2.1. FIRST GROUND OF APPEAL PERTAINS TO DELETION OF AN A DDITION MADE BY THE AO,OF RS.2.98 LAKHS, ON ACCOUNT OF TRANSFER FEE/CHARGES.DURING THE ASSES SMENT PROCEEDINGS AO FOUND THAT THE ASSESSEE HAS COLLECTED CONTRIBUTION TOWARDS BETTERMENT CHARG ES/TRANSFER FEE TO THE EXTENT OF RS.3.23 LAKHS FROM TRANSFEREES AND SAME WAS NOT OFFERED FOR TAXAT ION ON THE PRINCIPLES OF MUTUALITY.FOLLOWING THE SPECIAL BENCH DECISION OF ITAT,MUMBAI DELIVERED IN THE CASE OF WALKESHWAR TRIVENI COOPERATIVE SOCIETY(ITA/3497/MUM/2001-AY1997-98),AO HELD THAT THE TRANSFER FEE RECEIVED FROM NEW MEMBERS OF THE SOCIETY DOES NOT FALL UNDER THE PURVIEW OF PRINCIPLES OF MUTUALITY AND THUS EXIGIBLE TO TAX.HE FURTHER HELD THAT AS PER NO TIFICATION OF MAHARASHTRA STATE GOVT. RS.25, 000/- PER TRANSFER CAN BE ALLOWED.HE FOUND THAT DUR ING THE YEAR UNDER CONSIDERATION ONE PREMISES WAS TRANSFERRED AND THE ASSESSEE HAD CHARGED RS.3,2 3,000/-AS TRANSFER/BETTERMENT CHARGES. GIVING A RELIEF OF RS.25,000/- TO THE ASSESSEE AO ADDED RS .2.98 LAKHS(3,23,000/-25,000/-)TO THE TOTAL INCOME OF THE ASSESSEE. 2.2. AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN A PPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE AND THE ASSESSMENT ORDER HE HELD THAT ITAT MUMBAI HAD DELETED THE ADDITION MADE BY THE AO IN ASSESSEES OWN CASE WHILE DECIDING THE APPEALS FOR THE AYS.2001-02TO2003-04,THAT ITAT HAD FOLLOWED THE ORDER OF THE HONBLE JURIS -DICTIONAL HIGH COURT WHILE DECIDING THE APPEALS OF THE ASSESSEE. 2.3. BEFORE US,DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTE D THE ORDERS OF THE AO. AUTHORISED REPRESENTATIVE(AR)SUBMITTED THAT ISSUE WAS SQUARELY COVERED IN THE FAVOUR OF THE ASSESSEE BY THE ORDERS OF THE ITAT FOR EARLIER YEAR. 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT WHILE DECIDING THE APPEALS FOR THE AY.2001-02,2002-03 AND 2003-04(ITA/5048/MUM/2004,1433/ MUM /2007,1434/MUM/2007)IN ASSESSEES OWN CASE B B ENCH OF THE ITAT,MUMBAI HAD DECIDED THE ISSUE OF TRANSFER /BETTERMENT CHARGES AS UNDER: 11.WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE TI\IAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CONSIDER ED THE RELEVANT BYE-LAWS OF THE SOCIETY AND FOUND THAT THE SAME ARE ALMOST SIMILAR TO THE BYE-L AWS OF MCPCSL SUPRA, EXCEPT DIFFERENCE IN AMOUNT. 12.IN MITTAL COURT PREMISES CO-OPERATIVE SOCIETY LT D. SUPRA, IT HAS BEEN HELD VIDE PARA-7 OF THE JUDGMENT AS UNDER 7. ARGUMENTS ADVANCED ON BEHALF OF THE APPELLANTS/PETI TIONERS ARE BASED ON THE PRINCIPLES OF MUTUALITY WHICH WE HAVE ADVERTED TO I N THE OTHER APPEALS. IT IS, THEREFORE, SUBMITTED THAT BECAUSE OF MUTUAL RELATIO NSHIP OF THE MEMBERS OF THE CO- OPERATIVE HOUSING SOCIETY INTER-SE, NEITHER THE SOC IETY NOR THE MEMBERS CAN MAKE PROFITS FROM AMONGST THEMSELVES IN TRANSACTIONS REL ATINGTO. SOCIETY. CONSIDERING THE OBJECTS OF THE SOCIETY, SOCIETY IS NOT CARRYING ON ANY