ITO 21(3)-4, MUMBAI v. ODYSSEY CHS LTD,, MUMBAI

ITA 1726/MUM/2010 | 2005-2006
Pronouncement Date: 29-03-2012 | Result: Allowed

Appeal Details

RSA Number 172619914 RSA 2010
Assessee PAN AAAAO0286B
Bench Mumbai
Appeal Number ITA 1726/MUM/2010
Duration Of Justice 2 year(s) 25 day(s)
Appellant ITO 21(3)-4, MUMBAI
Respondent ODYSSEY CHS LTD,, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-03-2012
Appeal Filed By Department
Order Result Allowed
Bench Allotted C
Tribunal Order Date 29-03-2012
Date Of Final Hearing 20-03-2012
Next Hearing Date 20-03-2012
Assessment Year 2005-2006
Appeal Filed On 05-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI BEFORE SHRI RAJENDRA SINGH A.M. AND SHRI V.D. RAO J.M. ITA NO. : 1726/MUM/2010 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER WARD 21(3)(4) C-11 BLDG. 5 TH FLOOR PRATYAKSHKAR BHAVAN BKC BANDRA (E) MUMBAI-400 051. M/S. ODYSSEY CHS LTD. ORCHARD AVENUE HIRANANDANI GARDENS POWAI MUMBAI-400 076. PAN NO: AAAAO 0286 B (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI R.S. SRIVASTAVA RESPONDENT BY : SHRI RAJESH B. SHAH DATE OF HEARING : 20.3.2012 DATE OF PRONOUNCEMENT : 29.3.2012 O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDE R DATED 10.12.2009 OF CIT(A) FOR THE ASSESSMENT YEAR 2005-06. THE ONLY DISPUTE RAISED IS REGARDING ADDITION MADE ON ACCOUNT OF PREMIUM ON TRANSFER FEES AND CONTRIBUTION TO DEVELOPMENT FUND. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WHO IS A CO-OPE RATIVE SOCIETY RECEIVED TRANSFER FEES AND DEVELOPMENT FUND OF R S.9 45 000/- FROM MEMBERS IN RESPECT OF VARIOUS FLATS AS PER DETAILS GI VEN BELOW :- ITA NO. 1726/M/10 A.Y.05-06 2 FLAT NO. DEVELOPMENT TRANSFER FEE 302 75 000 903 1 50 000 75 000 1903 2 25 000 75 000 301 75 000 502 30 000 1601 30 000 701 30 000 1702 30 000 202 75 000 1101 30 000 303 50 000 401 50 000 1403 40 000 1901 30 000 2203 25 000 TOTAL 9 45 000 + 1 50 000 = 10 95 000/- 2.1 THE ASSESSEE EXPLAINED THAT TRANSFER PREMIUM HAD BEE N RECEIVED IN RESPECT OF TWO FLATS WHICH WERE TRANSFERRED DURING T HE YEAR AND CONTRIBUTION TO DEVELOPMENT HAD BEEN RECEIVED FROM ME MBERS WHO HAD SUB-LET THEIR FLATS FOR BETTERMENT OF SOCIETY. TH E AO HOWEVER OBSERVED THAT IN VIEW OF THE NOTIFICATION DATED 8.9.2 001 OF MAHARASHTRA GOVT. SOCIETY WAS NOT PERMITTED TO CHARGE T RANSFER PREMIUM IN EXCESS OF RS.25 000/-. IT WAS ALSO OBSERVED BY HIM THAT CONTRIBUTION TO DEVELOPMENT FUND RECEIVED IN RELATION TO FLAT NOS.903 AND 1903 WAS OF THE NATURE OF TRANSFER PREMIUM. THE TOTAL TRANSFER PREMIUM IN RESPECT OF TWO FLATS WAS THUS RS.5 25 000/- THE AO ALLOWED RS.50 000/- AND BALANCE OF RS.3 75 000/- WAS AD DED TO THE TOTAL INCOME AS NOT BEING COVERED BY PRINCIPLE OF MUTU ALITY. IN RELATION ITA NO. 1726/M/10 A.Y.05-06 3 TO CONTRIBUTION TO DEVELOPMENT FUND AO OBSERVED THAT THE AMOUNTS HAD BEEN COLLECTED ONLY FROM MEMBERS WHO HAD SUB-LET TH EIR FLATS AND NOT FROM OTHER MEMBERS AND THEREFORE THE PRINCIPLE O F MUTUALITY WHICH REQUIRES THAT CONTRIBUTORS AND PARTICIPANTS SHOULD B E THE SAME WAS NOT SATISFIED. HE THEREFORE ADDED THE SUM OF RS.5 70 000/- ALSO TO THE TOTAL INCOME. 2.2 THE ASSESSEE DISPUTED THE DECISION OF AO AND SUBMITTED BEFORE CIT(A) THAT IN VIEW OF THE JUDGMENT OF HON'BLE HIGH C OURT OF BOMBAY IN CASE OF SIND CO-OPERATIVE HOUSING SOCIETY VS. INCOME TA X OFFICER (317 ITR 47) THE VOLUNTARY CONTRIBUTIONS ON ACCOUNT OF TRANSFER FEE AND DEVELOPMENT FUND WERE COVERED BY PRINCIPLE OF MUT UALITY AND AMOUNTS WERE NOT TAXABLE. CIT(A) BEING SATISFIED BY T HE EXPLANATION GIVEN DIRECTED THE AO TO DELETE THE ADDITION AGGRIE VED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US THE LD. DR APPEARING BEFORE FOR REVENU E ASSAILED THE ORDER OF CIT(A). IT WAS POINTED OUT THAT THE CASE OF SIND CO-OPERATIVE HOUSING SOCIETY (SUPRA) WAS FOR THE PERIOD PRIOR TO G OVERNMENT NOTIFICATION DATED 9.8.2001 AND THEREFORE SAID JUDGME NT WAS NOT APPLICABLE. IT WAS POINTED OUT THAT THE HONBLE HIGH CO URT HAD ALSO HELD IN THAT CASE THAT IF ANY AMOUNT HAD BEEN COLLECTED IN EXCESS OF ITA NO. 1726/M/10 A.Y.05-06 4 THE NOTIFICATION AND NOT REFUNDED TO THE MEMBERS PR INCIPLE OF MUTUALITY WOULD NOT APPLY TO THE EXCESS AMOUNT. 3.1 THE LD. AR ON THE OTHER HAND SUBMITTED THAT THE ISSUE WAS COVERED BY THE JUDGMENT OF HON'BLE HIGH COURT OF BOMBA Y IN CASE OF SIND CO-OPERATIVE HOUSING SOCIETY (SUPRA). IT WAS ALSO SUBMITTED THAT THE GOVT. NOTIFICATION DATED 9.8.2001 WAS ONLY IN RESP ECT OF TRANSFER PREMIUM AND DID NOT APPLY TO VOLUNTARY CONTRIBUTIONS TOWARDS THE DEVELOPMENT FUND. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING APPLICA BILITY OF PRINCIPLES OF MUTUALITY IN RELATION TO THE AMOUNTS RECE IVED BY ASSESSEE TOWARDS TRANSFER PREMIUM IN CASE OF TRANSFER OF FLAT BY MEMBERS AND CONTRIBUTION TO DEVELOPMENT FUND BY THE MEMBERS WHO H AD SUB-LET THEIR FLATS. THE AO HELD THAT CONTRIBUTION HAD BEEN MADE ONLY BY MEMBERS WHO HAD EITHER TRANSFERRED FLATS OR SUB-LET FLA TS AND NOT ALL MEMBERS AND THEREFORE PRINCIPLE OF MUTUALITY WHICH