THE VITHALNAGAR CO OPERATIVE HOUSING SOCIETY LTD, MUMBAI v. ITO WD 21(2)(4), MUMBAI

ITA 4256/MUM/2014 | 1995-1996
Pronouncement Date: 28-09-2016 | Result: Dismissed

Appeal Details

RSA Number 425619914 RSA 2014
Assessee PAN AAAAT3055F
Bench Mumbai
Appeal Number ITA 4256/MUM/2014
Duration Of Justice 2 year(s) 3 month(s) 15 day(s)
Appellant THE VITHALNAGAR CO OPERATIVE HOUSING SOCIETY LTD, MUMBAI
Respondent ITO WD 21(2)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 28-09-2016
Date Of Final Hearing 23-08-2016
Next Hearing Date 23-08-2016
Assessment Year 1995-1996
Appeal Filed On 13-06-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH MUMBAI BEFORE SHRI JASON P. BOAZ ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN JUDICIAL MEMBER ITA NO. 4256/MUM/2014 (ASSESSMENT YEAR: 1995-96) THE VITHALNAGAR CO - OPERATIVE VS. INCOME TAX OFFICER - 21(2)(4) HOUSING SOCIETY LTD. 51 NS. ROAD NO. 11 JAI HIND CLUB JVPD SCHEME VILE PARLE (W) MUMBAI 400056 5 TH CLOOR C - 10 PRATYAKSHA KAR BHAVAN BANDRA-KURLA COMPLEX BANDRA (E) MUMBAI 400050 PAN - AAAAT3055F APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI RAJNEESH K. ARVIND DATE OF HEARING: 21.09.2016 DATE OF PRONOUNCEMENT: 28.09.2016 O R D E R PER JASON P. BOAZ A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)- 32 MUMBAI DATED 25.04.2014 FOR A.Y. 1995-96. 2. THE FACTS OF THE CASE BRIEFLY ARE AS UNDER: - 2.1 THE COORDINATE BENCH OF THIS TRIBUNAL VIDE ITS ORDER IN ITA NO. 5846/MUM/2008 DATED 25.11.2011 RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER (AO) FOR A SECOND TIME FOR DECIDI NG THE ISSUES INVOLVED AFRESH IN ACCORDANCE WITH THEIR EARLIER ORDER DATE D 17.11.2005 HOLDING AS UNDER: - '2. THE MAIN COMMON ISSUE INVOLVED IN THESE APPEALS RELATES TO THE DETERMINATION OF HEAD OF INCOME UNDER WHICH THE AMO UNT RECEIVED BY THE ASSESSEE AS THEIR SHARE OF SALE CONSIDERATION O F PLOT OF LAND IS CHARGEABLE TO TAX IN THEIR HAND AND THE SAME IS RAI SED IN GROUND NO.1 OF ITA NO.7168/MUM/2008 AND IN THE SOLITARY GROUND RAISED IN ITA NOS . 6369/MUM/2009 5863 & 5864/MUM/2008. 3. THE ASSESSEE IN THE PRESENT CASE ARE COOPERATIVE HOUSING SOCIETIES INCORPORATED IN THE YEAR 1947 FOR PROVIDING HOUSING FACILITIES IN ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 2 VILEPARLE AREA. THESE FOUR SOCIETIES ALONGWITH OTHE R 10 COOPERATIVE HOUSING SOCIETIES ACQUIRED LAND TO DEVELOP RESIDENT IAL COLONIES IN VILEPARLE AREA. THE SAID PLOTS WERE ALLOTTED TO THE SOCIETIES BY THE THEN GOVERNMENT OF BOMBAY PROVINCE. IN ADDITION CERTAIN PLOTS MARKED FOR AMENITIES AND PUBLIC UTILITIES WERE ALSO GIVEN TO T HESE 14 COOPERATIVE HOUSING SOCIETIES WITH SPECIFIED SHARE THEREIN. THE SE PLOTS MARKED FOR AMENITIES AND PUBLIC UTILITIES WHICH WERE JOINTLY O WNED BY 14 SOCIETIES WERE SOLD IN THE YEAR UNDER CONSIDERATION AND THEIR SHARE OF THE SALE CONSIDERATION WAS OFFERED BY THE SOCIETIES TO TAX UNDER THE HEAD 'CAPITAL GAINS'. KEEPING IN VIEW THE OBJECT OF THE COOPERATIVE HOUSING SOCIETIES OF CARRYING ON THE TRADE OF BUYIN G AND SELLING AS WELL AS DEVELOPING LAND AS ENVISAGED IN