TRADE, OCCUPATION OR BUSINESS. IN THE CASE OF TENANT CO-OPERATIVE HOUSING SOCIETY, IT IS POINTED OUT THAT THE BUILDING IS OWNED BY THE SOCIETY AND THE MEMBERS OCCUPYING FLAT S IN THE SAID SOCIETY ARE ONLY TENANTS WHO HAVE LIMITED RIGHT TO OCCUPY THE PREMIS ES SUBJECT TO THE CHARGES PAYABLE TO THEM BUT DETERMINED BY THE SOCIETY. IT IS CONTEN DED THAT THE PRINCIPLE OF MUTUALITY HAS BEEN DENIED MAINLY ON THE GROUND THAT THE CONTR IBUTION IS FROM THE INCOMING MEMBERS AND NOT OUTGOING MEMBERS. IT IS POINTED OUT THAT RELYING ON THE OBSERVATIONS IN WALKESHWAR TRIVENI CO-OPERATIVE HOUSING SOCIETY LTD. THAT THE SPECIAL BENCH ARRIVED AT THE CONCLUSION THAT THE CONTRIBUTIOR. BY WAY OF TRANSFER FEE BY MEMBERS, THE PRINCIPLE OF MUTUALITY WOULD APPLY HOWEVER, NOT AP PLIED IN THE CASE OF INCOMING RR EMBERS. WE HAVE REFERRED TO THE BYE~ LAWS OF BOTH, THE MITTAL COURT PREMISES CO- OPERATIVE SOCIETY 1 . LTD. AND MAKER CHAMBERS-ILL P REMISES CO-OPERATIVE SOCIETY LTD. THE BYE-LAWS ARE NOTHING BUT THE CONTRACT BETW EEN THE SOCIETY AND THE M2MBER. UNDER THESE BYE-LAWS, IT IS THE MEMBER WHO HAS TO M AKE THE PAYMENT. ANY INTER-SE ARRANGEMENT BETWEEN THE INCOMING MEMBERS AND THE TR ANSFEREE IS IRRELEVANT IN SO FAR AS THE SOCIETY IS CONCERNED. THERE IS AN AGREEMENT BY WHICH THE AMOUNT IS PAID BY THE TRANSFEREE. IN SO FAR AS SOCIETY IS CONCERNED, EVEN IF RECEIPT IS ISSUED IN THE NAME OF TRANSFEREE IT IS THE NATURE OF ADMISSION FEE WHICH COULD BE APPROPRI -ATED, ONLY ON THE TRANSFEREE BEING ADMITTED. MERELY BECAUSE THE AMOUN T MAY BE APPROPRIATED EARLIER, IT WILL NOT LOOSE THE CHARACTER OF THE AMOUNT BEING PAID BY A MEMBER. IN THE~E CIRCUMSTANCES, THE IDENTITY OF THE CONTRIBUTOR AND BENE -FICIARY BEING SATISFIED AND CONSIDERING THE PROVISIONS OF MAHARASHTRA CO-OPERAT IVE SOCIETIES ACT AND RULES FRAMED THEREUNDER, SURPLUS CAN BE DISPOSED OFF IN F AVOUR OF THE MEMBERS ONLY OR FOR THE OBJECTS FOR WHICH THEY MAY SPECIFY. AS HELD BY US IN INCOME TAX APPEAL NO.931 OF 2004 THE SAME REASON -ING WILL APPLY TO THE APPELLA NTS/PETITIONERS BEFORE US. IN THESE CIRCUMSTANCES, QUESTION(A) AS FRAMED HAS TO BE ANSW ERED IN THE NEGATIVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IN THE ABSENCE OF ANY DISTINGUISHABLE FEATURE BROUG HT ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWI NG THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT SUPRA HOLD THAT THE PRINCIPLE OF HIUTUAIITY WILL APPLY TO THE ASSESSEE SOCIETY AND HENCE THE TRANSFER FEE/ CHARGES RS.1I,01,500/- ARE NOT TAXABLE IN THE HANDS OF THE ASSESSEE SOCIETY AND ACCORDINGLY THE SAME ARE D ELETED. THE GROUND TAKEN BY THE ASSESSEE IN THIS REGARD IS, THEREFORE, ALLOWED. RESPECTFULLY FOLLOWING THE SAME WE DECIDE GROUND NO .1 AGAINST THE AO. 3. NEXT GROUND OF APPEAL PERTAINS TO TREATMENT TO BE G IVEN TO RENT RECEIVED FROM LETTING OUT OF TERRACE.