REQUIRED THAT CONTRIBUTORS TO THE FUND AND PARTICIPANTS IN THE SURPLUS SHOULD BE IDENTICAL WAS NOT SATISFIED. HOWEVER WE FIND THAT THIS ASPECT HAS ALREADY BEEN CONSIDERED BY THE HON'BLE HIGH COURT OF B OMBAY IN THE CASE OF SIND CO-OPERATIVE HOUSING SOCIETY (SUPRA) WHO HA VE HELD THAT EVEN CONTRIBUTIONS BY INCOMING MEMBERS WHO WERE NOT MEM BERS OF ITA NO. 1726/M/10 A.Y.05-06 5 THE SOCIETY AT THE TIME OF MAKING CONTRIBUTION WAS COV ERED BY MUTUALITY AS FUNDS CONTRIBUTED HAD TO BE UTILIZED FOR BENEFIT OF ALL MEMBERS. FOLLOWING THE SAME ANALOGY CONTRIBUTIONS MAD E BY MEMBERS WHO HAVE SUB-LET FLATS WILL BE COVERED BY THE PRINCIPLE OF MUTUALITY. HOWEVER HON'BLE HIGH COURT OF BOMBAY HAVE ALSO HELD THAT IF ANY EXCESS AMOUNT HAS BEEN COLLECTED WHICH IS MORE THAN THE AMOUNT CHARGED UNDER BYE-LAWS OF SOCIETY OR GOVT. NOTIF ICATION SOCIETY IS BOUND TO REFUND THE AMOUNT AND IN CASE THE AMOUNT I S RETAINED BY SOCIETY SAME IS EXIGIBLE TO TAX. IN THE PRESENT CASE TH E SOCIETY RECEIVED TRANSFER PREMIUM OF RS.75 000/- EACH IN RESPECT OF TRANSFER OF FLAT NOS.903 AND 1903. IN ADDITION A SUM OF RS.1 50 000/- AND RS.2 25 000/- HAS BEEN SHOWN AS CONTRIBUTION TO DEVELOPM ENT FUND IN RESPECT OF FLAT NOS. 903 AND 1903 WHICH HAS BEEN CONSIDERE D BY THE AO OF THE NATURE OF TRANSFER PREMIUM. IT IS NOT CLEAR WHETHER THE SAID CONTRIBUTION HAS BEEN RECEIVED BY THE SOCIETY FOR SUB-LE TTING THE FLAT OR ONLY ON ACCOUNT OF TRANSFER OF FLATS. IN CASE THERE IS NO SUB-LETTING INVOLVED AND COLLECTION IS ONLY ON ACCOUNT OF TRANSFER OF FLAT THE NATURE OF DEVELOPMENT CONTRIBUTION HAS TO BE CONSIDERED AS THE SAME AS THAT OF TRANSFER PREMIUM. FACTS ARE NOT CLEAR. IT IS ALSO NO T CLEAR WHETHER THERE IS ANY LIMIT IN THE BYE-LAWS OR IN GOVERNMENT NOTIFICATION ON THE CONTRIBUTION TO DEVELOPMENT FUND ON ACCOUNT OF SUCH SUB-L ETTING. IN CASE ANY AMOUNT HAS BEEN COLLECTED IN EXCESS OF THE LIMIT AND NOT ITA NO. 1726/M/10 A.Y.05-06 6 REFUNDED TO MEMBERS THE SAME SHALL BE CHARGEABLE TO TA X. IN OUR VIEW MATTER REQUIRES FRESH EXAMINATION. WE THEREFOR E SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER TO THE FILE O F AO. FOR PASSING A FRESH ORDER AFTER NECESSARY EXAMINATION IN THE LIGHT OF THE OBSERVATIONS MADE ABOVE AND AFTER ALLOWING OPPORTUNITY OF HEARIN G TO THE ASSESSEE. 5. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29.3.2012. SD/- SD/- ( V.D. RAO ) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI DATED: 29.3.2012. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.