Income Tax Appellate Tribunal - Mumbai
Suvarna Nagar Co-Operative Housing ... vs Assessee on 31 March, 2010
आयकर अपीऱीय अधिकरण, मुंबई न्यायपीठ „ई' मुंबई
IN THE INCOME TAX APPELLATE TRIBUNAL
"E" BENCH, MUMBAI
श्री डी. करुणाकर राव, ऱेखा सदस्य, एवुं श्री अममत शक्ऱा, न्याययक सदस्य के समक्ष
BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND
SHRI AMIT SHUKLA, JUDICIAL MEMBER
आमकय अऩीर सं. / ITA no. 179/Mum./2011
(ननधधायण वषा / Assessment Year : 2002-03)
Suvarna Nagar Co-operative Housing
Society Limited, Jai Hind Club Bldg.
....................... अऩीरधथी /
2nd Floor, Plot no.51, N.S. Road no.11
JVPD Scheme, Vide Parle (W) Appellant
Mumbai 400 049
फनधभ v/s
Income Tax Officer ................... प्रत्मथी /
Ward-21(2)(4), Mumbai
Respondent
स्थधमी रेखध सं./ Permanent Account Number - AAAAS4938E
ननधधारयती की ओय से / Assessee by : Ms. Arati Vissanji & Shalin Divatia
यधजस्व की ओय से / Revenue by : Mr. Ashok Suri
सन
ु वधई की तधयीख / आदे श घोषणध की तधयीख /
Date of Hearing - 26.03.2014 Date of Order - 11.04.2014
आदे श / ORDER
अममत शक्ऱा, न्याययक सदस्य के द्वारा /
PER AMIT SHUKLA, J.M.
The present appeal has been preferred by the assessee challenging the impugned order dated 31st March 2010, passed by the learned Commissioner (Appeals)-XXXII, Mumbai, for the quantum of Suvarna Nagar Co-operative Housing Society Limited 2 assessment passed under section 143(3) of the Income Tax Act, 1961 (for short "the Act") for the assessment year 2002-03, vide which, following grounds have been raised:-
"1. The learned CIT(A) erred in confirming the order of the Assessing Officer charging to tax as business income, capital gains of ` 73,52,640 received by the assessee on sale of common plot of land.
2. The learned CIT(A) erred in confirming the order of the Assessing Officer charging to tax contribution received from members aggregating to ` 30,30,000 incidental to sale of plot which was exempt on the principle of mutuality."
2. Facts in brief:- Brief facts, qua the issue raised in ground no.1, are that during the year, the assessee has sold its share in the common plot number 22 as jointly held by 14 co-operative housing society for ` 90 lakhs and long term capital gain has been computed at ` 73,52,640, which has been invested in NABARD capital gain bonds for claiming exemption under section 54EC. The assessee, along with other 14 co-operative housing societies were incorporated in the year 1947 for providing housing facilities in Vile Parle area. The then Government of the Province, acquired the land and the individual plots were conveyed to each of the 14 co-operative housing societies to develop residential colonies. Due to certain circumstances, these societies have sold part of this plot of land, which were marked for amenities and the sale proceeds were offered for taxation as capital gain. The Assessing Officer observed that as per the bylaws of these housing societies, it is empowered to purchase, hold, sell, exchange, mortgage, rent or lease, etc. These objects referred to carrying on trade or building and buying and selling, developing land in accordance with the trading co-operative principles. Thus, this was adventure in the nature of trade and the entire amount of ` 90 lakhs was treated as Suvarna Nagar Co-operative Housing Society Limited 3 business income. The Assessing Officer further held that this issue had come up for consideration in the assessee's case for the assessment year 1995-96, wherein the Assessing Officer has taxed the sale proceeds under the head "profit and gains from business".
3. The learned Commissioner (Appeals) also dismissed the assessee's appeal while following the appellate order for the assessment year 1995-96.
