MIG CO OPERATIVE HOUSING SOCIETY GROUP- II LTD, MUMBAI V. ITO 19(3)(3), MUMBAI

ITA 896/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8426 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 23-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Assessee Lawyers: YOGESH THARAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Diversion of income; Question of law; Cost of acquisition; Fair market value
• Section: 50C; 2(14); 142(1); 147; 148; 139

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -BBENCH MUMBAI , , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMARJIT SINGH,JUDICIAL MEMBER ./`I.T.A./896/MUM/2016, / ASSESSMENT YEAR: 2011-12 MIG-CO-OPERATIVE HOUSING SOCIETY GROUP-II LIMITED KALPATARU SPARKLE,NANA DHAMADHIKARI ROAD, GANDHINAGAR, BANDRA (E) MUMBAI-400 051. PAN:AAAAM 8129 P VS. INCOME TAX OFFICER-19(3)(3) MATRU MANDIR, TARDEO ROAD MUMBAI-400 007. ( /APPELLANT ) ( / RESPONDENT) ./I.T.A./1099/MUM/2016, / ASSESSMENT YEAR: 2011-12 INCOME TAX OFFICER-19(3)(3) MUMBAI-400 007. VS. MIG-CO-OPERATIVE HOUSING SOCIETY GROUP-II LIMITED,MUMBAI-400 051. ( /APPELLANT ) ( / RESPONDENT) / R EVENUE BY: SHRI N.P. SINGH CIT-DR /ASSESSEE BY: SHRI YOGESH THAR-AR / DATE OF HEARING: 05/12/2016 / DATE OF PRONOUNCEMENT: 17.02.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , / PER RAJENDRA A.M. - CHALLENGING THE ORDER,DATED 11/01/2016,OF THE CIT ( A)-33,MUMBAI THE ASSESSEE AND THE ASSESSING OFFICER (AO)HAVE FILED CROSS APPEALS FOR THE YEAR UNDER CONSIDERATION. ASSESSEE-A CO-OPERATIVE HOUSING SOCIETY (SOCIETY) FILED ITS RE TURN OF INCOME ON 30/07/2012. 2. DURING THE COURSE OF HEARING BEFORE US,THE DEPARTME NTAL REPRESENTATIVE(DR)STATED THAT THE AO FILED ADDITIONAL GROUNDS OF APPEAL WITH REGARD T O RE-OPENING OF THE ASSESSMENT PROCEED - INGS.HE STATED THAT NO NEW OR FACTUAL MATERIAL WAS REQUIRED TO BE REFERRED TO FOR DECIDING THE LEGAL ISSUES RAISED IN THE ADDITIONAL GROUNDS.THE A UTHORISED REPRESENTATIVE(AR)OF THE ASSESSEE LEFT THE ISSUE TO THE DISCRETION OF THE BE NCH.WE FIND THAT THE AO HAS RAISED ONLY LEGAL GROUNDS,HENCE ,WE ADMIT THE SAME. BRIEF FACTS: 3. ASSESSEE-SOCIETY IS REGISTERED UNDER THE MAHARASHTR A COOPERATIVE SOCIETY ACT, 1960.IT OWNED 12 THREE FLOORED BUILDINGS COMPRISING OF EIGH T RESIDENTIAL FLATS IN EACH BUILDING ON A PLOT OF LAND MEASURING AROUND 9973.19 M. THE PLOT OF LAND ON WHICH THE SAID BUILDINGS WERE CONSTRUCTED WAS HELD BY IT AS A LESSEE UNDER A LONG -TERM LEASE OF 90 YEARS,BEGINNING FROM 16/05/1977,VIDE LEASE DEED THE EXECUTED ON 12/12/20 06.APART FROM THAT IN AUGUST,1997 896&1099/M/16- MIG CO-OP.HSG. SOC. GROUP-II 2 MHADA ALERTED AND SOLD TO THE ASSESSEE ADDITIONAL F LOOR SPACE INDEX (FSI)OF 2880 M IN RESPECT OF THE ENTIRE PLOT AND IT ALSO AGREED TO AL LOWED THE SOCIETY RG,TIT BITS AREA OF 2783.66 M IN RESPECT OF ENTIRE PLOT FOR PREMIUMS LESS CONS IDERATION RECORDED THEREIN IN 2010 THE SOCIETY ALONG WITH 96 OF ITS MEMBERS DECIDED TO RED EVELOP THE PROPERTY BY DEMOLISHING THE OLD BUILDINGS AND CONSTRUCTING NEW BUILDINGS UPON T HE LAND MEASURING 9973.19 M BY UTILISING THE AGGREGATE FSI OF 2302 8 M CONSISTING OF LAND OF 5032.15 M UTILISED IN OLD BUILDINGS.THE SOCIETY SHARE OF ITS FSI PURCHASED OF 1728 M AND RIGHT TO ACQUIRE AN ADDITIONAL FSI OF 16267.85 GRANTED BY MHADA TO THE SOCIETY.ACC ORDINGLY,IT ENTERED INTO A REDEVELOP - MENT AGREEMENT WITH ONE DEVELOPER, ON 26/04/ 2010,F OR THE REDEVELOPMENT WHEREBY OUT OF THE AGGREGATE FSI OF 23,028 M IT RETAINED 10,012.1 8 M AND GRANTED RIGHTS AND ENTITLEMENTS TO THE DEVELOPER FOR THE BALANCE FSI OF 13,015.84 M.THE MEMBERS OF THE SOCIETY AGREED TO TRANSFER THEIR OLD FLATS TO THE DEVELOPER. IN TURN, THE DEVELOPER AGREED TO PAY AN AMOUNT OF RS. 53.50 LAKHS TO EACH OF THE MEMBERS OF THE SOCIETY A PART FROM RS.15 CRORES TO THE CORPUS FUND OF THE SOCIETY.THE PAYMENT WAS IN ADDITION TO THE FLATS AND PARKING SPACES TO BE CONSTRUCTED AND HANDED OVER TO THE MEMBERS OF THE S OCIETY.CONSIDERING THE MARKET VALUE AND THE BENEFITS PASSED ONTO THE SOCIETY IN THE DEED,TH E STAMP AUTHORITIES(SA)VALUED THE PROPERTY IN QUESTION AT RS.78.52 CRORES.THE DEVELOP ER PAID STAMP DUTY ON VALUE OF RS.78, 51, 97,500/-. 3.1. THE SOCIETY HAD NOT FILED ITS RETURN OF INCOME AS R EQUIRED BY THE PROVISIONS OF SECTION 139 (1)OF THE ACT I.E.BY 30/09/2011-THE DUE DATE OF FIL ING OF RETURN FOR THE YEAR UNDER CONSIDERA - TION.A NOTICE U/S.148 WAS ISSUED ON 26/03/2013TO TH E ASSESSEE CONSIDERING THE FACT THAT IT HAD ENTERED INTO AN AGREEMENT WITH THE DEVELOPER ON 26/ 04/2010 AND HAD TRANSFERRED ASSETS HAVING STAMP VALUE OF RS.78.52 CRORES AGAINST THE C OMPENSATION RECEIVED OF RS.51.36 CRORES. IN THE REGIONS RECORDED,THE AO MENTIONED THAT APART FROM THE ABOVE CONSIDERATIONS,THE SOCIETY HAD RECEIVED RS.15 CRORES AND HAD NOT OFFER ED ANY INCOME OUT OF THE SAID TRANSACTION, THAT PROVISIONS OF SECTION 50C WERE APPLICABLE TO T HE FACTS OF THE CASE.THE NOTICE WAS RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARK INTIMATI ON POSTED-UNCLAIMED.HOWEVER,THE AO TREATED IT A VALID SERVICE OF NOTICE.THEREAFTER,IT WAS NOTICED THAT ASSESSEE HAD FILED ITS RETURN BELATEDLY ON 30/07/2012 FOR THE YEAR UNDER APPEAL D ECLARING INCOME OF RS.1.25 LAKHS. IT WAS ALSO FOUND BY THE AO THAT SUBSEQUENTLY THE CASE WAS ALSO SELECTED FOR SCRUTINY UNDER CASS ON THE BASIS OF THE PIECES OF AIR INFORMATION.HE IS SUED A NOTICE U/S. 143(2) ON 23/09/2013 AND COMPLETED THE ASSESSMENT U/S.143 (3) R.W.S.147 OF THE ACT ON 27/03/2014, DETERMINING ITS INCOME AT RS.103.58 CRORES. 896&1099/M/16- MIG CO-OP.HSG. SOC. GROUP-II 3 4. FIRST GROUND OF APPEAL,FILED BY THE ASSESSEE,IS ABO UT REOPENING OF THE ASSESSMENT U/S. 147 OF THE ACT.ADDITIONAL GROUNDS FILED BY THE AO ALSO DEA L WITH RE-OPENING AND ISSUE OF NOTICE U/S. 143(2)OF THE ACT. 4.1. IN THE APPELLATE PROCEEDINGS BEFORE THE FIRST APPEL LATE AUTHORITY (FAA),THE ASSESSEE ARGUED THAT FOR THE AY.UNDER APPEAL TIME-LIMIT TO I SSUE NOTICE AS PER THE PROVISIONS OF SECTION 143(2)AVAILABLE TO THE AO WAS UP TO 30/09/2013 AND THE TIME-LIMIT FOR COMPLETING THE SCRUTINY ASSESSMENT U/S.143(3) WAS AVAILABLE UP TO 31/03/2014,THAT THE NOTICE U/S.148 WAS ISSUED ON 26/03/ 2013,THAT AT THE TIME OF ISSUE OF THE ASSESSMENT NOTICE TIME-LIMIT FOR ISSUING NOTICE U/S. 143 (2)OF THE ACT AND MAKING SCRUTINY A SSESSMENT U/S.143(3)HAD NOT EXPIRED,THAT THE TIME-LIMIT FOR CONDUCTING REGULAR ASSESSMENT HA D NOT ELAPSED THE ASSESSMENT MADE BY THE AO WAS VOID AB INITIO.IT RELIED UPON FOUR CASE LAWS AND STATED THAT ORDER PASSED BY THE AO SHOULD BE QUASHED AS SAME WAS BAD IN LAW. 4.2. THE FAA HELD THAT THERE WAS NO MERIT IN THE ARGUMEN TS ADVANCED BY THE ASSESSEE.THAT IT HAD NOT FILE RETURN OF INCOME IN TIME,THAT THE AO H AD RECEIVED SEPARATE INFORMATION ABOUT THE DEVELOPMENT AGREEMENT BEING EXECUTED ON 26/04/2010- INVOLVING CONSIDERATION OF RS.51.36 CRORES,THAT HE HAD INITIATED THE RE-ASSESSMENT PROC EEDINGS ACCORDINGLY,THAT ASSESSEE HAD FILED ITS RETURN IN THE MONTH OF JULY,2012, THAT THE AO H AD ALREADY INITIATED PROCEEDINGS U/S. 147, THAT THE MATTER WAS SELECTED THROUGH CASS, THAT THE AO HAD ISSUED NOTICES U/S. 143(2) AND 142(1) OF THE ACT,THAT THE AO HAD BROUGHT THE REASO NS RECORDED FOR REOPENING TO THE NOTICE OF THE ASSESSEE,THAT HE COMPLETED THE ASSESSMENT U/S. 143 (3) R.W.S.147 OF THE ACT,THAT THE PRIMARY REASON WAS THE ISSUE OF NOTICE U/S.148 OF T HE ACT BEFORE THE SELECTION OF THE CASE UNDER CASS,THAT ON THE DATE OF FORMING THE OPINION ABOUT ESCAPEMENT OF INCOME THERE EXISTED NO RETURN AND THE DUE DATE FOR FILING THE R ETURN HAD EXPIRED,THAT THE AO HAD NO OPTION AND HAD INITIATED THE PROCEEDINGS U/S. 147,THAT THE IT HAD OVERLOOKED THE CIRCUMSTANCES UNDER WHICH THE RE-ASSESSMENT PROCEEDINGS WERE INITIATED ,THAT THERE WAS NO MUCH SUBSTANCE IN THE ARGUMENT OF THE ASSESSEE THAT NOTICE U/S. 148 COULD NOT BE ISSUED WHEN TIME-LIMIT WAS AVAILABLE FOR ISSUE OF NOTICE U/S.143(2) FOR MAKING ASSESSMENT U/S.143(3) OF THE ACT.HE FURTHER HELD THAT CASE LAWS,RELIED UPON BY THE ASSE SSEE,WERE OF NO HELP AS THE FACTS OF THE CASE UNDER CONSIDERATION WERE DIFFERENT FROM THE FACTS O F THE MATTERS REFERRED TO BY THE ASSESSEE. FINALLY,HE HELD THAT THERE WAS NO MERIT IN THE ARGU MENT OF THE ASSESSEE MADE WITH REGARD TO ISSUE OF NOTICE U/S.148 AND COMPLETION OF ASSESSMEN T U/S.143(3)OF THE ACT. 4.3. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORI SED REPRESENTATIVE (AR) REITERATED THE ARGUMENTS ADVANCED BEFORE THE FAA.HE FURTHER ARGUED THAT AN INTIMATION U/S.143(1) WAS ISSUED ON 29.11.2013 IN THIS CASE,THAT IN THE CASE UNDER CONSIDERATION NOTICE U/S.148 WAS 896&1099/M/16- MIG CO-OP.HSG. SOC. GROUP-II 4 ISSUED BEFORE INTIMATION U/S.143(1) WAS ISSUED,THAT THERE WAS NO FRESH MATERIAL TO ISSUE RE- OPENING NOTICE,THAT THE JUDICIAL FORUMS ARE UNANIMO US THAT IF TIME LIMIT AVAILABLE U/S.143(3) IS AVAILABLE,A NOTICE U/S. 148 SHOULD NOT BE ISSUED,TH AT IN THE ORDER SHEET,IN THE REASONS RECORDED, IN THE NOTICE ISSUED FOR LEVYING PENALTY U/S. 271(1 )(B)OF THE ACT,THE AO HAD CLEARLY MENTIONED THAT ASSESSMENT WAS PASSED U/S. 143(3)R. W.S. 14.HE REFERRED TO PAGES 401-455 OF THE PB AND RELIED UPON CASES OF JAGMOHAN SHARMA (IT A/1384/KOL/2013,DATED 05.09. 2014, AY :2006-07); M/S. ROY & CO.(ITA/166/KOL/2013 DATED 05.09.2014,AY: 2005-06) AND TCP LTD.(323ITR346).HE FURTHER CONTENDED THAT THE MEMBE RS WERE PAID COMPENSATION BY THE DEVELOPER IN THEIR INDIVIDUAL CAPACITY,THAT THE REC EIPT OF SUCH INCOME WAS DISCLOSED BY THEM IN THEIR RESPECTIVE RETURNS,THAT CORPUS FUND CONTRI BUTED BY DEVELOPER TO THE SOCIETY WAS ALSO OFFERED IN ITS RETURN,THAT AMOUNTS RECEIVED BY MEMB ERS OF THE SOCIETY COULD NOT BE ASSESSED IN THE HANDS OF THE ASSESSEE,THAT PROVISIONS OF SECTIO N 50C WERE NOT APPLICABLE, THAT THE SOCIETY WAS NOT THE OWNER OF THE LAND, THE AGREEMENT ENTERE D INTO WITH THE DEVELOPER WAS AN AGREEMENT FOR TRANSFER OF DEVELOPMENT RIGHTS, THAT THE PROVISIONS OF SECTION 50C APPLIED TO LAND/BUILDING OR RIGHTS IN RESPECT OF LAND OR BUILD ING AND NOT THE DEVELOPMENT RIGHTS,THAT THE SOCIETY CONTINUED TO BE A LESSEE,THAT THE DEVELOPME NT RIGHTS HAD NO COST OF ACQUISITION, THAT THE TRANSFER OF SUCH RIGHTS WOULD NOT BE TAXABLE,TH AT THE NEW RIGHT CAME INTO EXISTENCE BECAUSE OF NEW REGULATION, THAT RIGHT ACCRUED TO TH E SOCIETY WERE AKIN TO TDR , THAT THE MEMBERS HAD FORMED A SOCIETY,THAT MHADA CREATED LEA SE HOLD RIGHTS IN FAVOUR OF SOCIETY FROM THE YEAR 1996-97,THE TRANSFER OF LEASE HOLD WA S NOT COVERED BY PROVISIONS OF SECTION 50C OF THE ACT,THAT THE AMOUNT OF RS.15CRORES WAS TAXED TWICE I.E. IN THE HANDS OF THE SOCIETY AND THE MEMBERS.HE REFERRED TO THE DECISION OF THE HON' BLE BOMBAY HIGH COURT IN THE CASE OF KAILASH JYOTI & ORS. IN INCOME TAX APPEAL NO.1607 O F 2013 DATED 24TH APRIL, 2015. HE STATED THAT IDENTICAL ISSUE WAS DEALT BY THE TRIBUN AL IN CASE OF RAJ RATAN PALACE CO. OP. HSG. SOCIETY LTD.(46SOT217),THAT THE HON'BLE BOMBAY HIGH COURT HAD UPHELD THE ORDER OF THE TRIBUNAL (PG.121 OF THE PB).HE ARGUED THAT IN THE C ASE OF VOLTAS (74TAXMANN.COM69) IT HAS BEEN HELD THAT PROVISIONS OF SECTION 50C WOULD BE A PPLICABLE IN CASE OF LAND/BUILDING ONLY, THAT SOCIETY CONTINUED TO BE THE LESSEE (PG.-129-17 5 OF LPB). 4.3.1. THE DR ARGUED THAT NOTICE ISSUED U/S.148 OF THE ACT WAS NEVER SERVED ON THE ASSESSEE, THAT THE AO HAD TALKED OF DEEMED SERVICE OF NOTICE IN THE ASSESSMENT ORDER, THAT THE SERVICE CANNOT BE DEEMED,THAT CONSTRUCTIVE SERVICE WAS REQU IRED.HE REFERRED TO THE CASES OF RAJEEV KUMAR DONERIA (94ITD345); HOTLINE INTERNATIONAL PVT .LTD.(296ITR333)AND MYSORE MINERALS LTD. (CVL.APPEAL NO.5374 OF 1994,DT.01/09.1999) OF THE HON'BLE SUPREME COURT . 896&1099/M/16- MIG CO-OP.HSG. SOC. GROUP-II 5 WITH REGARD TO THE MERIT OF THE CASE,THE DR STATED THAT SOCIETY WAS THE OWNER OF THE PROPERTY, THAT ONLY SOCIETY COULD TRANSFER THE RIGHT TO THE D EVELOPER.HE REFERRED TO PG.NO.336(PARA 27, 28,18) OF THE PB .HE ALSO MADE A REFERENCE TO THE L ETTER TO KOTAK MAHINDRA BANK DT.30-11-09 AND STATED THAT FROM THE CONDUCT OF THE SOCIETY IT WAS CLEAR THAT SOC WAS OWNER OF THE FLATS. HE ALSO STATED THAT FACTS OF RAJ RATAN SOCIETY(SUPRA)W ERE NOT APPLICABLE TO THE CASE UNDER CONSIDERATION, THAT IN THE CASE OF RAJ RATAN BUILDI NG WAS NOT DEMOLISHED,THAT BUILDER WAS GIVEN RIGHT TO DEVELOP ONLY THE REAR PORTION OF THE PROPERTY,THAT IN THAT MATTER MEMBERS HAD ENTERED INTO AGREEMENT WITH THE DEVELOPER. IN HIS REJOINDER,THE AR ARGUED THAT THE DEPARTMENT CANNOT APPROBATE AND REPROBATE AT THE SAME TIME,THAT FOR SERVICE OF NOTICE IT CANNOT BE A RGUED THAT THERE WAS NO SERVICE OF NOTICE WHEN THE AO HIMSELF HAD TALKED OF CONSTRUCTIVE SERV ICE. 4.