ITO 16(2)(1), MUMBAI v. THE MISTRY PARK CHS LTD, MUMBAI

ITA 2847/MUM/2010 | 2005-2006
Pronouncement Date: 25-03-2011 | Result: Dismissed

Appeal Details

RSA Number 284719914 RSA 2010
Assessee PAN AAAMI1920G
Bench Mumbai
Appeal Number ITA 2847/MUM/2010
Duration Of Justice 11 month(s) 15 day(s)
Appellant ITO 16(2)(1), MUMBAI
Respondent THE MISTRY PARK CHS LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 25-03-2011
Assessment Year 2005-2006
Appeal Filed On 09-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI BEFORE SHRI D.K. AGARWAL (J.M.) AND SHRI J. SUDHAKA R REDDY (A.M.) ITA NO. 2847/MUM /2010 ASSESSMENT YEAR : 2005-06 THE INCOME TAX OFFICER 16(2)(1) ROOM NO. 221 2 ND FLOOR MATRU MANDIR TARDEO MUMBAI 400 007. VS. M/S MISTRY PARK CHS LTD. 77 BHULABHAI DESAI ROAD MUMBAI -400 026. PAN : AAAMI1920G (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. ASHIMA GUPTA RESPONDENT BY : SHRI SAMEER DALAL O R D E R PER D.K. AGARWAL J.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER DATED 14.1.2010 PASSED BY THE LD. CIT (A) FOR THE A .Y. 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSES SEE IS COOPERATIVE HOUSING SOCIETY FILED RETURN OF INCOME DECLARING TOTAL INCO ME AT NIL. HOWEVER ASSESSMENT WAS COMPLETED AT AN INCOME OF ` 7 67 590/- VIDE ORDER DATED 30.11.2007 PASSED U/S 143(3) OF THE INCOME TAX ACT 1961 (THE ACT). ON APPEAL THE LD. CIT(A) PARTLY ALLOWED THE APPEAL. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US. ITA NO. 28 47/MUM/2010 M/S THE MISTRY P ARK CHS LTD. 2 4. GROUND NO. 1 READS AS UNDER:- 1. THE LD. CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF TRANSFER CHARGES OF ` 4 50 000/- FOLLOWING THE DECISION OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF M/S SHYAM CHS AND SUPRABHAT C HS WHEREIN IT HAS BEEN HELD THAT ALL AMOUNTS RECEIVED BY THE CHS ON THE GROUNDS OF TRANSFER CHARGES ARE EXEMPT UNDER THE PRINCIPLE OF MUTUALITY. THE DECISION HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AN D THE ISSUE IS SUB- JUDICE. 5. DURING THE COURSE OF ASSESSMENT PROCEEDING IT W AS INTER ALIA OBSERVED BY THE A.O. THAT THE ASSESSEE HAS RECEIVED ` 4 50 000/- ON ACCOUNT OF TRANSFER FEES. THIS AMOUNT WAS PAID BY ITS TWO OUTGOING MEMBERS. T HE A.O. DISALLOWED THE SAID AMOUNT OF ` 4 50 000/- ON THE GROUND THAT THE SAME IS NOT COVE RED UNDER PRINCIPLE OF MUTUALITY. 6. ON APPEAL THE LD. CIT(A) FOLLOWING DECISIONS OF HO NBLE BOMBAY HIGH COURT IN THE CASES OF M/S SHYAM CHS AND SUPRAB HAT CHS DECISION GIVEN ON 1.10.2009 WHEREIN IT HAS BEEN CLE ARLY STATED THAT ALL AMOUNTS RECEIVED BY THE CHS ON THE GROUNDS OF TRANS FER CHARGES ARE EXEMPT UNDER THE PRINCIPLE OF MUTUALITY DELETED TH E ADDITION OF TRANSFER FEES OF ` 4 50 000/- MADE BY THE A.O. 7. AT THE TIME OF HEARING THE LD. D.R. SUPPORTS TH E ORDER OF THE A.O. 8. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSES SEE SUBMITS THAT THIS ISSUE STANDS COVERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE BY THE ORDERS OF THE TRIBUNAL THEREFORE THE ISSUE MAY BE DECIDED A CCORDINGLY. 9. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE TH AT THE A.O. WHILE ITA NO. 28 47/MUM/2010 M/S THE MISTRY P ARK CHS LTD. 3 MAKING THE ADDITION HAS HELD THAT SINCE THE CONTRIB UTION HAS BEEN CREDITED TO COMMON WELFARE FUND OF THE SOCIETY HEN CE NOT EXEMPT AND LIABLE TO TAX. WE FURTHER FIND THAT THE LD. CIT(A) AFTER CONSIDERING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN S INDH CO OPERATIVE HOUSING SOC. VS. ITO (2009) 317 ITR 47 (BOM.) HAS F OLLOWED THE SUBSEQUENT DECISIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT IN M/S. SHYAM CHS AND SUPRABHAT CHS AND DELETED THE ADDITIO N MADE BY THE ASSESSING OFFICER. 10. IN SHYAM CO OPERATIVE HOUSING SOC. VS. CIT IN INCOME TAX APPEAL NOS.92 93 AND 206 OF 2008 DATED 17.7.2009 ON THE QU ESTION WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A NY PART OF TRANSFER FEE RECEIVED BY THE ASSESSEE SOCIETIES WHETHER FROM O UTGOING OR INCOMING MEMBERS- IS NOT LIABLE TO TAX ON THE GROUND OF MUTU ALITY? IT HAS BEEN HELD AS UNDER:- IN INCOME TAX APPEAL NO.92 93 2006 OF 2008 IN ADDITION IT IS SUBMITTED THAT THE DEMANDS ARE IN RE SPECT OF THE ASSESSMENT YEARS 1999-2000 2000-2001 2001-200 2. THE TRANSFER PREMIUM WAS CHARGED BASED ON THE GOVERNMENT CIRCULAR DATED 27.11.1989 AND 20.12.1989 . IT IS SUBMITTED THAT CLAUSE 40(D)(7) OF THE MODEL BYE LAWS DRAFTED ON 2.7.2001 AND THE CIRCULAR DATED 9.8.2001 WERE THEREFORE NOT APPLICABLE TO THE CASE OF THE APPELL ANT. BY OUR JUDGMENT DATED 17 TH JULY 2009 IN INCOME TAX APPEAL NO.931 OF 2004 IN THE CASE OF SIND COOP. HSG. SOC. VERSUS THE INCOME TAX OFFICER WE HAVE HELD TH AT BOTH CONTRIBUTIONS BY THE OUTGOING AND INCOMING MEMBERS ARE SUBJECT TO PRINCIPLE OF MUTUALITY. WE HAVE ALSO DI SCUSSED THE EFFECT OF THE GOVERNMENT CIRCULAR DATED 27.11.1 989 AND 20.12.1989. IN THE LIGHT OF THAT THE QUESTION HAS TO BE ANSWERED IN THE AFFIRMATIVE IN FAVOUR OF THE ASSESS EE AND AGAINST THE REVENUE. ITA NO. 28 47/MUM/2010 M/S THE MISTRY P ARK CHS LTD. 4 11. SIMILAR VIEW WAS TAKEN BY THEIR LORDSHIPS IN SU PRABHAT CO- OPERATIVE HOUSING SOCIETY LTD. VS. ITO IN INCOME TA X APPEAL NO.1972 OF 2009 WHEREIN ON THE QUESTIONS OF LAW : 1) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPELLATE TRIBUNAL WAS RIGHT IN COMING TO THE CONCLUSION THAT THE PRINCIPLE OF MUTUALITY DOES NOT APPLY TO VARIOUS AMOUNTS RECEIVE D BY THE APPELLANT? 2) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE SUM OF RS. 7 44 000/- RECEIVED FROM ITS MEMBERS IS LIABLE TO BE TAXED AS INCOME OF THE APPELLANT ? 3) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE SUM OF RS. 20 695/- RECEIVED AS INTEREST IS LIABLE TO BE T AXED AS INCOME OF THE APPELLANT? IT HAS BEEN HELD : 5. BOTH PARTIES AGREE THAT THE AFORESAID THREE QUESTIONS ARE COVERED BY THE JUDGMENT OF THE OF DIV ISION BENCH OF THIS COURT DATED 17 TH JULY 2009 IN INCOME TAX APPEAL NO. 931/2004 (SIND CO-OP. HSG. SOCIETY V. IN COME TAX OFFICER) REPORTED IN [2009] 26 DTR (BOM.) 149. ACCORDINGLY ALL THE THREE QUESTIONS ARE ANSWERED I N FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. APPEAL IS DISPOSED OF IN TERMS OF THIS ORDER WITH NO ORDER AS TO COSTS . 