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THE ASSESSEE HAD RECEIVED LEASE RENT OF RS.16,39,284/- FROM SIX PARTIES INCLUDING BHARATI A IRTEL,HATHWAY,THAT RENT RECEIPT WAS CLAIMED AS INCOME FROM HOUSE PROPERTY,THAT ASSESSEE HAS CLAIME D DEDUCTION U/S .24(A) OF THE ACT FOR THE RENT RECIEVED.AFTER CONSIDERING THE SUBMISSIONS OF THE A SSESSEE-SOCIETY AO HELD THAT ASSESSEE ITSELF WAS NOT CLEAR ABOUT THE HEAD OF INCOME UNDER WHICH SHOULD BE ASSESSED I.E. AS INCOME FROM HOUSE PROPERTY OR INCOME FROM OTHER SOURCES,THAT S OCIETY HAD NOT PROVIDED ANY HOUSE PROPERTY, THAT IT ONLY RENTED TERRACE FOR ERECTION OF ANTENNA FOR WHICH THE AMOUNT OF RS.16,39,284/- WAS RECEIVED. RELYING UPON THE ORDER OF MODEL MANUFACTU RING CO. PVT. LTD.,DELIVERED BY THE HONBLE HIGH COURT OF CALCUTTA(175 ITR 374)AO HELD THAT AMO UNTS RECEIVED BY THE ASSESSEE FROM SIX PARTIES HAD TO ASSESSED UNDER THE INCOME FROM OTHER SOURCES AND NOT INCOME FROM HOUSE PROPERTY.HE DID NOT ALLOW ANY DEDUCTION TO THE ASSE SSEE-SOCIETY U/S.57 OF THE ACT. 3.1. AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN A PPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).FOLLOWING THE ORDER OF THE ITAT FOR THE EARLI ER YEARS FOR THE SAME ISSUE IN ASSESSEES OWN CASE FAA HELD THAT INCOME RECEIVED AS RENT HAD TO B E ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY.HE HELD-.LETTING OUT OF THE TERRAC E HAS TO BE ASSESSED UNDER HEAD INCOME FROM HOUSE PROPERTY SUBJECT TO DEDUCTION U/S.24 OF THE A CT. 3.2. BEFORE US,DEPARTMENTAL REPRESENTATIVE (DR) SUPPORT ED THE ORDERS OF THE AO. AUTHORISED REPRESENTATIVE(AR)SUBMITTED THAT ISSUE WAS SQUARELY COVERED IN THE FAVOUR OF THE ASSESSEE BY THE ORDERS OF THE ITAT FOR EARLIER YEAR. 3.3. WE FIND THAT WHILE DECIDING THE APPEALS FOR THE AY. 2001-02,2002-03 AND 2003-04(ITA/ 5048/ MUM/2004,1433/ MUM /2007,1434/MUM/2007)IN AS SESSEES OWN CASE B BENCH OF THE ITAT,MUMBAI HAD DECIDED THE ISSUE OF RENT RECEIVED FROM LETTING OUT OF TERRACE AS UNDER: 35.GROUND NO.5, 6, 7 AND 8 ARE AGAINST THE SUSTENAN CE OF ADDITION OF RENTAL INCOME RS.5,93,700/- AS INCOME FROM OTHER SOURCES. 36.THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT IT W AS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS ALLOWED M/S. HUTCHISON MAX TELECOM LTD. TO ERECT TH E TOWER ON THEIR TERRACE IN CONSIDERATION OF AN AMOUNT OF RS.5,93,700/- AND CLAIMED AS INCOME FROM HOUSE PROPERTY SUBJECT TO DEDUCTION U/S.24 OF THE ACT. HOWEVER, THE ASSESSING OFFICER WHILE OBSERVING THAT THE ASSESSEES SOCIETY HAS NOT PROVIDED ANY HOUSE PROPERTY TO THE COMPANY AND IT IS ONLY THE OP EN TERRACE WHICH HAS BEEN LET OUT, TREATED THE SAME AS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURDDS WITHOUT ALLOWING ANY EXPENDITURE IN THIS REGARD. ON APPEAL THE ID. CIT(A) WHILE CONFIRMING THE ASSES SING OFFICERS ACTION TREATING THE INCOME FROM OTHE R SOURCES DIRECTED THE ASSESSING OFFICER TO ALLOW 20% OF THE GROSS RECEIPTS AS EXPENSES TO EARN SUCH INCOME. 