SAVITA CO-OPERATIVE HOUSING SOCIETY LIMITED,MUMBAI V. INCOME-TAX OFFICER WARD 27(3)(1), MUMBAI, MUMBAI

ITA 6839/MUM/2024

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The case involves Savita Co-operative Housing Society Limited appealing against the order of the National Faceless Appeal Centre, which upheld the Assessing Officer's decision treating a redevelopment agreement as a transfer of immovable property, resulting in a short-term capital gain of Rs. 65,277,000. The Tribunal examined whether the redevelopment agreement constituted a transfer of property under the Income-tax Act, 1961. The key contention was that the society did not transfer any property or possession to the developers, and the redevelopment work was never commenced. The Tribunal's decision hinged on the interpretation of the redevelopment agreement and the actual transactions (or lack thereof) that occurred.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 47178 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2016-2017
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITHA KAUSHIK
• Assessee Lawyers: MEHUL SHAH
• Keywords: Sale consideration of property below Jantri Value; Capital Gains
• Section: 148; 250

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.6839/MUM/2024 (निर्धारण वर्ा / Assessment Year :2016-17) Savita Co-operative Housing Society Limited. Plot No. 86, Opp Tilak Road, Ghatkopar 400077 v/s. बिधम Income Tax Ward 27(3)(1), Mumbai Station Tower, Vashi, Navi Mumbai 400703 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAGAS5959R Appellant/अपीलधर्थी .. Respondent/प्रनिवधदी निर्ााररती की ओर से /Assessee by: Shri. Mehul Shah रधजस्व की ओर से /Revenue by: Ms. Kavitha Kaushik (SR DR) सुिवधई की िधरीख / Date of Hearing 01.04.2025 घोर्णध की िधरीख/Date of Pronouncement 07.04.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 09/02/2024 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2016-17. 2. The assessee has raised the following grounds of appeal: “Being aggrieved by the orders of the Assessment Unit, Additional / Joint / Deputy / Assistant Commissioner of Income Tax, National e-Assessment Centre, Delhi and learned Commissioner of Income-tax (Appeal), NFAC, this appeal petition is filed on P a g e | 2 ITA No. 6822/Mum/2024 A.Y. 2020-21 Sri Devi Tool Engineers Pvt Ld.. the following amongst other grounds of appeal, which it is prayed may be considered without prejudice to one another. 1. On the facts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) erred in upholding action of the Assessing Officer in making addition of RS. 65,277,000 by treating the same as short term capital gain on account of transfer of immovable property without appreciating that, there was no transaction in nature of transfer but, just an agreement for redevelopment of the society building. 2. On the facts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) erred in upholding action of the Assessing Officer in treating the redevelopment agreement as transfer of immovable property without appreciating the fact that, Assessee neither transferred any property, nor did it part with possession of the building with the developers, but entered into this redevelopment agreement in its capacity as a co-operative Society, and was never in receipt of any amount in this regard in its bank account, and the bank statement does not feature any amount in relation to stamp duty value of RS. 65,277,000. 3. Your Appellant craves leave to add to, amend, alter, modify, and / or delete any of the above grounds of appeal at or before final disposal of appeal.” 3. Brief facts of the case are that the assessee had not filed its return of income for the relevant AY. Subsequently, Ld. AO noticed from the information available on ITBA software that, the assessee had received consideration of Rs. 6,52,77,000/- from sale of a property and interest income of Rs. 14,758/- during the year under consideration. Accordingly, notice u/s. 148 was issued on 24/03/2023. As the assessee did not submit requisite documentary evidences, the assessment was completed u/s. 144/147 r.w.s. 144B of the Act at an income of Rs. 6,52,91,758/- after making additions on the above issues. Aggrieved with the order of Ld.AO, the assessee preferred an appeal before Ld. CIT(A). After considering the assessee’s submissions, Ld. CIT(A) confirmed the addition on account of capital gains to the extent of Rs. 6,52,77,000/- vide order dated P a g e | 3 ITA No. 6822/Mum/2024 A.Y. 2020-21 Sri Devi Tool Engineers Pvt Ld.. 24/12/2024. Aggrieved with the order of Ld.CIT(A) the assessee has filed appeal before the Tribunal. 4. Before us, Ld. AR has submitted that the assessee is a co-operative housing society and had entered into a redevelopment agreement (along with its members) with a builder viz. M/s. Sunshine Housing & Infrastructure Pvt Ltd. The developers was only granted redevelopment rights under this agreement and even the possession of land was not given to the builder after execution of the redevelopment agreement. At the time of filing of appeal, the old building structure was still existing as the builder never commenced the redevelopment work. Vide agreement dated 20/04/2015 for proposed redevelopment, the stamp duty valuation was shown at Rs.6,52,77,000/- on which the builder had paid stamp duty of Rs. 32,63,850/- for registration purposes. Before the Ld.AO as well as Ld. CIT(A), the assessee explained that the developer did not commence the work even after a lapse of 10 years. Even otherwise, under the redevelopment agreement there was no transfer of property and the agreement value mentioned therein was merely for arriving at the stamp duty payable for the purposes of registration. In support of its claim, the Ld. AR has submitted a copy of the impugned redevelopment agreement as well as a copy of a fresh redevelopment agreement executed with the new developer viz. Yashodanand Developers on 30/11/2024, wherein, it P a g e | 4 ITA No. 6822/Mum/2024 A.Y. 2020-21 Sri Devi Tool Engineers Pvt Ld.. has also been clearly mentioned that the earlier redevelopment agreement dated 20/04/2015 stands terminated. In view of these facts, Ld. AR argued that no capital gains ought to have been levied in this case. On the other hand, Ld. DR strongly relied on the orders of the lower authorities. 5. We have heard the rival submissions. After considering the facts and documentary evidences placed before us, we are of the considered opinion that the impugned transaction does not constitute a transfer of property on which any capital gains can be charged. More so in view of the fact that the redevelopment agreement did not get executed and was eventually cancelled on 02/04/2019. Ld.AO is, therefore, not justified in treating the amount of Rs. 6,52,77,000/- mentioned therein as consideration received from the transfer of redevelopment rights. Accordingly, we hold that no capital gain has arisen out of the above said agreement and therefore, the addition made by the Ld. AO amounting to Rs. 6,52,77,000/- made on this account is hereby deleted. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 07.04.2025. Sd/- Sd/- BEENA PILLAI RENU JAUHRI (न्यधनयक सदस्य/JUDICIAL MEMBER) (लेखधकधर सदस्य/ACCOUNTANT MEMBER) P a g e | 5 ITA No. 6822/Mum/2024 A.Y. 2020-21 Sri Devi Tool Engineers Pvt Ld.. Place: म ुंबई/Mumbai दिन ुंक /Date 07.04.2025 दिव्य रमेश न ुंिग वकर / स्टेनो आदेश की प्रनतनलनि अग्रेनित/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यानित प्रनत //True Copy// आदेशािुसार/ BY ORDER, सहायक िंजीकार (Asstt. Registrar) आयकर अिीलीय अनर्करण/ ITAT, Bench, Mumbai. "