ITO 16(1)(1), MUMBAI V. STERLING CO OP HSG. COC. LTD, MUMBAI

ITA 8197/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9333 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 07-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV PANT JCIR
• Assessee Lawyers: VISHWAS V MEHENDALE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT (MZ) AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A. NO. 8197/M/2011 ASSESSMENT YEAR: 2008-2009 ITO-16(1)(1), MATRU MANDIR, MUMBAI 400 007. VS. M/S. STERLING CO-OP. HSG. SOC. LTD., 38, PEDDAR ROAD, MUMBAI 400 0026. PAN: AAAJS1912M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJIV PANT, JCIR - DR RESPONDENT BY : SHRI VISHWAS V.MEHENDALE, AR DATE OF HEARING: 20.11.2012 DATE OF ORDER:23. 11.2012 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 7.12.2011 IS AG AINST THE ORDER OF CIT (A)- 27, MUMBAI DATED 21.9.2011 FOR THE ASSESSMENT YEAR 2008-2009. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROU NDS WHICH READ AS UNDER: 1. THE LD CIT (A) ERRED IN DELETING THE ADDITION ON AC COUNT OF TRANSFER CHARGES OF RS. 14,65,000/- FOLLOWING THE DECISION O F HONBLE HIGH COURT OF BOMBAY IN THE CASE OF M/S. SHYAM CHS AND M/S. SUPRA BHAT CHS WHEREIN IT HAS BEEN HELD THAT ALL AMOUNTS RECEIVED BY THE CHS ON THE GROUNDS OF TRANSFER CHARGES ARE EXEMPT UNDER THE PRINCIPLE OF MUTUALITY . THE DECISION IS NOT ACCEPTABLE BY THE DEPARTMENT AND TH E ISSUE IS SUB-JUDICE. 2. THE LD CIT (A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF NON- OCCUPANCY CHARGES OF RS. 3,27,640/- FOLLOWING THE D ECISIONS OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S. MITTAL COURT CHSL, WHEREIN IT HAS BEEN HELD THAT NON-OCCUPANCY CHARGES UNDERTAKEN FROM MEMBERS WHICH HAVE LET OUT THEIR FLATS IS EXEMPT UNDER THE PRINCIPLE OF MUTUALITY. THE DECISION IS NOT ACCEPTED BY THE DEPARTMENT AND THE ISSUE IS SUB-JUDICE. 3. AT THE OUTSET, SHRI VISHWAS V.MEHENDALE, LD COUN SEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE JUDGMENTS OF JURISDICTIONAL HI GH COURT IN THE CASE OF M/S. SHYAM CHS VIDE ITA NO.92, 93, 206 OF 2009, DATED 17.7.200 9 AND SUPRABHAT CHS VIDE ITA NO. 1972 OF 2009, DATED 1.10.2009 AND MENTIONED THA T THE HONBLE HIGH COURT HAS 2 HELD THAT THE TRANSFER FEE RECEIPTS ARE EXEMPT FROM THE TAX ON THE PRINCIPLES OF MUTUALITY. THUS, THE ISSUE OF TAXABILITY OF TRANSF ER FEE STANDS COVERED IN FAVOUR OF THE ASSESSEES BY THE SAID DECISIONS. REGARDING APP LICABILITY OF PRINCIPLE OF MUTUALITY TO NON-OCCUPANCY CHARGES , ASSESSEE BROUGHT OUR ATTENTION TO PARA 4.1 OF THE IMPUGNED ORDER AND MENTIONED THAT THIS ISSUE IS ALS O ENJOYS THE EXEMPTION IN VIEW OF THE PRINCIPLE OF MUTUALITY AS HELD BY THE JURISD ICTIONAL HIGH COURT IN THE CASE OF MITTAL COURT CO-OPERATIVE HSG. SOCIETY (2009) 184 T AXMAN 292 AND ALSO IN THE CASE OF SUPRABHAT CHS (SUPRA). 4. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE AO. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE ORDE RS OF THE REVENUE PARA 3, 4 AND 4.1 OF THE IMPUGNED ORDER. CONSIDERING THE REQ UIREMENT OF THE SAID PARAGRAPHS THEY ARE REPRODUCED AS UNDER: 3. DURING THE PROCEEDINGS BEFORE ME, THE AR SUBMITTED THAT IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN TH E CASES OF SIND HOUSING SOCIETY AND MITTAL COURT COOPERATIVE HSG. SOCIETY W HERE THEIR LORDSHIPS HAD GIVEN A JUDGMENT THAT THE TRANSFER FEE AND NON OCCUPANCY CHARGES RECEIVED BY THE HOUSING SOCIETY ARE EXEMPT TO TAX U NDER PRINCIPLE OF MUTUALITY, THE ADDITION MADE BY THE AO SHOULD BE DE LETED. THE AR ALSO ARGUED THAT MISCELLANEOUS RECEIPTS INCLUDE RENT OF RS. 6,000 COLLECTED FROM THE MEMBERS OF THE SOCIETY FOR USING THE GARDEN AND IT IS NOT FROM GIVING THE PROPERTY ON RENT TO ANY OUTSIDERS. AS REGARDS THE B ALANCE AMOUNT OF RS. 5000 REALIZED ON SALE OF SCRAP THE AR HAS NOT PRESSED TH E GROUNDS. 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT. AS REGARDS THE TRANSFER FEE RECEIVED, THE HONBLE BOMB AY HIGH COURT IN THE CASE OF SIND COOPERATIVE HSG. SOCIETY STATED IN ONE OF T HE PARAGRAPHS OF THE ORDER THAT TRANSFER FEE RECEIVED BY THE HOUSING SOCIETY I S EXEMPT UNDER THE PRINCIPLE OF MUTUALITY, BUT, THEY HAD ALSO STATED IN THEIR OR DER THAT ANY AMOUNT TAKEN BY THE SOCIETY WHICH IS IN EXCESS OF GOVERNMENT RULES, AS LAID DOWN BY THE MAHARASHTRA COOPERATIVE SOCIETIES ACT WOULD EITHER HAVE TO BE REFUNDED TO THE MEMBER OF THE SOCIETY OR THE AMOUNT WOULD BE HE LD TO BE TAXABLE AS THERE WAS AN ELEMENT OF PROFITEERING IN IT. SUBSEQUENTLY , HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S. SHYAM CHS IN ITA NO. 92, 93, 206 OF 2009 VIDE THEIR ORDERS DATED 17 TH JULY, 2009 AND SUPRABHAT CHS IN ITA NO. 1972 OF 20 09 VIDE THEIR ORDERS DATED 1.10.2009, HAS CLEARLY STATED TH AT ALL THE AMOUNTS RECEIVED BY THE CHS ON ACCOUNT OF TRANSFER FEE ARE EXEMPT TO TAX UNDER THE PRINCIPLE OF MUTUALITY. SINCE THE ISSUE IS NOW FULLY CLARIFIED BY THE SUBSEQUENT JUDGMENTS OF THE HONBLE BOMBAY HIGH COURT, THE AMOUNT OF TRA NSFER FEES CONSIDERED BY 3 THE AO AS APPELLANTS INCOME AMOUNTING TO RS. 14,65 ,000/- STANDS DELETED AND THIS GROUND OF APPEAL IS ALLOWED. 4.1. SECONDLY, THE HONBLE BOMBAY HIGH COURT IN THE CASES OF MUTTAL COURT COOPERATIVE HSG. SOCIETY (2009) 184 TAXMAN 292 AND SUPRABHAT CHS IN ITA NO. 12972 OF 2009 VIDE THEIR ORDERS DATED 1.10.2009 , HAS CLEARLY STATED THAT ALL THE AMOUNTS RECEIVED BY THE CHS ON ACCOUNT OF N ON OCCUPANCY CHARGES ARE EXEMPT TO TAX UNDER THE PRINCIPLE OF MUTUALITY. SI NCE THE ISSUE IS NOW FULLY SETTLED BY THE JUDGMENTS OF THE HONBLE BOMBAY HIGH COURT, THE NON OCCUPANCY CHARGES CONSIDERED BY THE AO AS APPELLANT S INCOME AMOUNTING TO RS. 3,27,640/- ALSO STANDS DELETED AND THIS GROUND OF APPEAL IS ALLOWED. 6. FROM THE ABOVE IT IS EVIDENT THAT THE ISSUES REL ATING TO TAXABILITY OF TRANSFER FEE RECEIPTS AND NON-OCCUPANCY CHARGES UNDER THE PR INCIPLE OF MUTUALITY ARE COVERED BY THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASES OF M/S. SHYAM CHS (SUPRA), SUPRABHAT CHS (SUPRA) AND MITTAL COURT CO-OPERATIV E HSG. SOCIETY (SUPRA) IN FAVOUR OF THE ASSESSEE. THEREFORE, CONSIDERING THE SPEAKI NG ORDER OF THE CIT (A) WHO DECIDED THE ISSUES AGAIN RELYING ON THE BINDING JUR ISDICTIONAL HIGH COURT JUDGMENTS, WE ARE OF THE OPINION THAT ORDER OF THE CIT (A) DOE S NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF NOVEMBER, 2012. SD/- SD/- (D. MANMOHAN) (D. KARUNAKARA RAO) VICE PRESIDENT ACCOUN TANT MEMBER DATE : 23.11.2012 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR E, BENCH, ITAT, MUMBAI. 6. GUARD FILE. 4 // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI