NEW UDYOG MANDIR PREMISES COP. OP. SOCIETY, V. ITO WD 15(1)(3),

MA 108/MUM/2009

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 4535 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 06-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC : MUMBAI BEFORE SHRI D. MANMOHAN, HONBLE VICE PRESIDENT AND SHRI P.M. JAGTAP, ACCOUNTANT MEMBER M.A.NO. 108/MUM/2009 ARISING OUT OF ITA. NO. 5616/MUM/2007 ASSESSMENT YEAR 2004-2005 NEW UDYOG MANDIR PREMISES CO- OP. SOCIETY LTD., MUMBAI PAN AAAAN-2358-R VS. INCOME TAX OFFICER 15 (1) (3) MUMBAI. (APPLICANT) (RESPONDENT) FOR APPLICANT : SHRI B.V. JHAVERI FOR RESPONDENT : SHRI MOHAMMED VAMAN (D.R.) ORDER PER D.MANMOHAN, V.P. 1. BY THIS APPLICATION, THE ASSESSEE-SOCIETY SEEKS RECALL OF THE ORDER DATED 14 TH NOVEMBER, 2008 CONTENDING INTER ALIA, THAT THE DEC ISION RENDERED THEREIN CONTAINS MISTAKES APPARENT FROM RE CORD WHICH DESERVES TO BE RECTIFIED UNDER SECTION 254 (2) OF THE ACT. 2. IN RESPECT OF ASSESSMENT YEAR 2004-2005 THE ASS ESSEE- SOCIETY RECEIVED TRANSFER FEE OF RS.50,000/- FOR TH E TRANSFER OF UNIT NO. 207. IN THE ASSESSMENT ORDER IT WAS CLEARLY STATED THAT THE PURCHASER HAD PAID RS.25,000/- ON 22-4-2003 AND THE SELLER HAD AL SO PAID RS.25,000/- TO THE SOCIETY ON THE SAME DATE. THE ASSESSING OFFI CER RELIED UPON THE DECISION OF THE ITAT, MUMBAI BENCH IN THE CASE OF R EGENT CHAMBERS (82 ITD 13) TO CONCLUDE THAT THE TRANSFEREE IS ONLY REL INQUISHING HIS TITLE IN FAVOUR OF THE INCOMING MEMBER AND HENCE, DOES NOT P ARTICIPATE IN ENJOYMENT OF BENEFITS THAT FLOW FROM THE AMOUNT PAI D BY HIM AS TRANSFER FEES. SECONDLY THE INCOMING MEMBER WHO DOES NOT CON TRIBUTE ANYTHING OUT OF THE TRANSFERORS SHARE SHALL BE ENJOYING ALL THE BENEFITS THAT FLOW 2 OUT NOT ONLY FROM HIS SHARE BUT THE TRANSFERORS SH ARE AND THUS THE BODY OF CONTRIBUTORS AND THE BODY OF PARTICIPATORS IS NO T IDENTICAL TO EACH OTHER. ASSESSING OFFICER FURTHER NOTICED THAT ASSES SEE RECEIVED RS.3,63,265/-, IN THE FORM OF INTEREST FROM MEMBERS , TOWARDS LATE PAYMENT OF THEIR OUTSTANDING CONTRIBUTION. SINCE IN TEREST ON LATE PAYMENT DOES NOT CONSTITUTE REGULAR CONTRIBUTION FR OM ALL MEMBERS, BUT FROM LIMITED MEMBERS WHO DEFAULTED, THE ASSESSING O FFICER WAS OF THE OPINION THAT PRINCIPLE OF MUTUALITY IS NOT APPLICAB LE TO SUCH RECEIPTS, IN THE LIGHT OF THE DECISION OF ITAT, MUMBAI IN THE CA SE OF REGENT CHAMBERS (82 ITD 13 (MUM.)). 3. CIT(A) AFFIRMED THE ORDER OF THE ASSESSING OFFI CER. THE ITAT, SMC BENCH, DISMISSED THE APPEAL FILED BY THE ASSESS EE ON THE GROUND THAT THE AMOUNT OF RS.50,000/- DISALLOWED BY THE AS SESSING OFFICER PERTAINS TO PREMIUM COLLECTED FROM THE MEMBERS IN E XCESS OF RS.25,000/-; PLACING RELIANCE UPON THE DECISION OF THE ITAT, MUMBAI SPECIAL BENCH IN THE CASE OF WALKESHWAR TRIVENI CO -OP HOUSING SOCIETY LTD. VS. ITO (2004) 88 ITD 159 (MUM.) (SB), IT WAS HELD THAT PRINCIPLE OF MUTUALITY IS NOT APPLICABLE WITH REFERENCE TO THE P REMIUM COLLECTED FROM THE MEMBERS IN EXCESS OF RS.25,000/-. AS REGARDS IN TEREST ON ARREARS, THE TRIBUNAL APPLIED THE DECISION OF ITAT, MUMBAI B ENCH IN THE CASE OF REGENT CHAMBERS 82 ITD 13 TO CONCLUDE THAT INTEREST HAVING BEEN PAID ONLY BY THE DEFAULTING MEMBERS, PRINCIPLES OF MUTUA LITY IS NOT APPLICABLE. 4. BY THIS APPLICATION ASSESSEE SUBMITS THAT THE D ECISION OF THE TRIBUNAL IS BASED UPON INCORRECT APPRECIATION OF FA CTS AND HENCE THE IMPUGNED ORDER SUFFERS FROM A MISTAKE APPARENT FROM RECORD. ADVERTING OUR ATTENTION TO THE ORDER OF THE ASSESSING OFFICER , IT WAS SUBMITTED THAT TRANSFER FEE OF RS.50,000/- CONSISTS OF RS.25,000/- RECEIVED FROM THE TRANSFEROR AND ANOTHER RS.25,000/- RECEIVED FROM TH E TRANSFEREE AND BOTH WERE WITHIN THE PRESCRIBED LIMITS WHEREAS THE TRIBUNAL WAS UNDER 3 THE WRONG IMPRESSION THAT THE AMOUNT DISALLOWED BY THE ASSESSING OFFICER REFERS TO THE PREMIUM COLLECTED IN EXCESS O F RS.25,000/-. HE CONTENDED THAT EVEN ON A STRICT APPLICATION OF THE DECISION OF THE ITAT, SPECIAL BENCH (SUPRA) THE TRANSFER FEE OF RS.25,000 /- RECEIVED FROM THE TRANSFEREE SHOULD BE HELD TO BE NOT TAXABLE. HE ALS O ADVERTED OUR ATTENTION TO THE LATEST DECISION OF THE HONBLE HIG H COURT OF BOMBAY IN THE CASE OF SIND COOPERATIVE HOUSING SOCIETY INCOME TAX APPEAL NO. 931 OF 2004 DATED 17-07-2009 WHEREIN THE COURT OBSERVE D THAT TRANSFER FEES RECEIVED BY THE ASSESSEE-SOCIETY WHETHER FROM OUT GOING OR INCOMING MEMBERS IS NOT LIABLE TO TAX ON THE GROUND OF MUT UALITY. LEARNED COUNSEL SUBMITTED THAT IN THE LIGHT OF DECISION OF THE HONBLE BOMBAY HIGH COURT, THE VIEW TAKEN BY THE ITAT WOULD COME I N CONFLICT WITH THE DECISION OF THE HONBLE HIGH COURT AND HENCE IT HAS TO BE CONSIDERED AS A MISTAKE APPARENT FROM RECORD WHICH DESERVES TO BE R ECTIFIED. 5. AS REGARDS THE SECOND ISSUE, HE SUBMITTED THAT THE CLAIM OF THE ASSESSEE THAT THE INTEREST RECEIVED FROM SOME O F THE MEMBERS ON ACCOUNT OF LATE PAYMENT OF THE CONTRIBUTIONS WOULD ALSO BE FORMING PART OF THE FUND OF THE SOCIETY WHICH IS UTILISED FOR TH E MUTUAL BENEFIT OF ALL THE MEMBERS AND HENCE PRINCIPLES OF MUTUALITY IS AP PLICABLE AND SEVERAL CASE LAW RELIED UPON BY THE ASSESSEE INCLUDING THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS. BANKIPUR CLUB LTD. (19 97) 226 ITR 97 WAS NOT EVEN REFERRED BY THE ITAT AND THUS IT GIVES RAI SE TO A MISTAKE APPARENT FROM RECORD ; HE THUS STRONGLY SUBMITTED T HAT THE ITAT HAVING OVERLOOKED THE WRITTEN SUBMISSIONS FILED BY THE ASS ESSEE THE ORDER SUFFERS FROM A MISTAKE APPARENT FROM RECORD. 6. ON THE OTHER HAND, LEARNED D.R. SUBMITTED THAT GROUND NO.1 OF THE ASSESSEES APPEAL SPEAKS OF AMOUNT PAID IN E XCESS OF RS.25,000/- AND SINCE SPECIFIC GROUND WAS NOT URGED BEFORE THE TRIBUNAL THE ORDER 4 PASSED ON THE STRENGTH OF SUCH GROUND CANNOT BE SAI D TO GIVE RISE TO A MISTAKE APPARENT FROM RECORD. 7. AS REGARDS THE GROUND RAISED IN THE FORM OF INT EREST, LEARNED D.R. SUBMITTED THAT THE ITAT HAD TAKEN A CONSCIOUS DECISION, BY RELYING UPON THE DECISION OF THE ITAT IN THE CASE OF REGENT CHAMBERS ; SINCE INTEREST IS COLLECTED ONLY THROUGH THE DEFAULTING M EMBERS AND NOT FROM EVERYBODY. THEREFORE, CHALLENGING THE VIEW TAKEN BY THE BENCH WOULD AMOUNT TO SEEKING REVIEW OF THE DECISION. 8. JOINING THE ISSUE LEARNED COUNSEL SUBMITTED THA T THE DECISION WAS RENDERED WITHOUT TAKING NOTE OF THE FA CTS MENTIONED IN THE WRITTEN SUBMISSIONS AS WELL AS THE CASE LAW RELIED UPON BY THE ASSESSEE. IT WAS FURTHER CONTENDED THAT THE DECISION OF THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF SINDH CO-OPERATIVE HOUSING SOC IETY ELABORATELY DISCUSSED AN IDENTICAL ISSUE WHEREIN THE COURT OBSE RVED THAT AMOUNT RECEIVED FROM THE MEMBERS OF THE SOCIETY AND UTILIZ ED FOR THE MUTUAL BENEFIT OF THE MEMBERS IS NOT TAXABLE IN THE HANDS OF THE SOCIETY. IN THE LIGHT OF LATER DECISION OF THE HONBLE HIGH COURT, LEARNED COUNSEL SUBMITTED, THE ORDER PASSED BY THE ITAT SUFFERS FRO M A MISTAKE APPARENT FROM RECORD. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD. IN OUR CONSIDERED OPINION THE ORDER PASSED BY THE ITAT DESERVES TO BE RECALLED SINCE THE SMC BENCH OMITTED TO CONSI DER CERTAIN VITAL FACTS WHICH ARE BORNE OUT OF THE RECORD I.E., ASSESSMENT ORDER AS WELL AS THE ORDER OF THE LEARNED CIT(A) ; THE BENCH APPEARS TO HAVE MERELY GONE BY THE GROUND URGED BEFORE THE TRIBUNAL BY 5 OVERLOOKING THE SUBSTANCE OF THE MATTER URGED THROU GH GROUND NO.1. AT ANY RATE, IN THE LIGHT OF DECISION OF THE JURISDICT IONAL HIGH COURT IN THE CASE OF SIND COOPERATIVE HOUSING SOCIETY (SUPRA) AS WELL AS THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF CIT VS. SMT.ARUNA LUTHRA (2001) 252 ITR 76 WE ARE OF THE OP INION THAT THE ORDER SUFFERS FROM A MISTAKE APPARENT FROM RECORD S INCE IN THE INTEREST OF SUBSTANTIAL JUSTICE, IN EXERCISE OF THE POWERS V ESTED IN US UNDER SECTION 254 (2) OF THE ACT, WE RECALL THE ORDER DAT ED 14 TH NOVEMBER, 2008 FOR RE-CONSIDERING THE MATTER AFRESH IN THE LIGHT O F DECISION OF HONBLE BOMBAY HIGH COURT (SUPRA). REGISTRY IS DIRECTED TO POST THE APPEAL FOR FRESH HEARING IN NORMAL COURSE. ACCORDINGLY, MISCEL LANEOUS APPLICATION IS ALLOWED. PRONOUNCED ON 09-02-2010. SD/- SD/- (P.M. JAGTAP) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATE 09 TH FEBRUARY, 2010. VBP/- COPY TO 1. NEW UDYOG MANDIR PREMISES CO-OP. SOCIETY LTD., 7 , MOGUL LANE, NEAR JOHNSON & JOHNSON, MAHIM (WEST), MUMBAI 016 PAN AAAAN-2358-R 2. I.T.O. 15 (1) (3), 1 ST FLOOR, MATRU MANDIR, GRANT ROAD, MUMBAI. 4. CIT(A)-XV, MUMBAI. 5 CIT, CITY-15, MUMBAI 6. D.R. SMC BENCH, MUMBAI. 7. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, MUMBAI BENCHES MUMBAI.