12. IN THE ABSENCE OF ANY DISTINGUISHABLE FEATURE B ROUGHT ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE ABOVE DE CISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT HOLD THE AMOUNT RECEIVED BY THE ASSESSEE IS SUBJECT TO PRINCIPLE OF MUTUALITY AND ACCORDINGLY W E ARE INCLINED TO UPHOLD THE FINDING OF LD. CIT(A) IN DELETING THE AD DITION MADE BY THE A.O. THE GROUND TAKEN BY THE REVENUE IS THEREFORE REJECT ED. 13. GROUND NO. 2 READS AS UNDER:- ITA NO. 28 47/MUM/2010 M/S THE MISTRY P ARK CHS LTD. 5 THE LD. CIT(A) ERRED IN DELETING THE ADDITION ON AC COUNT OF LEAVE AND LICENCE CHARGES OF ` 3 35 000/- FOLLOWING THE DECISIONS OF HONBLE MUMBAI ITAT WHEREIN IT HAS BEEN HELD THAT NON-OCCUP ANCY CHARGES TAKEN FROM MEMBERS WHO HAVE LET OUT THEIR FLATS IS EXEMPT UNDER PRINCIPLE OF MUTUALITY. 14. BRIEF FACTS OF THE ISSUE ARE THAT THE A.O. NOTED TH AT THE ASSESSEE IN THE INCOME AND EXPENDITURE ACCOUNT HAS CREDITED AN AMOUNT OF ` 3 35 000/- AS NON-OCCUPANCY CHARGES. THE A.O. TRE ATED THE ABOVE AMOUNT AS TAXABLE AS THE SAME IS NOT EXEMPT ON THE GROUND OF MUTUALITY; THIS AMOUNT WAS CHARGED WITH THE INTENTI ON OF MAKING A GAIN FOR THE SOCIETY AND WAS GOVERNED BY THE PROFIT MOTI VE; THIS CHARGE WAS NOT VOLUNTARY AND THERE IS NO IDENTITY BETWEEN THE CONT RIBUTORS AND THE PARTICIPANTS. 15. ON APPEAL BEFORE THE LD. CIT(A) THE LD. CIT(A ) FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL HELD THAT THE SAME IS EXEMPT UNDER THE PRINCIPLE OF MUTUALITY DELETED THE ADDITION MADE B Y THE A.O. 16. AT THE TIME OF HEARING THE LD. D.R. SUPPORTS T HE ORDER OF THE A.O. 17. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ISSUE STANDS COVERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE BY THE ORDERS OF THE CO-ORDINATE BENCH OF THE TRIBUNAL THEREFORE T HE ISSUE MAY BE DECIDED ACCORDINGLY. 18. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND T HAT THE A.O. HAS DISALLOWED THE AMOUNT OF NON-OCCUPANCY CHARGES ON T HE GROUND THAT THE ITA NO. 28 47/MUM/2010 M/S THE MISTRY P ARK CHS LTD. 6 SAME IS NOT COVERED BY THE PRINCIPLE OF MUTUALITY. THE LD. CIT(A) AFTER FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL DELET ED THE ADDITION MADE BY THE ASSESSING OFFICER. IN THE ABSENCE OF ANY DI STINGUISHING FEATURE BROUGHT ON RECORD BY THE LD. DR WE RESPECTFULLY FOL LOWING THE DECISION OF THE TRIBUNAL WHEREIN THE TRIBUNAL HAS DELETED THE A DDITION MADE BY THE A.O. ON THE GROUND OF PRINCIPLE OF MUTUALITY AND TH E RULE OF CONSISTENCY DECLINE TO INTERFERE WITH THE ORDER PASSED BY THE L D. CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. THE GROUND TAKEN BY THE REVENUE IS THEREFORE REJECTED. 19. IN THE RESULT THE REVENUES APPEAL STANDS DISM ISSED. ORDER PRONOUNCED ON THIS 25 TH OF MARCH 2011. SD/- (J. SUDHAKAR REDDY) ACCOUNTANT MEMBER SD/- (D.K. AGARWAL) JUDICIAL MEMBER MUMBAI DATED 25 TH MARCH 2011. RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 27 MUMBA I 4. COMMISSIONER OF INCOME TAX CITY -XVI MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH F MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI ITA NO. 28 47/MUM/2010 M/S THE MISTRY P ARK CHS LTD. 7 1 DRAFT DICTATED ON 11.3.11 SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 14.3.11 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/A PPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 D ATE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS