Income Tax Appellate Tribunal - Mumbai
The Navyug Co Operative Housing Society ... vs Dy. Commissioner Of Income Tax Circle ... on 23 March, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH, MUMBAI
BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER&
SHRI ARUN KHODPIA, ACCOUNTANT MEMBER
ITA No. 2811/MUM/2025 (AY: 2004-05)
(Physical hearing)
The Navyug Co-operative Housing DCIT, Circle - 19(3), Mumbai,
Society Ltd. Vs Kautilya Bhavan, Bandra Kurla
Jai Hind Club Building JVPD Scheme, Complex, Bandra (East),
2nd Floor, N.S. Road No. 11, Juhu, Mumbai - 400051.
Mumbai - 400049.
[PAN : AAAAT0325L]
Appellant / Assessee Respondent / Revenue
Assessee by Mrs. Arati Vissanji, Advocate &
Mr. Shalin S. Divatia, CA
Revenue by Shri Leyaqat Ali Aafaqui, Sr. DR
Date of Institution 24.04.2025
Date of hearing 05.01.2026
Date of pronouncement 23.03.2026
Order under section 254(1) of Income Tax Act
PER PAWAN SINGH, JUDICIAL MEMBER;
1. This appeal by assessee is directed against the order of ld. CIT(A)/NFAC dated 18.07.2024 for Assessment Year (AY) 2004-05.
2. Brief facts of the case are that assessee is a co-operative society. The assessing officer initiated the assessment proceeding pursuant to order of ld. PCIT dated 19.03.2014 passed under section 263. The assessing officer during assessment recorded that assessee along with 13 other co- operative societies owned a common plot conveyance deed (sale deed) of which was executed in their favor by Bombay Housing Board. The assessee owned only 5.00% share of said common plot admeasuring 4780.6 square meters bearing plot no. 4A/7 bearing CTS No. 194A/2 of ITA 2811/Mum/2025 (AY 2004-05) The Navyug Co-operative Housing Society Ltd.
Village Juhu, part of Juhu Ville Parle Development (JVPD) Scheme at East West Road No. 3, Village Juhu, Taluka Andheri. The said piece of land was sold by assessee and other co-operative societies to Vasundhara Co- operative Housing Society Limited, which is co-operative housing society of Maharashtra cadre of Indian Police Services (IPS) officers. The assessee has shown sale consideration of Rs. 77,14,920/- as per agreement dated 14.05.2003, whereas market value of said property as per Stamp Duty Valuation Authority (SVA) was determined at Rs. 11.88 crore. The assessing officer was of the view that on the sale transaction of such plot the provision of section 50C is applicable. The assessing officer issued show cause notice dated 27.01.2015 proposing addition as per the provisions of section 50C. The assessee filed its reply dated 23.03.2015. The contents of reply of assessee are recorded on page no. 2 to 5 of assessment order. The assessee in its reply submitted that their case has been reopened pursuant to order under section 263 dated 19.03.2014. The order of ld. PCIT under section 263 is a subject matter of appeal before Tribunal and hearing is fixed on 26.11.2015. Therefore, proceeding be kept in abeyance till then. The assessee also stated that similar issue was earlier considered in the order passed under section 147 r.w.s. 143(3).
3. In without prejudice submission, the assessee while explaining the fact stated that impugned plot of land as per the scheme of Government of Maharashtra was reserved for Recreation Ground, Garden, Police Head Quarters as per Development Control Regulations (DCR) 1991. In 1975, 2 ITA 2811/Mum/2025 (AY 2004-05) The Navyug Co-operative Housing Society Ltd.
the possession of plot was taken by Home Department, Government of Maharashtra. The possession receipt was issued by Public Works Department, Government of Maharashtra. The provisions of section 50C cannot apply to sale of plot of land to Government or where the plot is reserved for particular purpose, possession of which has already been taken. In 2000 officials of Police Department proposed a housing society and entered into a memorandum of understanding (MOU) with 14 co- operative societies of JVPD scheme. As per MOU, a sum of Rs. 14,19,670/- was paid as an advance by the proposed society. A memorandum of understanding (MOU) was executed between the societies of IPS officers and 14 societies of JVPD scheme including of assessee on 14.05.2003 for a total consideration of Rs. 77,14,920/- against the proposed consideration of Rs. 70,98,350/- as agreed in MOU dated 25.01.2000. The provision of section 50C was introduced with effect from 01.04.2003. The execution of conveyance deed dated 14.05.2003 was in furtherance fulfilling of pre-existing obligation and therefore, rigors of section 50C will not apply. As per Circular No. 5/2010 dated 03.06.2010, issued by Central Board of Direct Taxes (CBDT), the purpose behind the enactment of section 50C was to prevent the leakage of revenue. The reserved plot was sold by 14 co-operative societies pursuant to taken possession of by Government Authorities as it was reserved for public purpose like providing a housing for Government employees, as such there cannot be any leakage of revenue. Thus, the 3 ITA 2811/Mum/2025 (AY 2004-05) The Navyug Co-operative Housing Society Ltd.
provisions of section 50C cannot be made applicable on this specific case.
4. In other alternative submission, the assessee made request for making reference to District Valuation Officer. The assessee also stated that in respect of same transaction, the ld. CIT(A) in case of association of the societies, in its order dated 03.03.2009 bearing reference no. CIT(A)/XXI/DCIT-21(1)/IT-359/06-07 passed by the CIT(A)-XXI held that provisions of section 50C are not applicable on the facts and circumstances of this case. It was also held that protective assessment was also made in JVPD association. Against the order of ld. CIT(A) dated 03.03.2009, the department has not filed further appeal. Though the department has challenged the order of ld. CIT(A) in ITA No. 3132/Mum/2009, thus, the department has accepted the fact that on such transaction section 50C is not applicable. The assessee in without prejudiced submissions also stated that this transaction is out of the purview of section 50C as the same was entered much prior to enactment of provision of section 50C. Section 50C came into existence from 01.04.2003. The reply of assessee was not accepted by assessing officer. The assessing officer held that conveyance deed was executed on 14.05.2003 after insertion of section 50C. The assessing officer brought 5.00% difference vis-à-vis, the sale consideration declared by assessee and 13 other co-operative societies and the value determined by stamp valuation authority and worked out addition of Rs. 59,42,160/- and added under section 50C.
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ITA 2811/Mum/2025 (AY 2004-05) The Navyug Co-operative Housing Society Ltd.
2. Aggrieved by the additions in the assessment order, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee reiterated almost similar submission as made before assessing officer. The ld. CIT(A) after considering the submissions of assessee and the assessment order upheld the addition made by assessing officer. Further, aggrieved the assessee has filed present appeal before Tribunal. The assessee has raised following grounds of appeal:
"1. The Learned CIT(Appeals) erred in confirming the Order of the Assessing Officer taking the valuation as per the stamp duty authority, u/s.50C of the Act, as the sales consideration in computing long term capital gain in respect of the sale of common plot.
2. The Learned CIT(Appeals) erred in confirming the Order of the Assessing Officer u/s 143(3) rws 263 which merely constituted a mere change of opinion since computing of LTCG on Sale of plot was already a part of earlier assessment proceedings u/s 143(3) rws 148.
3. In the alternative and without prejudice,the learned CIT(Appeals) erred in computing Capital Gain, adopting the cost of Acquisition of the Plot on the basis that it was reserved, while adopting the sales consideration U/s 50C as applicable to an unreserved plot.
4. The assessee craves leave to add, alter or modify the grounds of appeal and submit a detailed statement of facts, written submissions and case law relied upon at the time of the hearing."
5. We have heard the submission of learned Authorized Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the revenue. The ld AR of the assessee submits that the solitary issue is this appeal relates to the addition Of Rs. 52,75,090/- As long-term capital gain (LTCG) under section 50C on sale of assesses share in common plot on execution of sale deed under MOUsigned on 25.01.2000, copy of which is filed on record. Admittedly The plot was reserved for housing purpose of residence of police 5 ITA 2811/Mum/2025 (AY 2004-05) The Navyug Co-operative Housing Society Ltd.
officers of State Government. Public work department of State Government has obtained the in 1975. The assessee was not exclusive owner of impugned plot. In fact, the said plot was owned by 14 Societies of JVPD Scheme. The ld AR of the assessee while explaining facts would submits that in 2000 IPS officer of State Cadre formed a housing society and entered into a memorandum of understanding (MOU) with all 14 co-operative societies of JVPD scheme and paid a sum of Rs. 14,19,670/- as an advance out of total agreed consideration of Rs. 70,98,350/- in MOU dated 25.01.2000 on "as is where is basis". As per MOU, all the obligation for getting permission and sanction from various Governmentagency was on the buyers. Till April 2003, the plot was reserved police quarter. On 25.04.2003, the state Government de- reserved the plot, copy of notification of State Government is filed on record at page No. 49 of paper book. Soon after de-reservation,sale deed was executed by assessee and other 13 society of JVPD Scheme in favour of the societies of IPS on 14.05.2003 for a total consideration of Rs. 77,14,920/-, against the proposed consideration of Rs. 70,98,350/- as agreed in earlier MOU dated 25.01.2000. The assessee or the association of assessee i.e. JVPD Society association has not received any other consideration or money at the time execution of sale deed. The sale deed was executed in furtherance of MOU executed on 25.01.2000. The sale deed was executed at the instance of society of IPS Officer to get clear title of the impugned plot. The SVA valued the land for the purpose of registration at Rs. 11,88,43.320/-. The provision 6 ITA 2811/Mum/2025 (AY 2004-05) The Navyug Co-operative Housing Society Ltd.
of section 50C was introduced with effect from 01.04.2003. The MOU was executed in 2000, that is much before introduction of section 50C. The execution of conveyance deed dated 14.05.2003 was in furtherance fulfilling of pre-existing obligation and therefore, rigors of section 50C will not apply. The ld AR of the assessee also relied on CBDT Circular No. 5/2010 dated 03.06.2010. the plot was reserved for police quarter and possession was already taken in 1975, the assessee agreed to sale the plot with other 13 society as is where is basis to Vasundhara Co-operative society formed by IPS officer, hence, there is no question and possibilities of revenue leakage. To support her submissions, the ld. AR of the assessee relied on the decision of Hon'ble Apex Court in K.P. Verghese Vs ITO (131 ITR 597 SC), CIT Vs J.H. Gotla (153 ITR 323 SC) and Madras High Court in CIT Vs Shri Vummudi Amarendran in TCA No. 329 of 2020 dated 28.09.2020.
6. In alternative submission, the ld. AR of the assessee submits that during assessment, the assessing officer made reference to DVO on 12.03.2015 for estimation of fair market value of the plot. However, the assessing officer has not waited for report of DVO and passed the assessment order, nor disclosed that if any report of DVO was received by him. The assessing officer has not followed the mandatory provision of section 50C(2) rws 16A(6) of Wealth Tax Act. Thus, the order passed by assessing officer and confirmed by ld CIT(A) is invalid. To support her submission, the ld AR of the assessee relied on the following case laws, 7 ITA 2811/Mum/2025 (AY 2004-05) The Navyug Co-operative Housing Society Ltd.
Rajni Arvind Birla Vs ITO (ITA No. 930/Ahd/2025), Krit P. Thakker Vs ITO in ITA No. 5892/Mum/2010, SEL Resources Limited Vs ITO in ITA No. 697/Hyd/2025 dated 20.08.2025.
7. On our specific quarry about the facts if similar additions were made in case of other 13 similar society, who are part of JVPD association, the ld AR of the assessee submits that out of total 14 societies, no addition was made in case of six societies, wherein same transaction has been accepted and additions are made in case of eight societies, and in such cases appeals before CIT(A) is pending.
8. On the other hand, the ld Sr DR for the revenue supported the order of lower authorities. The assessing officer while passing assessment order under section 143(3) rws 263 correctly applied the provision of section 50C. The submissions made on behalf of assessee do not warrant any interference with the findings of assessing officer, which is confirmed by ld CIT(A). The main contention of the assessee is that section 50C is not applicable as the plot was sold "as is where is basis". Such submissions are untenable section 50C mandates that where consideration received or accruing from the transfer of capital asset is less than the value adopted by SVA, such SVA value shall be deemed the full value of consideration for computing capital gain. The provision of section 50C is clear and unambiguous and applying to all transfer of land or building unless expressly exempted. The constitutional validity of section 50C is already upheld by Bombay High Court. In the present case, reference was made to DVO and he has confirmed the valuation 8 ITA 2811/Mum/2025 (AY 2004-05) The Navyug Co-operative Housing Society Ltd.
of SVA in his report dated June 2016. On the argument of ld AR that MOU was executed in 2000, before introduction od section 50C, the ld SR DR for the revenue submits that transfer of plot occurred only after execution of sale deed date 14.05.2003. The Hon'ble Supreme Court in CIT Vs Narang Diary Product (1996) 219 ITR 478 SC, held that unregistered documents do not confers any legal title and capital gain cannot be assessed before registration.
9. We have considered the rival submissions of both the parties and have gone through the order of lower authorities carefully. We have also deliberated on various case laws relied by both the parties. We find that there is no much dispute on facts, the parties have locked their horn on the applicability of deeming provision of section 50C.On examination of various documentary evidences on record, which clearly indicate that the assessee along with other societies of JVPD scheme executed MOU to transfer their right in the plot "as is where is basis". The other documents also prove the facts the assessee and other societies were not the absolute owner of the said plot as it was reserved for specific purpose by State Government. In the MOU, all the obligation for getting permission and sanction from various Government agencies was on the buyers. It is also matter of fact that till April 2003, the plot was reserved police quarter. On 25.04.2003, the state Government deserve the plot, copy of notification of State Government is filed on record at page No. 49 of paper book. However, the possession of plot was never handed over to the association of assessee. We also find that at the 9 ITA 2811/Mum/2025 (AY 2004-05) The Navyug Co-operative Housing Society Ltd.
time of registration of sale deed, the market value of land for stamp duty purpose was determined by SVA at Rs.11.88 Crore, accordingly the stamp duty thereon may have been paid, while registering the sale deed. The facts relating to that value adopted for the purpose of payment of stamp duty was disputed by the buyers or not, is not on record.
10. We are conscious of the facts that addition is made by invoking deeming fiction of section 50C. Similarly, the assessing officer has not made any efforts to examine the officer bearer of buyer society. Thus, on the basis of aforesaid discussions we can safely conclude that the assessee and its association was not the absolute owner of the property and had only limited rights over the property, which was also encumbered, thus, keeping in view of peculiar facts of the appeal in our hand, the market value of the property as taken for the purpose of payment of stamp duty could not be adopted as the sale consideration by applying the provisions of Section 50C. We, therefore, uphold the impugned addition made by assessing officer and upheld byld CIT(A) is not justified.
11. We also find merit in the submissions of ld AR of the assessee that in respect of same transaction, the ld. CIT(A)XXI, Mumbai, in its order dated 03.03.2009 bearing reference no. CIT(A)/XXI/DCIT-21(1)/IT- 359/06-07 in The Juhu Ville Parle Development Co-operative Society passed held that provisions of section 50C are not applicable on the facts and circumstances of this case (para-7.3 of said order, copy is 10 ITA 2811/Mum/2025 (AY 2004-05) The Navyug Co-operative Housing Society Ltd.
available on record). Against the said order of ld. CIT(A) dated 03.03.2009, the department has not filed further appeal. Though the department has challenged the order of ld. CIT(A) in ITA No. 3132/Mum/2009, copy of grounds of appeal raised by revenue is available on record. Thus, we find that the department has accepted the fact that on such transaction section 50C is not applicable. Hence, we accept the primary submissions of ld AR of the assessee. Once, we accepted the primary submissions of assessee, hence, adjudication on all her submissions have become academic.
12. The ratio of case laws relied by ld DR for the revenue is not applicable on the peculiar facts of the case in hand, as facts on such case law is different. In the result, the grounds of appeal raised by the assessee is allowed.
13. In the result, the appeal of assessee is allowed.
Order pronounced in the open court on 23/03/2026
Sd/- Sd/-
(ARUN KHODPIA) (PAWAN SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 23/03/2026
Biswajit
Copy of the order forwarded to:
(1) The Assessee;
(2) The Revenue;
(3) The PCIT / CIT (Judicial);
(4) The DR, ITAT, Mumbai; and
(5) Guard file.
By Order
Assistant Registrar
ITAT, Mumbai
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