PUNAM CO OP HSG SOC. LTD, V. ASST CIT 8(1),

MA 172/MUM/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9091 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 15-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI . , BEFORE SHRI D. MANMOHAN, VICE PRESIDENT / AND !'# , !$ %& SHRI RAJENDRA, ACCOUNTANT MEMBER M.A. NO. 172/MUM/2012 (ARISING OUT OF ITA NO. 5919/MUM/2007) ASSESSMENT YEAR 2004-05 PUNAM CO - OP. HOUSING SOCIETY LTD., 67, NAPEAN SEA ROAD, MUMBAI 400 006. PAN: AAATP 1723 F VS. A SST . COMMISSIONER OF INCOME TAX 8(1), MUMBAI. (APPLICANT) ( RESPONDENT) APPLICANT BY : SHRI SATISH R. MODY RESPONDENT BY : MS. NEERAJA PRADHAN ' ($ / DATE OF HEARING : 31-08-2012 )* ' ($ / DATE OF PRONOUNCEMENT : 12-09-2012 %!+ / O R D E R PER RAJENDRA, A.M. AN APPLICATION U/S. 254 OF THE INCOME TAX, 1961 (AC T) WAS FILED BY THE ASSESSEE CO-OPERATIVE HOUSING SOCIETY LTD., (CHSL) ON 15-03-2012 WITH REFERENCE TO ORDER DT. 18-11-2009 IN THE APPEAL NO. 5919/M/2007 PASSED BY THE TRIBUNAL FOR THE ASSESSMENT YEAR 2004-05. THE ASSESSEE-CHSL SUBMITTE D THAT ORDER DT. 18-11-2009 SUFFERED FROM CERTAIN MISTAKES WHICH WERE APPARENT FROM THE RECORD AND REQUIRED RECTIFICATION. THE BRIEF FATS OF THE CASE ARE AS UNDER: 2. THE APPLICANT A CO-OPERATIVE HOUSING SOCIETY HAD DU RING THE YEAR COLLECTED A SUM OF RS. 7,14,000/- DURING THE A.Y UNDER CONSIDER ATION, UNDER THE HEAD MAJOR REPAIRS, RENOVATION, PLUMBING AND PAINTING ACCOUNT FROM TWO MEMBERS NAMELY MRS. M.A. NO. 172/MUM/2012 (ARISING OUT OF ITA NO. 5919/MUM/2007) PUNAM CO-OP. HOUSING SOCIETY LTD. 2 C.K. POOJARA AND MRS. RAJANI SARIN. THE APPLICANT C LAIMED THAT THESE AMOUNTS RECEIVED WERE NOT TAXABLE ON THE GROUND OF MUTUALIT Y. THE ASSESSING OFFICER (AO) WHILE PASSING THE ASSESSMENT ORDER HELD THAT THESE MEMBERS HAD SOLD THEIR FLATS DURING THE YEAR AND THE AMOUNT WAS RECEIVED AS PREMIUM FOR TRANSFER OF FLATS, THAT THE SAID AMOUNT WAS NOT COVERED BY THE PRINCIPLE OF MUTUALIT Y AND WAS AS SUCH TAXABLE. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). HOWEVER, HE DISMISSED THE APPEAL FOR THE YEAR UNDER CONSIDERATION. IN THE APPELLATE PROCEEDINGS, ITAT VIDE ITS ABOVE REFERRED ORDER AL SO REJECTED THE CLAIM OF THE ASSESSEE-CHSL. DECIDING THE APPEAL, TRIBUNAL HELD AS UNDER: AS FAR AS THE CONCEPT OF MUTUALITY IS CONCERNED SA ME IS NOT APPLICABLE BECAUSE THIS CONTRIBUTION HAS BEEN TAKEN FROM THE T WO MEMBERS AND, THEREFORE, THERE IS NO COMPLETE IDENTITY BETWEEN TH E CONTRIBUTORS AND BENEFICIARIES. 4. BEFORE US, AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT TRIBUNAL DID NOT APPRECIATE THE FACT THAT THE CONTRIBUTION TO THE CO MMON FUND AND THE PARTICIPATORS MUST BE AN IDENTICAL BODY DID NOT MEAN THAT EACH ME MBER SHOULD CONTRIBUTE TO THE COMMON FUND OR THAT EACH MEMBER SHOULD PARTICIPATE IN THE SURPLUS OR GET BACK FROM THE SURPLUS PRECISELY WHAT HE HAD PAID. HE FURTHER SUBMITTED THAT WHAT WAS REQUIRED WAS THAT THE MEMBERS AS A CLASS MUST BE ABLE TO PAR TICIPATE IN THE SURPLUS, THAT SUMS RECEIVED FROM MRS. C.K. POOJARA AND MRS. RAJANI SAR IN WAS RECEIVED AS THE MEMBERS OF THE SOCIETY, THAT THE AMOUNTS PAID BY THEM WAS C OVERED BY THE PRINCIPLE OF MUTUALITY AND HENCE NOT TAXABLE. HE RELIED UPON TH E DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DARBHANGA MANSION CO-OP. HOUSING SOCIETY LIMITED (ITA NO. 1453 OF 2007 DT. 03-08-2010) AND I N THE CASE OF SIND CO-OPERATIVE HOUSING SOCIETY (317 ITR 47). HE FURTHER SUBMITTED THAT IN THE LIGHT OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SAURASHTRA KUTCH STOCK EXCHANGE LIMITED (305 ITR 227) NON-CONSIDERATION OF DECISION OF JURI SDICTIONAL HIGH COURT / SUPREME COURT WAS A MISTAKE APPARENT FROM THE RECORD RECTIF IABLE U/S. 254(2) OF THE ACT. AR RELIED UPON THE ORDER OF THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUG H THE CASES RELIED UPON BY THE AR. IN THE CASE UNDER CONSIDERATION, ASSESSE E-CHSL HAS RECEIVED A SUM OF RS. 7.14 LAKHS FROM TWO OUT-GOING MEMBERS AND HAD CLAIM ED THAT THE SAID AMOUNTS WERE NOT TAXABLE AS SAME WERE COVERED BY THE PRINCIPLES OF MUTUALITY. WE FIND A SIMILAR QUESTION WAS DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SIND CO-OPERATIVE HOUSING SOCIETY. IN THAT CASE HONBLE BOMBAY HIGH COURT HAD HELD AS UNDER : IF THE OBJECT OF THE ASSESSEE CLAIMING TO BE A 'MUT UAL CONCERN' OR 'CLUB' IS TO CARRY ON A PARTICULAR BUSINESS AND MONEY IS REALIZE D BOTH FROM THE MEMBERS AND FROM NON-MEMBERS, FOR THE SAME CONSIDERATION, B Y GIVING THE SAME OR SIMILAR FACILITIES TO ALL ALIKE IN RESPECT OF THE O NE AND THE SAME BUSINESS CARRIED ON BY IT, THE DEALINGS AS A WHOLE DISCLOSE THE SAME PROFIT-EARNING MOTIVE AND ARE ALIKE TAINTED WITH COMMERCIALITY. ON THE OTHER HAND, IF IT IS MERELY A MUTUAL ARRANGEMENT WHERE THE FEES OR SUBSC RIPTIONS ARE COLLECTED FOR EXTENDING FACILITIES TO MEMBERS LIKE USUAL PRIVILEG ES, ADVANTAGES AND CONVENIENCES EVEN IF SOME SURPLUS IS GENERATED, THE N THAT SURPLUS CANNOT BE M.A. NO. 172/MUM/2012 (ARISING OUT OF ITA NO. 5919/MUM/2007) PUNAM CO-OP. HOUSING SOCIETY LTD. 3 REGARDED AS PROFIT AS LONG AS THE CONTRIBUTORS AND PARTICIPANTS AS A CLASS ARE THE SAME AND THEY HAVE A SAY OVER THE DISTRIBUTION OF THE SURPLUS. IT WAS NOT NECESSARY THAT EACH MEMBER SHOULD CONTRIBUTE OR EAC H MEMBER SHOULD PARTICIPATE IN THE SURPLUS AND GET BACK FROM THE SU RPLUS WHAT HE HAD PAID AS ALONG AS HE HAD CONTROL OVER THE SURPLUS. 6. IN OUR OPINION, WHILE PASSING THE ORDER DT. 18-11-2 009, TRIBUNAL DID NOT HAVE THE BENEFIT OF THE ORDER OF DARBHANGA MANSION CO-OP . HOUSING SOCIETY LIMITED THAT WAS PASSED ON 03-08-2010. IT HAS BEEN DECIDED BY T HE HONBLE HIGH COURT OF BOMBAY THAT CONTRIBUTION FROM OUTGOING MEMBERS TO T HE HOUSING SOCIETY SHOULD BE TREATED AS A PART OF THE INCOME AND SAME IS COVERED BY THE PRINCIPLE OF MUTUALITY. 7. RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE JUR ISDICTIONAL HIGH COURT WE ALLOW THE MA FILED BY THE ASSESSEE-CHSL. AS A RESU LT ORDER DT. 18-11-2009 STANDS MODIFIED AND IT SHOULD BE READ AS UNDER: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY . A SUM OF RS. 7.14 LAKHS RECEIVED FROM TWO OUT GOING MEMBERS UNDER THE HEAD MAJOR REPAIRS, RENOVATION, PLUMBING AND PAINTING ACCOUNT IS COVER ED BY THE PRINCIPLE OF MUTUALITY AND HENCE ALLOWABLE. GROUND NO.3 IS DECI DED IN FAVOUR OF THE ASSESSEE-CHSL. MA/APPEAL FILED BY THE ASSESSEE-CHSL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH SEPTEMBER, 2012. SD/- SD/- ( . / D. MANMOHAN) ( !'# / RAJENDRA) / VICE PRESIDENT !$ %& / ACCOUNTANT MEMBER MUMBAI, ,% DATE: 12 TH SEPTEMBER, 2012 TNMM %!+ %!+ %!+ %!+ ' '' ' -(. -(. -(. -(. /!.*( /!.*( /!.*( /!.*( / COPY OF THE ORDER FORWARDED TO : 1. APPLICANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE 0.( -( //TRUE COPY// %!+ %!+ %!+ %!+ / BY ORDER, / DY./ASSTT. REGISTRAR , / ITAT, MUMBAI