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL.WE FIND THAT IN THE PRESENT CASE DEVELOPMENT-AGREEMENT WAS EXECUTED BY THE SOCI ETY AND THE DEVELOPER,THAT THE DEVELOPER HAD MADE PAYMENTS TO THE FLAT OWNERS IN T HEIR INDIVIDUAL CAPACITY,THAT CONTRIBUTION TOWARDS CORPUS OF THE SOCIETY WAS ALSO PAID BY DEVE LOPER,THAT THE SOCIETY AS WELL AS INDIVIDUAL MEMBER HAD OFFERED RECEIPT OF INCOME IN THEIR RET URNS,THAT THE AO AND THE FAA WERE OF THE VIEW THAT PAYMENT MADE BY THE DEVELOPER WAS TO BE T AXED IN THE HANDS OF THE SOCIETY. 4.4.1. HERE,IT WILL BE USEFUL TO TAKE NOTICE OF THE CASE O F RAJ RATAN PALACE CO-OPERATIVE HOUSING SOCIETY(SUPRA),WHEREIN THE TRIBUNAL HAD DEA LT WITH THE SIMILAR ISSUE.IT THAT MATTER THE SOCIETY CONSISTED OF 51 MEMBERS AND WAS OWNER O F CERTAIN PROPERTY.IT ENTERED INTO AN AGREEMENT WITH A DEVELOPER FOR DEVELOPMENT OF SAID PROPERTY.THE TRIBUNAL RECORDED THE FOLLOWING FACTS: THE ASSESSEE WAS A REGISTERED HOUSING SOCIETY HAVI NG 51 MEMBERS AND DULY ELECTED MANAGING COMMITTEE. IT WAS THE OWNER OF A PROPERTY ADMEASURI NG 3316 SQ.METERS OR THEREABOUTS TOGETHER WITH R BUILDING. THE SOCIETY INVITED OFFERS FROM BUILDERS FOR REDEVELOPMENT OF ITS PROPERTY BY CONSTRUCTION OF A NEW MULTI-STOREY BUILDING BEHIND THE R BUILDING, BY MEANS OF T.D.R. FROM ELSEWHERE AND BY THE CONSUMPTION OF AVAILABLE F.S.I . OF THE SAID PROPERTY, AFTER DEMOLISHING THE EXISTING BUNGALOW.IN PURSUANCE OF THE ABOVE N SUB MITTED TENDER FOR DEVELOPMENT OF SOCIETYS SAID PROPERTY. THE ASSESSEE SOCIETY VIDE AGREEMENT DATED 18.05.199 6 AGREED TO GRANT TO THE DEVELOPERS PERMISSION LEAVE AND LICENCE TO ENTER UPON THE SOC IETYS PROPERTY AND WITH THE RIGHT TO DEMOLISH THE SAID BUNGALOW AND CONSTRUCT A NEW MULT I-STOREY R.C.C. BUILDING, ON THE TERMS AND CONDITIONS MUTUALLY AGREED UPON BY THE AND ON BEHAL F OF THE SOCIETY AND THE DEVELOPERS. IT WAS NOT IN DISPUTE THAT AS PER TERMS OF AGREEMEN T THE ASSESSEE SOCIETY WAS PAID ONLY A SUM OF RS.2,51,000. THE CONSIDERATION MENTIONED IN CLAUSE 12 OF THE AGREEMENT OF RS.2,00,16,828/- WAS LATER REVISED TO A SUM OF RS.3,02,16,828/- BECA USE OF THE ADDITIONAL FSI THAT THE BUILDER HAD CONSTRUCTED. THE SUM OF RS.3,02,16,828/- WAS PA ID BY THE DEVELOPER TO THE INDIVIDUAL MEMBERS OF THE SOCIETY TOTALLING IN ALL ABOUT 51. THE ASSESSEE FILED ITS RETURN OF INCOME WHEREIN IT DID NOT OFFER ANY SUM TO TAX IN RESPECT OF THE AGREEMENT DATED 18.5.1996. THE ASSESSING OFFICER, H OWEVER, WAS OF THE VIEW THAT THE ASSESSEE WAS THE OWNER OF THE LAND AND BY VIRTUE OF CLAUSES 12 & 13 OF THE AGREEMENT DATED 18-5-1996 IT 896&1099/M/16- MIG CO-OP.HSG. SOC. GROUP-II 6 WAS ENTITLED TO THE ENTIRE COMPENSATION OF RS.3,02, 16,828/-.HE WAS OF THE VIEW THAT THE ASSESSEE HELD A CAPITAL ASSET AND ALLOWED THE DEVELOPER NAM ELY N TO CONSTRUCT THE MULTI-STORIED BUILDING ON THE SURPLUS LAND BELONGING TO THE SOCIE TY AND RECEIVED COMPENSATION. THE ASSESSING OFFICER HELD THAT THE SAID RECEIPT OF COMPENSATION WAS TAXABLE AS PER THE PROVISIONS OF SECTION 2(24). HE ALSO HELD THAT THE AGREEMENT BETWEEN THE DEVELOPER AND THE INDIVIDUAL 51 MEMBERS OF THE SOCIETY WAS ONLY TO FACILITATE PAYMENT BY THE D EVELOPER AND IT DID NOT ABSOLVE THE SOCIETY FROM THE TAXABILITY OF THE ENTIRE PROCEEDS.THUS, A SUM OF RS.3,02,16,828/- WAS ADDED BY THE ASSESSING OFFICER .ON APPEAL, THE COMMISSIONER(APPE ALS) UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. AFTER CONSIDERING THE SUBMISSION OF THE BOTH THE SI DES,THE TRIBUNAL HAS HELD AS UNDER - IT WAS APPARENT FROM RECORDS THAT UNDER THE AGREEM ENT DATED 18-5-1996 THE ASSESSEE SOCIETY GAVE PERMISSION TO THE DEVELOPER TO CONSTRUCT ON TH E SOCIETYS LAND. NO PART OF THE LAND WAS EVER TRANSFERRED TO THE SOCIETY. THE SOCIETY MERELY GAVE PERMISSION TO THE DEVELOPER TO CARRY OUT DEVELOPMENT IN THE REAR SIDE OF THE EXISTING BU ILDING R AFTER DEMOLISHING A SMALL BUNGALOW WHICH WAS IN EXISTENCE. CLAUSES 12 & 13 OF THE AGREEMENT DATED 18-5-1996 CLEARLY MENTIONED THAT THE DEVELOPER WOULD PAY COMPENSATION TO THE SOCIETY AND MEMBERS. THE SUM WAS QUANTIFIED AT RS.2,00,16,828/-.OUT OF THIS ONLY A SUM OF RS.2,51,000/- WAS PAID TO THE SOCIETY. ADMITTEDLY, THE REMAINING SUM AND THE ADDI TIONAL SUM PAYABLE UNDER CLAUSE 13 OF THE AGREEMENT DATED 18-5-1996 WAS PAID TO THE INDIVIDUA L MEMBERS OF THE SOCIETY UNDER 51 DIFFERENT AGREEMENTS. THUS IT WAS CLEAR THAT THE AS SESSEE DID NOT PART WITH ANY RIGHTS IN PROPERTY AND DID NOT RECEIVE ANY CONSIDERATION EXCE PT A SUM OF RS.2,51,000. IN SUCH CIRCUMSTANCES, ONE FAILED TO SEE AS TO HOW THERE CO ULD BE ANY INCIDENCE OF TAXATION IN THE HANDS OF THE ASSESSEE. BESIDES, THE ORDER OF THE AS SESSING OFFICER WAS VAGUE. IT WAS NOT CLEAR AS TO WHETHER THE SUM IN QUESTION WAS BROUGHT TO TA X AS CAPITAL GAIN IN THE HANDS OF THE ASSESSEE OR AS INCOME UNDER SECTION 2(24). NEITHER OF THE ABOVE PROVISIONS COULD BE PRESSED INTO SERVICE FOR BRINGING THE SUM IN QUESTION TO T AX IN THE HANDS OF THE ASSESSEE. AS ALREADY SEEN THAT THERE WAS NO RECEIPT BY THE ASSESSEE EXC EPT A SUM OF RS. 2,51,000. THE SUM SO RECEIVED WAS FOR MERELY GRANTING CONSENT TO CONSUM E TDR PURCHASED BY THE DEVELOPER FROM A 3RD PARTY. THE SOCIETY CONTINUED TO BE THE OWNER OF THE LAND AND NO CHANGE IN OWNERSHIP OF LAND HAD TAKEN PLACE. MERE GRANT OF CONSENT WOULD NOT AMOUNT TO TRANSFER OF LAND/OR ANY RIGHTS THEREIN. IT WAS ALSO SEEN THAT THE SOME OF THE INDIVIDUAL MEMBERS HAD OFFERED THE RECEIPTS FROM THE DEVELOPER TO TAX AND THE SAME HAD ALSO BEEN BROUGHT TO TAX IN THE HANDS OF THE INDIVIDUAL MEMBERS. IN THIS SCENARIO, THE ADDIT ION MADE IN THE HANDS OF THE ASSESSEE SOCIETY WAS WITHOUT ANY BASIS. CONSEQUENTLY THE ADD ITION MADE IN THE HANDS OF THE SOCIETY WAS TO BE DELETED. [PARA 12] BEFORE THE HON'BLE BOMBAY HIGH COURT FOLLOWING QUES TION WAS RAISED BY THE DEPARTMENT- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE TRIBUNAL IS RIGHT IN HOLDING THAT AMOUNT RECEIVED CANNOT BE TAXED IN THE HANDS OF ASSESSEE SOCIETY BECAUSE SOCIETY CONTINUES TO BE OWNER OF THE LAND AS NO CHANGE IN O WNERSHIP OF LAND HAS TAKEN PLACE WITHOUT APPRECIATION THE FACT THAT THE ASSESSEE HAS RECEIVE D COMPENSATION OF RS.3,02,16,828/-FOR GRANTING THE DEVELOPER THE RIGHT TO DEVELOP THE PRO PERTY WHICH IS CLEARLY TAXABLE AS PER PROVISIONS OF SECTION 2(24) READ WITH SECTION 2(47 ) AND 2(14) OF THE INCOME TAX ACT? THE HONBLE COURT DECIDED THE ISSUE AS UNDER : 2. THE REVENUE SEEKS TO TAX THE SOCIETY IN RESPECT OF THE AMOUNT RECEIVED ON TRANSFER OF TDR. THE TRIBUNAL IN THE IMPUGNED ORDER RECORDED A FINDI NG OF FACT THAT THE AMOUNT WHICH WAS RECEIVED ON THE TRANSFER OF TDR WAS RECEIVED BY MEM BERS OF RESPONDENT SOCIETY. THE MEMBERS OF THE SOCIETY HAD OFFERED THE AMOUNTS RECEIVED BY THEM TO TAX IN THEIR INDIVIDUAL RETURNS. IN FACT,COPIES OF ORDERS OF THE TRIBUNAL IN RESPECT OF INDIVIDUAL MEMBERS WHO RECEIVED AMOUNT FROM THE DEVELOPERS AND OFFERED TO TAX WAS ALSO PLA CED BEFORE THE TRIBUNAL. 3. AS THE DECISION IS BASED ON A FINDING OF FACT W HICH IS NOT CHALLENGED BY THE REVENUE AS BEING PERVERSE, WE SEE NO REASON TO ENTERTAIN THE P ROPOSED QUESTION OF LAW. 4 ACCORDINGLY, APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. 896&1099/M/16- MIG CO-OP.HSG. SOC. GROUP-II 7 WE FIND THAT FACTS OF THE CASE BEFORE US ARE ALMOST SIMILAR TO THE FACTS OF RAJ RATAN PALACE CHG(SUPRA).AS STATED EARLIER,THE DEVELOPER HAD MADE PAYMENTS TO THE SOCIETY AS WELL AS TO THE MEMBERS AND THEY HAD OFFERED THE AMOUNTS,RECEIV ED BY THEM,FOR TAXATION.IN OUR OPINION,ONCE THE MEMBERS HAD SHOWN THE INCOME RECEI VED BY THEM IN THEIR HANDS THERE CAN - NOT BE ANY JUSTIFICATION FOR TAXING THE SAME IN THE HANDS OF SOCIETY.NO DOUBLE TAXATION AND NO DOUBLE DEDUCTION IS ONE OF THE WELL RECOGNISED AND FUNDAMENTAL PRINCIPLES OF TAXATION.IN OUR OPINION,SIGNING OF AGREEMENT BY THE MEMBERS OR SOCI ETY 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,INCOME WAS RECEIVED BY THE MEMBERS AND THEY HAD OFFERED THE SAME FOR TAXATION. 