39.AFTER CAREFULLY HEARING THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND THAT THE FACTS ARE NOT IN DISPUTE. W E FURTHER FIND THAT IN THE CASE OF SHARDA CHAMBER PREMISES VS. ITO IN ITA NIO.1234/M/08 DATED 1.9.200 9 FOR ASSESSMENT YEAR 2003-04 IN WHICH JM WAS ONE OF THE PARTY, ON THE SIMILAR FACTS, THE TRIBUNA L AFTER CONSIDERING THE DECISION IN ITO V/S. CUFFE PARADE SAINARA PREMISES CO-OPERATIVE SOCIETY LTD. 7225/MU M/05 DATED 28TH APRIL, 2008 FOR ASSESSMENT YEAR 2002-03 AND ALSO THE DECISION IN THE CASE OF SOHAN VS. ITO (1986) 16 LTD 272 SUPRA HAS HELD VIDE PARA 6 AND 7 OF ITS ORDER DATED 1.9.2009 AS UNDER 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND MERIT IN THE PLEA OF T HE ID. COUNSEL FOR THE ASSESSEE THAT IN THE CASE OF M/S.DALAMAL HOUSE COMMERCIAL COMPLEX-PREMISES CO -OPERATIVE SOCIETY LTD., THE TRIBUNAL WHILE ADMITTING THE ADDITIONAL GROUND BEING A LEGAL ISSUE HAS ALSO HELD THAT THE LETTING OUT OF THE TERRACE, ERECTION OF ANTENNA AND INCOME DERIVED FRO M LETTING OUT HAS TO BE TAXED AS INCOME FROM HOUSE PROPERTY AND NOT AS INCOME FROM OTHER SOURC ES.THE TRIBUNAL WHILE DECIDING THE ISSUE HAS FOLLOWED THE ORDER OF THE TRIBUNAL IN THE CASE OF M /S. CUFFE PARADE SAINARA PREMISES CO-OP. SOCIETY LTD.(SUPRA). 7.IN THE ABSENCE OF ANY DISTINGUISHING - FEATURE BR OUGHT ON RECORD BY THE REVENUE WE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL (S UPRA),AND KEEPING IN VIEW THE CONSISTENCY WHILE ADMITTING THE ADDITIONAL GROUND TAKEN BY THE ASSESS EE HOLD THAT THE LETTING OUT OF TERRACE HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS AGAINST INCOME FROM OTHER SOURCES ASSESSED BY THE ASSESSING OFFICER AND ALSO ALLOW DE DUCTION PROVIDED U/S.24 OF THE ACT AND ACCORDINGLY THE ADDITIONAL GROUND TAKEN BY THE ASSE SSEE IS ALLOWED. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL SU PRA, WE ARE OF THE VIEW THAT THE LETTING OUT OF THE TERRACE HAS TO BE ASSESSED UNDER THE HEAD INCOME FR OM HOUSE PROPERTY SUBJECT TO DEDUCTION U/S.24 OF TH E ACT AS AGAINST INCOME FROM OTHER SOURCES ASSESSED B Y THE ASSESSING OFFICER.WE HOLD AND ORDER ACCORDINGLY. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE ALLOWED. RESPECTFULLY FOLLOWING THE SAME WE DECIDE GROUND NO .2 AGAINST THE AO. AS A RESULT,APPEAL FILED BY THE AO STANDS DISMISSED. 0 *1 '0* + ) '* ) * 23 . ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH APRIL,2013 / ) ,-# 4 5' 18 &3 , 2013 - ) . 6 SD/- SD/- ( B.R.MITTAL/ . . ) ( ! ! ! ! / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, 5' /DATE:18.04.2013 TNMM / / / / ) )) ) &*7 &*7 &*7 &*7 8 7#* 8 7#* 8 7#* 8 7#* / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT (A) / 9 : 4. THE CONCERNED CIT / 9 : 5. DR B BENCH, ITAT, MUMBAI / 7;. &*' , . . . 6. GUARD FILE/ . < '7* &* //TRUE COPY// /' / BY ORDER, = / 2 DY./ASST. REGISTRAR , /ITAT, MUMBAI