4. Before us, it has been admitted by both the parties that this issue had come up for consideration before the Tribunal in assessee's own case in IT no.7168/Mum./2008 and in case of other societies also, who were one of the parties in the sale of the said plot. In the said decision, the Tribunal has set aside this issue to the file of the Assessing Officer for deciding the same afresh as per the direction given by the Tribunal dated 17th November 2005, relevant observation and directions fo the Tribunal are as under:-
"We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that the amount of similar nature was received by 14 cooperative housing societies including the four assessee societies in the present case on account of sale consideration of plot of land jointly owned by them. When the issue relating to head of income under which the said amount was chargeable to tax had come up for consideration in the cases of the assessee before the Tribunal in the first round, the Tribunal found it relevant to ascertain as to what had happened in the cases of other societies. None of the parties appearing before the Tribunal, however, could furnish the relevant details in this regard. The issue, therefore, was restored by the Tribunal to the file of the A.O. for deciding the same afresh after taking into consideration the final decision rendered on a similar issue in the case of other cooperative housing societies. It appears from the orders of the authorities below that the direction of the Tribunal, however, has not been complied with and the issue has been decided without complying with the directions of the Tribunal. At the time of hearing before us, the learned Counsel for the assessee has submitted that Suvarna Nagar Co-operative Housing Society Limited 4 although the assessee in the present case have details about the exact address of the remaining cooperative housing societies, they are not in a position to enforce their attendance before the A.O. or their compliance to the notice issued by the A.O. u/s 133(6). In our opinion, if these details are furnished by the assessee to the A.O., the latter is sufficiently empowered to enforce the attendance of the other cooperative housing societies or the necessary compliance or part so as to decide the issue as per the direction given by the Tribunal in the first round vide his order dated 17th Nov. 2005. We, therefore, restore this issue once again to the file of the A.O for deciding the same afresh as per the direction given by the Tribunal vide its order dated 17th Nov. 2005. The assessees are directed to furnish the addresses of the other cooperative housing societies to the A.O. who shall enforce their compliance in order to decide this issue as per the direction given by the Tribunal."
5. In view of the aforesaid decision of the Tribunal, we set aside the impugned order passed by the learned Commissioner (Appeals) and restore the issue back to the file of the Assessing Officer and direct him to decide the same in view of the observations and directions given by the Tribunal in the aforesaid case. Thus, ground no.1, is allowed for statistical purposes.
6. In ground no.2, the assessee has challenged the taxability of transfer fee of ` 30.30 lakhs received from the members.
7. The Assessing Officer held that the entire transfer fee received from Mr. Padamshri Soni, amounting to ` 15.40 lakhs and Juhugreen Apartments Owners India Pvt. Ltd. of ` 15.40 lakhs as taxable. The assessee had claimed the said amount received as exempt on the basis of principle of mutuality. Before the Assessing Officer, the assessee relied upon the decision of the Bombay High Court in Sindh Housing Co-operative Society v/s ITO, [2009] 317 ITR 147 (Bom.). However, the Assessing Officer, after detail discussion, held that it is a revenue receipt and is liable for tax as income. He had referred to the concept Suvarna Nagar Co-operative Housing Society Limited 5 of principle of mutuality and the decision of the Hon'ble Supreme Court in Bankipur Club Ltd. and held that this does not fall within the realm of principles of mutuality.
8. Before the learned Commissioner (Appeals), the assessee relied upon the decision of Bombay High Court in Sindh Housing Co-operative Society Ltd. (supra) and submitted that the assessee had received transfer fee from each of the going member on 14th June 2001 and 15th June 2001, which is much before the date of notification by the State Government on 9th August 2001. Hence, the restriction of ` 25,000 in respect of transfer fee is not applicable in case of the assessee. In any case, this restriction of ` 25,000 does not apply to plot owner co-operative housing society. However, the learned Commissioner (Appeals), after detail discussion, rejected the assessee's contention and held that the society could have charged transfer fee of ` 25,000 each and, therefore, only to this extent, the principles of mutuality will apply in view of the decision of the Bombay High Court in Sindh Housing Co-operative Society (supra). Accordingly, he disallowed ` 30.30 lakhs.