5. WE ALSO HOLD THAT SOCIETY WAS ONLY THE LESSEE AND W HAT WAS TRANSFERRED TO THE DEVELOPER WAS DEVELOPMENT RIGHTS NOT LAND OR BUILDING .SECTIO N 50C OF THE ACT STIPULATES AS UNDER: WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH.. NO AUTHORITY IS REQUIRED TO HOLD THAT TERMS LAND O R BUILDING OR BOTH DO NOT INCLUDE DEVELOPMENT RIGHTS AND THAT IN THE CASE BEFORE THER E WAS TRANSFER OF SUCH RIGHTS ONLY. IN LIGHT OF THE ABOVE DISCUSSION AND RESPECTFULLY,F OLLOWING THE JUDGMENT OF THE HON'BLE HIGH COURT IN THE CASE OF RAJ RATAN CHS(SUPRA),WE HOLD T HAT FAA WAS NOT JUSTIFIED IN TAXING THE SUM OF RS. 53.50 CRORES IN THE HANDS OF THE ASSESSE E,AS SAME WAS THE INCOME OF THE MEMBERS OF THE SOCIETY.GOA.2 IS DECIDED IN FAVOUR OF THE AS SESSEE. 6. AS WE HAVE DECIDED THE ISSUE ON MERITS,SO WE ARE NO T DEALING WITH TECHNICAL GROUNDS RAISED BY THE ASSESSEE WITH REGARD TO RE-OPENING OF THE ASSESSMENT. 7. GROUND NO.3 IS ALTERNATE GROUND TO GROUND NO.1 AND 2.THE ASSESSEE HAS ARGUED THAT FAA HAD NOT ALLOWED IT THE OPTION OF SUBSTITUTING THE FMV AS ON 1.4.1981 DULY INDEXED IN TERM OF SECTION 55 R.W.S. 48 OF THE ACT.WHILE DECIDING GROU ND NO.2,WE HAVE ALREADY HELD THAT THE DISPUTED AMOUNT CANNOT BE TAXED IN THE HANDS OF THE ASSESSEE.SO, GROUND NO.3 ARE ALLOWED FOR STATISTICAL PURPOSES. 896&1099/M/16- MIG CO-OP.HSG. SOC. GROUP-II 8 8. NEXT GROUND IS ABOUT TAXING RS.3.50 CRORES BY THE A SSESSEE TOWARDS CORPUS.DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE DEVELO PER HAD AGREED TO PAY TO THE ASSESSEE AN AMOUNT OF RS.15 CRORES TOWARDS CORPUS FUND, THAT IT WAS DECIDED THAT RS.3.50 CRORES WOULD BE PAID ON EXECUTION OF THE AGREEMENT AND BALANCE OF R S.11.50 CRORES WAS TO BE PAID ON EXPIRY OF 30 MONTHS FROM THE POSSESSION DATE OR ON THE DA TE PEACEFUL AND VACANT POSSESSION WAS GIVEN BY THE DEVELOPER TO THE SOCIETY, THAT THE COR PUS FUND WAS TO BE UTILISED FOR THE WELFARE OF THE SOCIETY,THAT THE ASSESSEE HAD PAID RS.2.97CR ORES TOWARDS INCOME TAX.HE HELD THAT PAYMENT OF INCOME TAX WAS NOT RELATED TO THE CORPUS OF THE SOCIETY AND THE SAME WAS NOT AN ALLOWABLE EXPENDITURE, THAT THE SUM OF RS.15 CRORES WAS NOTHING BUT A WINDFALL, THAT SAME WAS NOT IN ACCORDANCE WITH THE SCHEME FRAMED FOR THE CO -OPERATIVE SOCIETIES UNDERGOING RE-DEVELO PMNENT,THAT THE SOCIETY HAD ASSISTED THE DEVELOPER TO INFLATE ITS DEVELOPMENT EXPENSES, THAT THE SOCIETY HAD BROKEN THE STRING OF PRINCIPLE OF M UTUALITY,THAT IT HAD ACCEPTED CONTRIBUTION TO CORPUS FUND FROM NON-MEMBER I.E. DEVELOPER,THAT IT HAD DEPOSITED THE MONEY IN REC BOND, THAT IT WAS VIOLATION OF SOCIETIES ACT,THAT IT RECE IVED COMPENSATION ON TRANSFER OF ASSET FOR DISTRIBUTION AMONG THE MEMBERS,THAT THE DISPUTED SU M WAS NOT RECEIVED IN ACCORDANCE WITH THE PERMISSIBLE PARAMETERS OF LAW APPLICABLE TO THE SOCIETIES, THAT IT WAS JUST A RECEIPT OF NON RECURRING NATURE, THAT SAME WAS TO ASSESSED UNDER T HE HEAD INCOME FROM OTHER SOURCES.HE FURTHER ADDED INTEREST AMOUNT OF RS.1.43 CRORES RE CEIVABLE ON THE DEPOSIT TO THE INCOME OF THE ASSESSEE. 8.1. BEFORE THE FAA,THE ASSESSEE MADE ELABORATE SUBMISSI ONS. AFTER CONSIDERING THE AVAILABLE MATERIAL THE FAA HELD THAT PAYMENT OF RS.15 CRORES BY THE DEVELOPER TO THE SOCIETY COULD NOT BE TREATED AS PAYMENT TOWARDS CORPUS OF THE SOCIETY ,THAT THE AO HAD RIGHTLY HELD THAT THE DISPUTED AMOUNT WAS TO BE ASSESSED AS INCOME FROM O THER SOURCES,THAT OUT OF THE SUM OF RS.15 CRORES RS. 3.5 CRORES WERE TO BE PAID ON EXEC UTION OF THE DEVELOPMENT AGREEMENT,THAT BALANCE AMOUNT WAS TO BE PAID ON EXPIRY OF 30 MONTH S OR FULFILLMENT OF CERTAIN CONDITIONS, THAT RECEIPT OF RS.11.5 CRORES WOULD ACCRUE TO THE ASSESSEE IN FUTURE,THAT SAME ALONG WITH THE INTEREST AMOUNT TO BE RECEIVED IN SUBSEQUENT YEARS COULD NOT BE TAXED DURING THE YEAR UNDER APPEAL,THAT ONLY REAL INCOME COULD BE TAXED AND NOT ANY FUTURE OR IMAGINARY INCOME. FINALLY,HE HELD THAT ON RS.3.50 CRORES WAS TAXABLE, UNDER THE HEAD INCOME FROM OTHER SOURCES, IN THE HANDS OF THE ASSESSEE FOR THE YEAR UNDER CON SIDERATION. 8.2. BEFORE US,THE AR ARGUED THAT THE ASSESSEE HAD RECEI VED RS.3.50 CRORES ONLY DURING THE YEAR,THAT THE CIT(A) HAD WRONGLY ASSESSED THE INCOM E UNDER THE HEAD INCOME FROM OTHER SOURCES.THE DR SUPPORTED THE ORDER OF THE AO AND AR GUED IT.THE ASSESSEE WAS TO RECEIVE RS.15.00 CRORES FROM DEVELOPER, THAT IT HAD OFFERED RS.3.50 CRORES ONLY FOR TAXATION PURPOSES. 896&1099/M/16- MIG CO-OP.HSG. SOC. GROUP-II 9 8.3. WE FIND THAT THE FAA HAD HELD THAT RS.3.50 CRORES O NLY WERE TO BE TAXED DURING THE YEAR UNDER CONSIDERATION,THAT THE INCOME WAS TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES.IT IS A FACT THAT SOCIETY HAD NOT GIVEN POS SESSION OF LAND TO THE DEVELOPER DURING THE YEAR UNDER CONSIDERATION.IN OUR OPINION,THE MONEY R ECEIVED BY THE ASSESSEE DURING THE YEAR I.E. RS.3.50 CRORES WAS TO BE ASSESSED UNDER THE HE AD CAPITAL GAINS, AS CLAIMED BY THE ASSESSEE. FOURTH GROUND IS DECIDED IN FAVOUR OF THE ASSESSEE. 9. GROUND NO.5 IS ABOUT TAXING RS.9.04 CRORES.DURING T HE ASSESSMENT PROCEEDINGS THE AO NOTED THAT AS PER CLAUSE 5A OF THE AGREEMENT THE SO CIETY WAS TO RECEIVE A BENEFIT BY WAY OF DISCHARGE OF LIABILITIES WHICH WERE OTHERWISE DISCH ARGEABLE BY IT FROM ITS OWN FUND, THAT THE DEVELOPER HAD PAID RS.9.04CRORES ON BEHALF OF THE S OCIETY INCLUDING THE COST OF LAND (74.29 LAKHS ALLOTED BY THE MHADA TO THE SOCIETY).FINALLY, HE HELD THAT THE AMOUNT IN QUESTION I.E. RS.9,04,78,741/- HAD TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES AS SAME WAS NOT TAXABLE UNDER ANY OTHER HEAD. 9.1. DURING THE APPELLATE PROCEEDINGS BEFORE THE FAA,THE ASSESSEE ARGUED THAT IT HAD NOT RECEIVED ANY MONEY EXCEPT RS.15 CRORES FROM THE DEV ELOPER, THAT IF THE DISPUTED AMOUNT WAS TO BE TAXED IN ITS HAND EXPENDITURE INCURRED BY IT SHOULD BE ALLOWED. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE THE FAA HELD THAT PAYMEN T OF RS.9.04 CRORES, MADE BY THE DEVELOPER, WAS APPLICATION OF INCOME ACCRUED AND AR ISEN TO THE ASSESSEE SOCIETY DURING THE YEAR UNDER CONSIDERATION. HE REFERRED TO CASES OF S ITALDAS TIRTHDAS (41ITR367),VIBHUTI GLASS WORKS (177ITR439) AND MK BROTHERS PVT.LTD.(63ITR28) AND HELD THAT THE AO HAD CORRECTLY TAXED RS.9.04 CRORES PAID BY DEVELOPER TO MHADA ON BEHALF OF THE SOCIETY AS INCOME FROM OTHER SOURCES. 9.2 .BEFORE US,THE AR ARGUED THAT THE DEVELOPER HAD TO PAY MHADA CERTAIN SUMS FOR DEVELOPMENTS,THAT AO HAD WRONGLY HELD THAT PREMIUM PAID BY THE DEVELOPER WAS THE INCOME OF THE ASSESSEE.ALTERNATIVELY,IT WAS ARGUED THAT EV EN IF IT WAS TO BE TREATED AS INCOME TAXABLE IN THE HANDS OF THE SOCIETY,SAME SHOULD HAVE BEEN A LLOWED AS AN EXPENSE, THAT NOTHING WOULD SURVIVE FOR TAXATION.THE DR LEFT THE ISSUE TO THE D ISCRETION OF THE BENCH. 9.3. WE FIND THAT THE DEVELOPER HAD MADE PAYMENT TO MHAD A,THAT THE AO TREATED IT AS INCOME OF THE ASSESSEE.IN OUR OPINION, PAYMENT MADE TO A GOVERNMENT AGENCY IN PERSUANCE OF AN AGREEMENT CANNOT BE TREATED INCOME OF ASSESSEE.A S FAR AS PRINCIPLE OF APPLICATION OF INCOME IS CONCERNED,WE WOULD LIKE TO STATE THAT THE TRUE TEST FOR THE APPLICATION OF THE RULE OF DIVERSION OF INCOME BY AN OVERRIDING CHARGE, IS WHE THER THE AMOUNT SOUGHT TO BE DEDUCTED, IN 896&1099/M/16- MIG CO-OP.HSG. SOC. GROUP-II 10 TRUTH, NEVER REACHED THE ASSESSEE AS HIS INCOME. OB LIGATIONS, NO DOUBT, THERE ARE IN EVERY CASE, BUT IT IS THE NATURE OF THE OBLIGATION WHICH IS THE DECISIVE FACT. THERE IS A DIFFERENCE BETWEEN AN AMOUNT WHICH A PERSON IS OBLIGED TO APPLY OUT OF HIS INCOME AND AN AMOUNT WHICH BY THE NATURE OF THE OBLIGATION CANNOT BE SAID TO BE A PAR T OF THE INCOME OF THE ASSESSEE. WHERE BY THE OBLIGATION INCOME IS DIVERTED BEFORE IT REACHES THE ASSESSEE, IT IS DEDUCTIBLE; BUT WHERE THE INCOME IS REQUIRED TO BE APPLIED TO DISCHARGE AN OB LIGATION AFTER SUCH INCOME REACHES THE ASSESSEE,THE SAME CONSEQUENCE, IN LAW, DOES NOT FOL LOW. IT IS THE FIRST KIND OF PAYMENT WHICH CAN TRULY BE EXCUSED AND NOT THE SECOND. THE SECOND PAYMENT IS MERELY AN OBLIGATION TO PAY ANOTHER A PORTION OF ONE'S OWN INCOME, WHICH HAS BE EN RECEIVED AND IS SINCE APPLIED.WE ARE OF THE OPINION THAT DISPUTED AMOUNT FALLS IN FIRST CATEGORY.IN THE CASE BEFORE US,THE OBLIGATION INCOME WAS DIVERTED BEFORE IT REACHED THE ASSESSEE. BESIDES,THE PAYMENT IS NOT IN DOUBT AND IT IS ALSO A FACT THAT SAME WAS MADE IN CONNECTION WIT H THE DEVELOPMENT OF THE PROPERTY.SO,AS A COROLLARY,IT HAS TO BE ALLOWED AS AN ALLOWABLE EXP ENDITURE.CONSIDERING THE CIRCUMSTANCES AND FACTS OF THE CASE,WE DECIDE GROUND NO.5 IN FAVOUR O F THE ASSESSEE. ITA/1099/MUM/2016: 10 .THE ISSUE OF RE-OPENING OF ASSESSMENT HAS BEEN RAI SED BY THE AO IN ADDITIONAL GROUNDS. WHILE DEALING WITH THE SIMILAR GROUND OF THE ASSESS EE,IN THE EARLIER PART OF THE ASSESSMENT,WE HAVE MENTIONED THAT WE WOULD LIKE TO DECIDE THE MAT TER ON MERITS AND NOT ON TECHNICAL ISSUES.FOLLOWING THE SAME,WE ARE NOT DECIDING THE G ROUNDS ABOUT ISSUE OF NOTICE U/S.148 OF THE ACT THE REASSESSMENT. 