BYELAWS TH E AO HELD THAT THE SALE CONSIDERATION RECEIVED BY THE SOCIETIES CO NSTITUTED THEIR BUSINESS INCOME AND ACCORDINGLY THEIR RESPECTIVE SH ARE WAS BROUGHT TO TAX BY HIM IN THEIR HANDS AS BUSINESS INCOME. ON APPEAL THE LEARNED CIT(APPEALS) CONFIRMED THE DECISION OF THE ASSESSING OFFICER. THE MATTER THEREAFTER WAS CARRIED BEFORE THE TRIBUN AL IN THE APPEALS FILED BY THE ASSESSEE SOCIETIES IN THE PRESENT CASE AND THE TRIBUNAL VIDE ITS ORDER DATED 17 TH NOV. 2005 PASSED IN ITA NO.4241/MUM/ 2000 AND OTHERS RESTORED THE ISSUE TO THE FILE OF T HE AO TO DECIDE THE SAME AFRESH AFTER TAKING INTO CONSIDERATION THE FIN AL DECISION RENDERED IN THE CASE OF OTHER COOPERATIVE HOUSING S OCIETIES. DURING THE COURSE OF SET ASIDE PROCEEDINGS THE ASSESEE COULD NOT FURNISH ANY DETAILS ABOUT THE FINAL DECISION RENDERED IN THE CA SE OF OTHER COOPERATIVE HOUSING SOCIETIES WHICH HAD RECEIVED SI MILAR AMOUNT AGAINST SALE OF PLOT JOINTLY OWNED. THERE WAS ALSO NO RESPONSE FROM THE OTHER COOPERATIVE HOUSING SOCIETIES TO THE NOTI CES ISSUED U/S. 133(6). THE AO THEREFORE BROUGHT THE AMOUNT OF SA LE CONSIDERATION OF PLOT TO TAX IN THE HANDS OF THE ASSESSEE SOCIETIES AGAIN UNDER THE HEAD 'PROFITS & GAINS OF BUSINESS OR PROFESSION'. O N APPEAL THE LEARNED CIT(APPEALS) UPHELD THE ACTION OF THE AO ON THIS ISSUE RELYING MAINLY ON THE ORDERS OF HIS PREDECESSOR PASSED THE ASSESSEE'S CASE IN THE FIRST ROUND OF LITIGATION. AGGRIEVED BY THE ORD ER OF THE LEARNED CIT(APPEALS) THE ASSESSEES HAVE PREFERRED THESE AP PEALS BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THA T THE AMOUNT OF SIMILAR NATURE WAS RECEIVED BY 14 COOPERATIVE HOUSI NG SOCIETIES INCLUDING THE FOUR ASSESSEE SOCIETIES IN THE PRESEN T 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 SA ID MOUNT WAS CHARGEABLE TO TAX HAD COME UP FOR CONSIDERATION IN THE CASE OF THE ASSESSEE BEFORE THE TRIBUNAL IN THE FIRST ROUND TH E TRIBUNAL FOUND IT RELEVANT TO ASCERTAIN AS TO WHAT HAD HAPPENED IN TH E 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 AO FOR DECIDING THE SAME AFRESH AFTER TAKING INTO CONSIDERATION THE FIN AL DECISION RENDERED ON A SIMILAR ISSUE IN THE CASE OF OTHER CO OPERATIVE HOUSING ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 3 SOCIETIES. IT APPEARS FROM THE ORDERS OF THE AUTHOR ITIES BELOW THAT THE DIRECTION OF THE TRIBUNAL HOWEVER HAS NOT BEEN CO MPLIED WITH AND THE ISSUE HAS BEEN DECIDED WITHOUT COMPLYING WITH T HE DIRECTION OF THE TRIBUNAL. AT THE TIME OF HEARING BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ALTHOUGH THE ASSESS EE IN THE PRESENT CASE HAVE DETAILS ABOUT THE EXACT ADDRESS OF THE RE MAINING COOPERATIVE HOUSING SOCIETIES THEY ARE NOT IN A PO SITION TO ENFORCE THEIR ATTENDANCE BEFORE THE AO OR THEIR COMPLIANCE TO THE NOTICES ISSUED BY THE AO U/S. 133(6). IN OUR OPINION IF TH ESE DETAILS ARE FURNISHED BY THE ASSESSEE TO THE AO THE LATTER IS SUFFICIENTLY EMPOWERED TO ENFORCE THE ATTENDANCE OF THE OTHER CO OPERATIVE HOUSING SOCIETIES OR THE NECESSARY COMPLIANCE ON THEIR PART SO AS TO DECIDE THE ISSUE AS PER THE DIRECTION GIVEN