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3.10. During the course of assessment proceedings, the assessee submitted following reply (taking a sample reply in the case of M/s. Vithalnagar Cooperative Housing Society Ltd.):

"The assessment in the aforesaid case is proposed to be made pursuant to the notice issued under Section 148 dated 28.03.2011. the aforesaid notice has been issued pursuant to the decisions of the Hon'ble ITAT Bench "J", Mumbai in ITA No.3232/Mum/2009 for A. Y. 2004-05 in the case of ACIT 20 Co.Op. Housing Societies Cir.21(1) vs. Juhu Vile Parle Development Housing Association Ltd. the issue in the above matter was pertaining to the assessment of the capital gains on sale of the common plot, which is not the subject matter of assessment in the hands of the society, to the extent of its share in the said pot. The area of the land comprising the aggregate of the building plots and the area of the common amenities and public utilities were conveyed to the societies by the Bombay Housing Board vide indenture dated 261h day of April 1960. We would like to draw yourkind attention to the recital at Page Nos. 4 and 5 of the Indenture conveying the said plot:
"(1) The Learned Assessing officer erred in taking the cost of acquisition of the common plot sold during the year as Rs. Nil and in consequently calculating long term capital gain of Rs.7,41,789/- instead of loss of Rs.5,92,345/- as claimed by the assessee.
(2) In alternative and without prejudice the Learned Assessing Officer erred in charging to tax Rs.7,41,789/- as long term capital gains even though the cost of acquisition was taken as nil."

3.12. Thereafter, the said Commissioner of Income Tax- (Appeals) considered the submissions of the assessee with respect to determining appropriate amount of cost and accepted the submissions of the assessee and deleted the addition made by the AO, vide his appeal order 27.11.2012, with following observations:

"AND WHEREAS on the basis of the total cost of completing the scheme on the left bank of the Irla Nalla including the cost of earth f illing and construction of roads a n d c a n a l i z a t i o n t h e c o s t payable by each Socie ty works ou t to abou t R s. 1 0 . 0 0 p er sq u ar e ! , a 1 d of th e b u ild in g p lo ts to b e al l o tte d to e ac h S o c ie ty including th e propor tion ate cost of acqu isitio n and d e v e l o p m e n t o f common amenity and utility plots roads and canalization AND. WHEREAS all the fourteen Societies have paid the proportionate costs payable by them amounting in all to Rs.60,01,030.00 which is the total e s tim a te d c o s t o f ac quis it io n a nd d e ve lo p m e n t o f th e w h o le a re a" . (emphasis supplied) This clearly shows that the societies were allotted the land in 1960 on payment of cost and hence the cost of acquisition cannot be Nil. It does not make any difference whether the cost is paid towards the earth filling or road or canalization work, if the allotment of plot is in lieu of payment of such ch ar g e s b y 14 so c ie tie s as e v id en t f ro m th e in de n tu r e d ate d 26 /4/1960 . Once the property has been acquired prior to 1/4/1981 for a cost, then as per the provisions of section 48 & 49, the cost of acquisition shall be taken to be indexed cost of the FMV as on 1/4/1981. The valuation report of the registered valuer dated 26/7/2006 va1uing the total common plot at Rs 28,81,500 was before the AO but the AO, has not pointed out any mistake or or discrepancy in the said valuation report. In fact while deleting the addition of capital gains for AY 2004-05 on protective basis in hands of JVPD Association, the then CIT(A) also, based on the same valuation report had held that the FMV at Rs 28,81,800 as on 1/4/1981 was required to be allowed after indexation. Since the ITAT Mumbai has held that the capital gains, if any on transfer of the common plot is assessable in hands of 14 societies and not in hands of JVPD association, then it is logical to apply the same cost in hands of the 14 societies also in the ratio of their 23 Co.Op. Housing Societies respective shares. Hence the action of the AO in treating the cost as Nil is erroneous and not as per law and facts. If the deduction of indexed cost as per registered valuer's report dated 26/7/2006 is allowed for the share of appellant, it will result in Long term capital loss. Accordingly the addition of LTCG of Rs 7,41,789 made by AO is directed to be deleted. In the result appeal is allowed."

6. On a careful consideration of the facts and the rival contentions, we are inclined to uphold the decision of the CIT(A). It is not the case of the department that the assessee was the owner of the plot and therefore it should be assessed to capital gains. There is no dispute that the plot was owned by 14 different co-operative housing societies in specific shares and that the assessee was merely put in possession of the plot for the purpose of common management. The plot was originally allotted to the 14 co-operative housing societies by the Bombay Housing Board under an indenture dated 26.04.1960 (pages 47 to 74 of the paper book) and in the light of this indenture it cannot be said that the assessee became the owner of the plot. The byelaws of the assessee society, a copy of which is placed at pages 105 to 112 of the paper book, shows that the 14 cooperative housing societies were holding the residential plot, which was part of the land in JVPD scheme. The proportionate share of these societies in the property and their liability to pay the cost of development of the property is also mentioned in the byelaws. There is no document to which our attention was drawn on behalf of the department transferring the ownership of the plot to the assessee society. The finding of the CIT(A) which is not challenged before us is that the conveyance deed was executed by the 14 societies members on 14.5.2003 in favour of Vasundhara Co- operative Housing Society Ltd. formed by the Maharashtra Cadre of IPS. Earlier to this conveyance, there was a memorandum of understanding entered into between these parties on 26.1.2000, a copy of which is at pages 75 to 104 of the paper book. A perusal of the memorandum of understanding shows that it was executed between the 14 co-operative housing societies, the assessee and the promoters of Vasundhara Cooperative Housing Society Ltd. Clause (iii) of the preamble states that the society was formed by the 14 societies and registered under the Maharashtra Co-operative Societies Act to take possession of the property from the managing committees of the 14 co- operative housing societies and to hold and utilise the property for providing suitable utilities and amenities such 40 Co.Op. Housing Societies as play ground, schools, colleges etc. and to do all such acts and things as are of common interest to the 14 societies. The memorandum of understanding does not show the assessee as a owner of the property. Capital gains can arise to a person only if he owns the plot and transfers the same for consideration. The assessee not being the owner of the plot but merely holding possession thereof on behalf of the 14 co-operative societies and managing the same for the common benefit of the member societies cannot be considered as the owner of the property in order to bring the sale price to tax in its hands as capital gains. This is also supported by the accounting entries which show that the respective shares of the 14 housing societies in the sale consideration, after deducting the common expenses, has been divided in proportion to their respective shares in the property and credited to their accounts and shown as deposits in the assessee's balance sheet. In the absence of any transfer by the assessee, no capital gains can be assessed in its hands even on protective basis.