9. Before us, the learned Counsel for the assessee submitted that this issue is not only squarely covred by the decision of the Bombay High Court in Sindh Housing Co-operative Society (supra) but also by the decision of Bombay High Court in Mittal Court Premises Co - operative Society v/s ITO, [2010] 320 ITR 414 (Bom.). In this case, the High Court have categorically held that the notification issued by the State Government putting restrictions on the amount of transfer fee and the member desired transfer of their shares or occupancy rights are only in respect of housing residential society. In this case, admittedly, it is not in respect of housing residential society but a plot Suvarna Nagar Co-operative Housing Society Limited 6 society. Therefore, in view of the later decision of the Bombay High Court, this issue should be decided in favour of the assessee.
10. The learned Departmental Representative, on the other hand, strongly relied on the orders of the authorities below.
11. After carefully considering the rival submissions and also the case laws relied upon by the learned Counsel for the assessee, we find that this issue is squarely covered by the decision of the Bombay High Court in Mittal Co-operative Housing Society Ltd. (supra), wherein the Court observed and held as under:-
"The notification issued by the State of Maharashtra putting restrictions on the amount of transfer fee when the member desires to transfer his shares or occupancy rights are only in respect of housing residential societies. In the instant case, the appellants are not housing residential societies and consequently, those notifications would not be applicable. The bye-laws are nothing but the contract between the Society and the member. Under these bye-laws, it is the member who has to make the payment. Any inter se arrangement between the incoming members and the transferee is irrelevant insofar as the Society is concerned. There is an agreement by which the amount is paid by the transferee. Insofar as Society is concerned, even if receipt is issued in the name of transferee it is the nature of admission fee which could be appropriated, only on the transferee being admitted. Merely because the amount may be appropriated earlier, it will not lose the character of the amount being paid by a member. In these circumstances, the identity of the contributor and beneficiary being satisfied and considering the provisions of Maharashtra Co-operative Societies Act and rules framed thereunder, surplus can be disposed of in favour of the members only or for the objects for which they may specify."
12. Thus, respectfully following the decision of the Bombay High Court cited supra, we set aside the impugned order passed by the learned Commissioner (Appeals) and hold that the amount of transfer Suvarna Nagar Co-operative Housing Society Limited 7 fee of ` 30.30 lakhs is not taxable in view of the principles of mutuality. Thus, ground no.2, is allowed.
13. ऩरयणधभत् ननधधारयती की अऩीर सधंख्मकीम उद्देश्म के लरए आंलशक स्वीकृत की जधती है ।
13. In the result, assessee's appeal is partly allowed for statistical purposes.
आदे श की घोषणा खर ु े न्मधमधरम भें ददनधंक् 11 April 2014 की गई ।
th Order pronounced in the open Court on 11th April 2014 Sd/- Sd/-
डी. करुणाकर राव अममत शक्ऱा
ऱेखा सदस्य न्याययक सदस्य
D. KARUNAKARA RAO AMIT SHUKLA
ACCOUNTANT MEMBER JUDICIAL MEMBER
मुंबई MUMBAI, ददनाुंक DATED: 11th April 2014
दे श की प्रनतलरपऩ अग्रेपषत / Copy of the order forwarded to:
(1) ननधधारयती / The Assessee;
(2) यधजस्व / The Revenue;
(3) आमकय आमुक्त(अऩीर) / The CIT(A);
(4) आमकय आमुक्त / The CIT, Mumbai City concerned; (5) पवबधगीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई / The DR, ITAT, Mumbai; (6) गधर्ा पधईर / Guard file.
सत्मधपऩत प्रनत / True Copy आदे शधनुसधय / By Order प्रदीऩ जे. चौधयी / Pradeep J. Chowdhury वरयष्ठ ननजी सधचव / Sr. Private Secretary उऩ / सहधमक ऩंजीकधय / (Dy./Asstt. Registrar) आमकय अऩीरीम अधधकयण, भुंफई / ITAT, Mumbai