BY THE TRIBUNAL IN THE FIRST ROUND VIDE HIS ORDER DATED 17 TH NOV. 2005. WE THEREFORE RESTORE THIS ISSUE ONCE AGAIN TO THE FILE OF THE AO FOR DECIDING THE SAME F RESH AS PER THE DIRECTION GIVEN BY THE TRIBUNAL VIDE ITS ORDER DATE D 17 TH NOV. 2005. THE ASSESSEES ARE DIRECTED TO FURNISH THE ADDRESSES OF THE OTHER COOPERATIVE HOUSING SOCIETIES TO THE AO WHO SHALL E NFORCE THEIR COMPLIANCE IN ORDER TO DECIDE THIS ISSUE AS PER THE DIRECTION GIVEN BY THE TRIBUNAL. 2.2 PURSUANT TO THE ORDER OF THE COORDINATE BENCH D ATED 25.11.2011 THE AO ACCORDINGLY ISSUED NOTICES UNDER SECTION 142 (1) OF THE INCOME TAX ACT 1961 (IN SHORT 'THE ACT') DATED 02.08.2012 03 .09.2012 AND 23.11.2012 CALLING UPON THE ASSESSEE TO FILE DETAIL S IN THE MATTER. AFTER CONSIDERING THE SUBMISSIONS PUT FORTH BY THE ASSESS EE EXTRACTED AT PARA 4 ON PAGE 4 TO 8 OF THE ORDER OF ASSESSMENT; THE AO O BSERVED THAT THE ASSESSEE COULD NOT PROVIDE ANY NEW INFORMATION AND THAT THE SUBMISSIONS NOW PUT FORTH WERE FOUND TO BE SIMILAR TO WHAT IT H AD PUT FORWARD IN EARLIER ASSESSMENT PROCEEDINGS BEFORE THE AO AND IN APPEAL BEFORE THE LEARNED CIT(A) AND THE TRIBUNAL. THE AO THEREFORE VIDE LE TTER DATED 14.12.2012 REQUIRED THE ASSESSEE TO SUMMIT DETAILED EXPLANATIO N WITH REGARD TO THE FACTS FOUND IN THE AGREEMENT DATED 26.04.1960 BETWE EN BOMBAY HOUSING BOARD AND EACH OF THE 14 COOPERATIVE SOCIETIES. NOT ICES WERE ALSO ISSUED UNDER SECTION 133(6) TO ALL THE OTHER 13 COOPERATIV E SOCIETIES REQUIRING THEM TO PROVIDE DETAILS OF THE NUMBER OF PLOTS WITH SPECIFICATION SUCH AS PLOT NUMBER AREA IN SQ. YARDS ETC. ALLOTTED BY TH E BOMBAY HOUSING BOARD TO THE 14 COOPERATIVE SOCIETIES AND ELICITED RESPO NSES FROM ONLY SIX COOPERATIVE SOCIETIES WHOSE CASES WERE ALSO REMAND ED BACK TO THE FILE OF THE AO BY THE COORDINATE BENCH OF THIS TRIBUNAL. TH E AO NOTED THAT THESE F ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 4 SIX COOPERATIVE SOCIETIES COULD NOT FURNISH MATERIA L EVIDENCE/PROOF OF PLOTS ALLOTTED TO EACH OF THE 14 COOPERATIVE SOCIETIES WH ICH COULD SPECIFY THE AREA ALLOTTED TO THEM TO CLAIM OWNERSHIP RIGHT ON T HE LEASEHOLD LAND GIVEN TO THEM BY BOMBAY HOUSING BOARD IN 1960. FROM SCHED ULE-I THE AO OBSERVED THAT 7 07 036 SQ. YARDS GIVEN ASCERTAINAB LE IN SCHEDULE-I UNDER THE HEAD PUBLIC AMENITY WHICH INCLUDES PLAY GROUND RECREATION GROUND SHOPS PUBLIC BUILDING MUNICIPAL OFFICE POLICE ST ATION FIRE BRIDGE POST OFFICE BANK ETC. FROM SCHEDULE-II IT WAS SEEN TH AT THE AREA ALLOTTED WAS 8 15 467 SQ. YARDS WHICH INCLUDES PLAY GROUND SECO NDARY SCHOOL AND PRIMARY SCHOOL FOR BOYS AND GIRLS LADIES CLUB HOS PITAL SHOPS AND PROPOSED WIDENING OF ROADS OF 100 FT. AND 60 FT. 2.3 ACCORDING TO THE AO THE MAIN ISSUE INVOLVED IN THE CASE WAS THAT THE ASSESSEE HAD RECEIVED ITS AMOUNT OF SHARE ON SA LE OF COMMON PLOT WHICH WAS INCOME CHARGEABLE TO TAX UNDER THE HEAD P ROFITS AND GAINS OF BUSINESS AND NOT ON CAPITAL ACCOUNT AS CLAIMED BY T HE ASSESSEE. SINCE THE ASSESSEE COULD NOT FURNISH REQUIRED DETAILS SUCH AS THE ACTUAL PLOT NUMBER THE AMOUNT RECEIVED FROM SALE OF PLOT NO. 2 9 COULD NOT BE ASCERTAINED AS TO WHETHER IT IS AN INDEPENDENT PLOT FORMING PART OF THE 53 PLOTS ALLOTTED TO 14 COOPERATIVE SOCIETIES; HOW PLO T NO. 29 WAS DERIVED/ ALLOTTED FROM THE TOTAL AREA OF LAND ALLOTTED BY TH E BOMBAY HOUSING SOCIETY IN 1960; WHETHER THE PLOT SOLD WAS A PART OF LAND A LLOTTED FOR PUBLIC AMENITIES AND PUBLIC UTILITIES RESIDENTIAL FACILIT IES ETC. THE AO TREATED THE AMOUNT RECEIVED BY THE ASSESSEE ON SALE OF ITS SHAR E OF THE EXCESS LAND AVAILABLE WITH THESE COOPERATIVE SOCIETIES AS BUSI NESS INCOME BEING AN ADVENTURE IN THE NATURE OF TRADE AND ACCORDINGLY BR OUGHT THE PROFIT ON SALE THEREOF OF ` 23 00 000/- ARISING TO THE ASSESSEE TO TAX IN THE A SSESSEES HANDS AS BUSINESS PROFITS AS AGAINST LTCG ADMITTED THEREON BY THE ASSESSEE. IN ADDITION THERETO THE AO BROUGHT TO TA X IN ASSESSEES HANDS AN AMOUNT OF ` 5 02 000/- RECEIVED BY THE ASSESSEE FROM MEMBERS AS TRANSFER FEES. THE ASSESSMENT WAS ACCORDINGLY CONCLUDED UND ER SECTION 143(3) R.W.S. 253 OF THE ACT VIDE ORDER DATED 19.03.013 WH EREIN THE ASSESSEES INCOME WAS DETERMINED AT ` 43 74 000/-. ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 5 3. AGGRIEVED BY THE ORDER OF ASSESSMENT FOR A.Y. 1995- 96 DATED 19.03.2013 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A)-32 MUMBAI. THE LEARNED CIT(A) DISPOSED OFF THIS APPEAL VIDE ORDER DATED 18.04.2013 ALLOWING THE ASSESSEE PARTIAL RELIEF. 4. THE APPEAL IN THIS CASE WAS FIXED ON A NUMBER OF OC CASIONS. ON THESE OCCASIONS EITHER NONE APPEARED ON BEHALF OF T HE ASSESSEE OR ADJOURNMENTS SOUGHT WERE GRANTED ON THE REQUEST OF THE LEARNED A.R. FOR THE ASSESSEE. ON 21.09.2016 WHEN THE CASE WAS CALL ED FOR HEARING NEITHER WAS ANYONE PRESENT FOR AND ON BEHALF OF THE ASSESSE E NOR WAS ANY ADJOURNMENT SOUGHT ON ITS BEHALF. THE LEARNED D.R. FOR REVENUE HOWEVER WAS PRESENT AND READY TO ARGUE THE CASE. IN THESE C IRCUMSTANCES WE ARE OF THE OPINION THAT THE ASSESSEE IS NOT INTERESTED IN PURSUING THIS APPEAL SERIOUSLY AND WE THEREFORE PROCEED TO DISPOSE OFF T HE SAME WITH THE ASSISTANCE OF THE LEARNED D.R. AND THE MATERIAL ON RECORD. 5. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWI NG GROUNDS: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING THE ORDER U/S 143(3) R.W.S. 253 OF THE I .T. ACT 1961 OF THE ASSESSING OFFICER CHARGING TO TAX AS BUSINESS I NCOME CAPITAL RECEIPT OF RS.23 00 000/- RECEIVED AS ASSESSEES SH ARE ON SALE OF COMMON PLOT OF LAND. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ORDER U/S 143(3) R.W.S. 253 OF THE I .T. ACT 1961 OF THE ASSESSING OFFICER CHARGING TO TAX CONTRIBUTION OF RS.5 02 000/- RECEIVED FROM MEMBERS INCIDENTAL ON THE SALE OF PL OT (TRANSFER FEES) WHICH WAS EXEMPT ON THE PRINCIPLE OF MUTUALI TY. 3. THE ASSESSEE CRAVES LEAVE TO ADD ALTER OR AMEND THE GROUNDS OF APPEAL AND SUBMIT A DETAILED STATEMENT OF FACTS AND CASE LAWS RELIED UPON AT THE TIME OF HEARING. 6. GROUND NO. 1: 6.1 ACCORDING TO THE LEARNED D.R. FOR REVENUE THE LEARNED CIT(A) HAD CONSIDERED IN DETAIL THE SUBMISSIONS PUT FORTH BY T HE ASSESSEE IN RESPECT OF THE ISSUE AT GROUND NO. 1 WHICH HAVE BEEN SUMMARIZE D AT PARA 3.3(I) TO (X) OF THE IMPUGNED ORDER. THE LEARNED D.R. SUBMITS THA T IN HIS DECISION AT PARA 3.4 OF THE IMPUGNED ORDER THE LEARNED CIT(A) AFTER CONSIDERING THE ASSESSEES SUBMISSIONS AND THE AOS VIEWS AT PARA 4 .4(I) TO (V) HAS COME TO ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 6 THE CONCLUSION THAT IN ITS SUBMISSIONS THE ASSESSEE HAS NOT BEEN ABLE TO REBUT THE FACTUAL FINDINGS RENDERED BY THE AO AT PA RA 8.2 OF HIS ORDER WHICH HAD BEEN SUMMARIZED AT PARA 4.4(I) TO (IV) OF THE IMPUGNED ORDER. IT IS FURTHER SUBMITTED THAT THE LEARNED CIT(A) UPHELD THE AOS ORDER ON THIS ISSUE AS HE WAS OF THE VIEW THAT THE ASSESSEE WAS N OT ABLE TO PRODUCE ANY MATERIAL EVIDENCE TO CONTROVERT THE AOS VIEW THAT THE PROFIT ON SALE OF LAND OF THE ASSESSEE AND 13 OTHER COOPERATIVE SOCIETIES ALLOTTED TO THEM BY THE BOMBAY HOUSING BOARD IN 1960 WAS TO BE TREATED AS B USINESS PROFIT RATHER THAN CAPITAL GAIN AS CONTENDED BY THE ASSESSEE. 6.2.1 WE HAVE HEARD THE LEARNED D.R. FOR REVENUE AN D PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. THE IS SUE FOR CONSIDERATION BEFORE US IS WHETHER THE ASSESSEES SHARE OF PROFIT IN SALE OF LAND IN THE YEAR UNDER CONSIDERATION ALLOTTED TO IT ALONGWITH 13 OTHER COOPERATIVE SOCIETIES BY THE BOMBAY HOUSING BOARD IN 1960 IS T O BE BROUGHT TO TAX AS BUSINESS INCOME AS HELD BY THE AUTHORITIES BELOW OR AS CAPITAL GAINS AS CLAIMED BY THE ASSESSEE. THE FACTS OF THE MATTER AS EMANATE FROM THE RECORD THE OBSERVATION/FINDINGS OF THE AO THE SUB MISSIONS OF THE ASSESSEE BEFORE THE LEARNED CIT(A) AND THE LEARNED CIT(A)S DECISION THEREON AT PARAS 3.2 AND 3.3 OF THE IMPUGNED ORDER ARE AS EXTRACTED HEREUNDER: - 3.2 THE FACTS OF THE CASE OBSERVATION / FINDINGS OF THE AO IN THIS REGARD IN THE ASSESSMENT ORDER ARE SUMMARIZED AS UN DER: - I. THE HON'BLE ITAT 'F' BENCH MUMBAI VIDE THEIR ORDE R IN ITA NO 5864/MUM/2008 DATED 25.11.2011 SET ASIDE THE ISS UE TO THE FILE OF THE AO. II. THIS ISSUE RELATED TO SALE OF COMMON PLOT OF LAND N O. 29 ACQUIRED IN 1950 JOINTLY BY 14 CO-OP. SOCIETIES OF JVPD SCHE ME. THE PORTION OF SALE CONSIDERATION PERTAINING TO THE APPELLANT W AS RS. 23 00 000/-. THE APPELLANT IN ITS RETURN OF INCOME HAD OFFERED CONSEQUENT GAINS AS LTCG WHEREAS THE SALE WAS TREAT ED BY THE AO AS ADVENTURE IN NATURE OF TRADE AND THEREFORE TH E ENTIRE SALE CONSIDERATION WAS ADDED AS BUSINESS INCOME. III. IN THEIR ORDER THE HON'BLE ITAT CONCURRING TO THE IR EARLIER DECISION VIDE THEIR ORDER DATED 17.11.2005 HAVE DIR ECTED THE AO TO DECIDE THE ISSUE AFRESH AS PER THE DIRECTIONS GI VEN IN THE SAID ORDER DATED 17.11.2005. ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 7 IV. THE AO ACCORDINGLY ISSUED NOTICE U/S 142(1) DATED 0 2.08.2012 FIXING THE DATE OF HEARING ON 13.08.2012. FURTHER N OTICE U/S 142(1) DATED 03.09.2012 AND 23.11.2012 WERE ALSO IS SUED. THE AO OBSERVED THAT THE ASSESSEE COULD NOT PROVIDE ANY NEW INFORMATION AND THE SUBMISSION MADE BY THE ASSESSEE WAS FOUND TO BE WHAT WAS MADE DURING THE EARLIER ASSESSMENT P ROCEEDINGS BEFORE THE AO AS WELL AS BEFORE THE CIT(A) AND HON' BLE ITAT. THE REPLY SUBMITTED BY THE ASSESSEE HAS BEEN REPRODUCED BY THE AO AT PARA 4 PAGE 4 TO 8 OF THE ASSESSMENT ORDER. V. THE AO OBSERVED THAT AS THE SUBMISSION MADE BY THE ASSESSEE WAS NOT AS PER THE REQUIREMENT THEREFORE THE ASSES SEE WAS REQUIRED TO SUBMIT DETAILED EXPLANATION WITH REGARD TO THE FACTS FOUND IN THE AGREEMENT DATED 26.4.1960 BETWEEN BOMB AY HOUSING BOARD AND EACH OF THE 14 CO-OPERATIVE SOCIE TIES VIDE AO'S LETTER DATED 14.12.2012 CONTENTS OF WHICH HAV E BEEN REPRODUCED BY THE AO AT PARA 5 PAGE 8 & 9 OF THE AS SESSMENT ORDER. VI. FURTHER NOTICES U/S.133(6) WERE ISSUED TO ALL THE 1 3 CO-OPERATIVE SOCIETIES WHO WERE REQUIRED TO PROVIDE THE NUMBER O F PLOTS WITH SPECIFICATION PLOT NO. AREA IN SQ. YARDS ALLOTTED BY BOMBAY HOUSING BOARD TO 14 CO-OPERATIVE SOCIETIES. THE AO OBSERVED THAT OUT OF THIS ONLY 6 CO-OPERATIVE SOCIETIES HAVE RES PONDED OUT OF WHICH THREE WERE ASSESSED TO TAX WITH THE AO WITH SIMILAR ISSUE. THE AO OBSERVED THAT IN ALL THE RESPONDED CASES THE MATTER HAS BEEN REMANDED BACK TO THE FILE OF AO BY THE HON'B1E ITAT AS THE FACTS IN THESE CASES WERE ALSO SIMILAR TO THAT OF T HE ASSESSEE. NAMES OF SUCH CASES WERE LISTED AS UNDER: A. THE VITHALNGAR CO-OP HSG. SOCIETY LTD. ITO 21(2)(4) B. THE VALLABHNAGAR CO-OP HSG. SOCIETY LTD. ITO 21(2)( 4) C. THE NUTANLAXMI CO-OP HSG. SOCIETY LTD. ITO 21(1)(3) D. THE NAVYUG CO-OP HSG. SOCIETY LTD. E. THE SWASTIK CO-OP HSG. SOCIETY LTD. F. THE AZAD NAGAR CO-OP HSG. SOCIETY LTD. VII. THE AO OBSERVED THAT THE ABOVE SIX SOCIETIES COULD NOT SPECIFICALLY GIVE PROOF OF PLOT ALLOTTED TO EACH OF THE 14 CO-OP ERATIVE SOCIETIES OR ANY DOCUMENT/EVIDENCE WHICH COULD SPECIFY THE AREA ALLOTTED TO THEM TO CLAIM THE OWNERSHIP RIGHT ON THE LEASE HOLD LAND GIVEN BY THE BOMBAY HOUSING BOARD IN THE YEAR 1960. HE FURTH ER OBSERVED THAT THE BOARD HAS ALLOTTED THE TOTAL 6 07 036 SQ.Y DS. WHICH COULD BE OBSERVED FROM THE SCHEDULE I UNDER THE HEAD PUBI C AMENITY WHICH INCLUDES PLAY GROUND PUBLIC HALL RECREATION GROUND SHOP AND PUBLIC BUILDING MUNICIPAL OFFIE POLICE STATIO N FIRE BRIGADE POST OFFICE BANK AND SHOPS. UNDER SCHEDULE II FOR PUBLIC UTILITY THE AREA ALLOTTED WAS 815 467 SQ.YDS WHICH INCLUDE PLAY GROUND SECONDARY SCHOOL FOR BOYS AND GIRLS LADIES CLUB P RIMARY SCHOOL ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 8 FOR BOYS AND GIRLS CLUB HOSPITAL SHOP AND PROPOS ED WIDENING OF ROADS OF 100 FTS. AND 60 FTS. VIII. THE AO OBSERVED THAT THE MAIN ISSUE INVOLVED IN THI S CASE WAS THAT THE ASSESSEE SOCIETY HAS RECEIVED AMOUNT OF SH ARE ON SALE OF COMMON PLOT AS INCOME CHARGEABLE TO TAXES UNDER TH E HEAD PROFIT AND GAINS OF BUSINESS. IX. THE AO FURTHER OBSERVED THAT A SIMILAR ISSUE IN THE CASE OF M/S. VITHALNAGAR CO-OP HSG. LTD. HAD COME UP FOR ASSESSM ENT YEAR 1995-96 AND THE CIT(A) VIDE ORDER IN NO.CIT(A)XXX/D C/ SPL.RG.46/IT.17/97-98 DATED 25.5.1999 HELD THAT ' THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE WERE SIMILAR TO THE BUSI NESS AND AMOUNT RECEIVED FROM SALE WERE OF PLOT OF LAND WERE CONSIDERED AS BUSINESS INCOME. THE