11. FIRST GROUND OF APPEAL IS ABOUT DELETION OF AN AMOU NT OF RS.11.50 CRORES RECEIVED BY THE ASSESSEE TOWARDS CORPUS AND ACCRUED INTEREST THEREO N. 11.1. IN THE EARLIER PART OF OUR ORDER, WE HAVE NARRATED THE FACTS AND HAVE HELD THAT FAA HAD RIGHTLY TAXED RS.3.50 CRORES ONLY DURING THE YEAR U NDER APPEAL, THAT RS.11.50 CRORES AND INTEREST OF RS.1.43 CRORES WERE NOT RECEIVED BY THE ASSESSEE AND HENCE,WERE NOT TAXABLE FOR THE AY 2011-12.CONFIRMING HIS ORDER ,WE HOLD THAT T HERE IS NO INFIRMITY IN THAT ORDER AND HE HAS RIGHTLY DELETED THE ADDITION MADE ON ACCOUNT O F CORPUS FUND AND INTEREST ACCRUED ON IT.FIRST GROUND OF APPEAL IS DECIDED AGAINST THE AO . 896&1099/M/16- MIG CO-OP.HSG. SOC. GROUP-II 11 12. NEXT IS ABOUT ALLOWING DEDUCTION U/S.80P OF THE ACT .DURING THE ASSESSMENT PROCEEDINGS, THE AO HELD THAT THE SOCIETY HAD VIOLATED THE PRINC IPLES OF MUTUALITY,THAT THE PROVISIONS OF SECTION 80P WERE NOT APPLICABLE TO A CO-OP.HOUSING SOCIETY,THAT THE ASSESSEE HAD MADE DEPOSITS OUT OF MONEY RECEIVED AGAINST REDEVELOPMEN T AGREEMENT AND FROM DIFFERENT CHANNELS, THAT SAME WAS NOT PERMISSIBLE UNDER BYELA WS OF THE SOCIETY,THAT IT HAD TRANSFERRED A SUM OF RS.2.97 CRORES FROM THE CORPUS FUND TO THE P&L ACCOUNT,THAT SUCH INVESTMENT IN BANKS WOULD NOT QUALIFY FOR DEDUCTION U/S.80P OF TH E ACT.FINALLY,HE DENIED THE ASSESSEE THE BENEFIT OF DEDUCTION U/S. 80P. 12.1. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE REFER RED TO PROVISIONS OF SECTION 80P(2) OF THE ACT ESPECIALLY 80P(2)(C)(II) AND 80P(D) OF THE ACT AND RELIED UPON THE CASE OF DAOBA CO- OP SUGAR MILLS LTD.230/774,ASHOK APT CHS LTD.(ITA/2 845/M/2010),SAGAR SANJOG CHS LTD.(ITA/1972-74/MUM/2005);PANCHRATNA CO-OP.HSG LTD .(ITA2858/MUM/2010). REFERRING TO THE PROVISIONS OF SECTION 80P OF THE ACT,THE FAA HELD THAT RESTRICTIONS PUT BY THE SECTION WAS WITH REGARD TO INCOME RECEIVED BY WAY OF INTERE ST ON SECURITIES/INCOME FROM HOUSE PROPERTY, THAT THE RESTRICTION COULD BE EXTENDED TO OTHER SUB SECTIONS OF SECTION 80P(2), THAT THERE WAS NO BAR FOR CLAIMING DEDUCTION UNDER OTHER SUB SECTIONS OF SECTION 80P(2)BY A CO- OP. HSG. SOCIETY,THAT DEDUCTIONS COULD NOT BE DENIE D BY OBSERVING THAT THE SOCIETY HAD BREACHED THE PRINCIPLE OF MUTUALITY OR HAD VIOLATED THE BYE LAWS,THAT TILL THE SOCIETY WAS REGISTERED AS A CHS IN THE REGISTER OF THE REGISTRA R OF CO-OP. SOCIETY DEDUCTION U/S.80P COULD NOT BE DENIED. FINALLY,HE ALLOWED THE APPEAL FILED BY THE ASSESSEE. 12.2. BEFORE US,THE DR RELIED UPON THE ORDER OF THE AO AN D THE AR RELIED UPON THE ORDER OF THE FAA. 12.3. WE FIND THAT THE ASSESSEE HAD MADE A CLAIM DEDUCTIO N OF RS.47.08 LAKHS AND RS.50,000/- U/S. 80P(2)(D)AND80P(2)(C)(II)RESPECTIVELY,THAT THE AO HAD INVOKED THE PROVISIONS OF SEC.80P (2) (F)AND DENIED THE SOCIETY THE BENEFITS CLAIMED BY IT.IN OUR OPINION,THE SUB SECTIONS OF 80P DEAL WITH DIFFERENT CLAIMS AND OPERATE IN DIFFERENT FIELDS.THE PROVISIONS OF ONE SUB SECTION CANNOT BE IMPORTED TO ANOTHER SUB SECTION.IT IS A F ACT THAT THE REGISTRAR OF CO-OP.HSG. SOCIETY HAD NOT CANCELLED THE REGISTRATION OF THE HOUSING S OCIETY ON THE ALLEGED VIOLATION OF PRINCIPLE OF MUTUALITY OR BYE LAWS.IN THESE CIRCUMSTANCES,IN OUR OPINION THE FAA HAS RIGHTLY HELD THAT DEDUCTION CLAIMED BY THE ASSESSEE UNDER SUB-SECTION S (D) AND (C)(II) CANNOT BE DENIED THE ASSESSEE.UPHOLDING HIS ORDER,WE DISMISS THE GROUND RAISED BY THE AO. AS A RESULT,APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF THE AO IS DISMISSED. 896&1099/M/16- MIG CO-OP.HSG. SOC. GROUP-II 12 . ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRUARY , 2017. 17 , 2017 SD/- SD/- ( / AMARJIT SINGH ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 17.02.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.