AO FURTHER REPRODUCED THE RELE VANT PORTION AT PAGE NO. 11 OF THE ASSESSMENT ORDER. X. THE AO FURTHER OBSERVED THAT AS THE ASSESSEE COULD NOT GIVE THE AREA AND THE ACTUAL PLOT SR. NO. THE AMOUNT RECEIV ED FROM THE SALE OF PLOT NO.29 COULD NOT BE ASCERTAINED WHETHER IT I S AN INDEPENDENT PLOT FORMING PART OF THE 14 CO-OPERATIV E SOCIETIES AND HOW THE PLOT NO.29 WAS DERIVED / ALLOTTED FROM THE TOTAL AREA OF LAND ACQUIRED FROM THE BOMBAY HOUSING BOARD IN THE YEAR 1960. HE FURTHER OBSERVED THAT THE ASSESSEE HAS FAILED TO PROVE THE PIECE OF LAND SOLD NOT BEING THE PART OF THE LAND C ONSIDERED FOR PUBLIC AMENITIES AND PUBLIC UTILITIES. FURTHER THE AO OBSERVED THAT ASSESSEE COULD NOT PROVE AS PER THE BOARD ALLOTMEN TS OF PLOTS TO MEMBER (SOCIETY) THE PUBLIC UTILITIES AND THE AMEN ITIES WERE CREATED OUT OF THE TOTAL LAND GIVEN TO THEM. HE OBS ERVED THAT THE CO-OPERATIVE FORMATION WAS CREATED WITH AN AIM FOR CONSTRUCTION OF RESIDENTIAL HOUSE WITH OTHER AMENITIES. XI. THE AO FURTHER OBSERVED THAT IN THIS CASE APPROXIMA TELY 53 PLOTS WERE ALLOTTED TO VARIOUS CO-OPERATIVE SOCIETIES AT FREE OF COST OR AT NOMINAL PRICE BY THE BOMBAY HOUSING BOARD FOR COMMO N FACILITIES AND GENERAL UTILITIES WHICH IS STATED IN THE ASSESS EE'S OWN CASE IN THE ORDER PASSED BY THE CIT(A)XXI MUMBAI VIDE ORDE R NO.CIT(A) XXI/21(2)(4) /IT-350/06-07. XII. ACCORDINGLY THE AO TREATED THE AMOUNT RECEIVED ON S ALE OF THE EXCESS LAND AVAILABLE WITH THE SOCIETIES AS 'BUSINE SS INCOME' EVEN THOUGH IT WAS NOT THE ACTIVITY OF THE CO-OPERA TIVE HOUSING SOCIETY. ACCORDINGLY THE PROFIT OF RS.23 00 000/- W AS TAXED UNDER THE HEAD INCOME FROM BUSINESS. XIII. IT IS AGAINST THIS ACTION OF THE AO THAT THE APPELL ANT HAS RAISED AFORESAID TWO GROUNDS OF APPEAL. 3.3 THE SUBMISSIONS OF THE APPELLANT ARE SUMMARIZE D AS UNDER :- I. IT WAS SUBMITTED THAT THE APPELLANT IS AMONGST 14 C O-OP. HOUSING SOCIETIES WHICH WERE INCORPORATED IN AND AROUND 194 7 FOR PROVIDING HOUSING FACILITIES TO MIDDLE CLASS PERSON S IN SUBURB OF VILE PARLE IN MUMBAI. THEREUPON THE LANDS WERE ACQU IRED BY GOVT. ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 9 OF BOMBAY AND CONVEYED TO THE BOMBAY HOUSING BOARD. IN 1960 THE BOMBAY HOUSING BOARD EARMARKED THE LAND CONVEYE D BY THE GOVT. OF BOMBAY STATE FOR RESIDENTIAL PURPOSES AND FOR COMMON MEMBERS. II. CERTAIN PLO6TS WERE MARKED AS AMENITIES AND UTILITY PLOTS WHICH WERE CONVEYED JOINTLY TO THE FOURTEEN SOCIETIES AND EACH OF THE FOURTEEN SOCIETIES HELD SPECIFIED SHARES IN EACH OF THE COMMON AMENITIES AND UTILITY PLOTS IT WAS SUBMITTED THAT THE ENTIRE COST OF THE LAND (INCLUDING THAT HELD FOR COMMON AMENITIES) WERE PAID BY THE SOCIETIES AND ULTIMATELY BORNE BY THE MEMBERS I N PROPORTION TO THEIR RESPECTIVE SIZE OF THE PLOT. III. IT WAS SUBMITTED THAT THE PLOTS HELD FOR COMMON AME NITIES WERE FROM TIME TO TIME ALLOTTED BY 14 SOCIETIES TO VARIO US PARTIES FOR SPECIFIED PURPOSES AND IN MOST CASES FOR VERY NOMIN AL SUMS OR TOKEN ANNUAL LEASE OF RS. 1/- PER ANNUM. IV. IT WAS SUBMITTED THAT THE AREA COMPRISING THE VARIO US AMENITY PLOTS AND THE PURPOSE THEREOF WAS ALSO SPECIFIED BY THE GOVERNMENT AS A PART OF THE CONVEYANCE OF THE LAND TO THE SOCIETIES AND HENCE THE SAID SOCIETIES DID NOT HAVE ANY DISCRETION IN RESPECT OF THE AREA OF THE SAID AMENITY PLOTS OR THE PURPOSE AND HAD TO DISPOSE THEM FOR THE USER SPECIFIED OR USE T HEM FOR THE SAID PURPOSE THEMSELVES. THUS WHERE PLOT IS DISPOSED FOR USER WHICH IS DIRECTED BY THE GOVERNMENT WHILE CONVEYING LAND TH E SAME CANNOT TANTAMOUNT TO BUSINESS. V. IT WAS SUBMITTED THAT THE ASSESSEE TOGETHER WITH TH E OTHER 13 CO- OP. SOCIETIES SOLD ITS RIGHTS IN A COMMON PLOT ON 'AS IS WHERE IS BASIS' DURING A.Y. 199596 IN THE MANNER AND UNDER C ERTAIN COMPELLING CIRCUMSTANCES INTER-ALIA DUE TO ENCROAC HMENT ETC. VI. IT WAS FURTHER SUBMITTED THAT THE ACQUISITION OF TH E LAND HAS TAKEN PLACE ONLY ONCE THERE BEING A NUMBER OF PLOTS FOR COMMON AMENITIES THE SAME HAVE BEEN GIVEN OUT TO DESERVIN G INSTITUTIONS AS AND WHEN REQUESTS WERE MADE AND FOUND SUITABLE A ND IT WAS NOT THE CASE THAT THE SAME PLOT WAS BEING ACQUIRED AND SOLD TIME AND AGAIN. IT WAS SUBMITTED THAT SOMETIMES CERTAIN AMOUNTS ARE CHARGED FROM THE USER FOR PURPOSES LIKE CINEMA PET ROL PUMP FROM WHERE USER WILL BE CARRYING ON THE BUSINESS BUT THE FACT THAT A PLOT HAS NOT BEEN GIVEN FREE OF COST BY ITSELF CANNOT CO NSTITUTE THE SAME AS BUSINESS ACTIVITY. VII. IT WAS SUBMITTED THAT IN JUDICIAL DECISIONS IT HAS BEEN HELD THAT THE SALE OF AN ITEM AT THE PREVAILING MARKET PRICE OR THE EARNING OF A SURPLUS OVER THE COST OF THE ASSET ON SALE THEREO F IS NOT INDICATIVE OF WHETHER THE SAME WAS HELD AS A CAPITA L ASSET OR STOCK-IN-TRADE. HOWEVER SHARES CANNOT BE TREATED AS STOCK-IN- TRADE SIMPLY BECAUSE THERE WAS APPRECIATION IN THE VALUE OF SHARES. ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 10 VIII. THE ASSESSEE FURTHER RELYING ON THE DECISION IN THE CASE OF VENKATSWAMI NAIDU & CO V. CIT 35 ITR 594 (SC) CONT ENDED THAT OTHER THINGS BEING NEUTRAL OWNERSHIP OF LAND IS PR IMA FACIE PRESUMED TO BE ON CAPITAL ACCOUNT UNLESS THERE ARE STRONG CIRCUMSTANCES INDICATING TO THE CONTRARY. THEREFORE THE ONUS IS ON THE REVENUE TO ESTABLISH THAT THE PROFIT EARNED IN A TRANSACTION IS WITHIN THE TAXING PROVISIONS. IX. IT WAS SUBMITTED THAT IN A.Y. 2004-05 WHERE THE ASS ESSEE SOCIETY ALONGWITH THE 13 OTHER CO-OP. SOCIETIES HAD SOLD A PLOT OF LAND TO THE PROMOTERS OF THE PROPOSED CO-OP. HOUSING SOCIET Y TO BE FORMED OF THE MAHARASHTRA CADRE OF THE INDIAN POLICE SERVI CES THE CIT(A) HAD TREATED THE TRANSACTION UNDER THE HEAD CAPITAL GAINS AND SINCE THERE WAS NO CHANGE IN THE NATURE OF TRANSACT ION UNDERTAKEN DURING 1995-96 AND 2004-05 IT WAS REQUES TED TO TREAT TRANSACTION IN A.Y. 1995-96 AS CAPITAL GAINS AS TRE ATED AND OFFERED BY THE ASSESSEE. X. THE ASSESSEE IN THE ALTERNATIVE AND WITHOUT PREJUDI CE SUBMITTED THAT WHAT SHOULD BE ADDED TO THE TOTAL INCOME IS RS . 7 28 000/- SINCE THE ASSESSEE HAD ALREADY OFFERED RS. 15 72 00 0/- AS CAPITAL GAINS AT THE TIME OF FILING THE RETURN OF INCOME. 3.4 I HAVE CONSIDERED FACTS OF THE CASE ORAL CONTE NTIONS AND WRITTEN SUBMISSIONS OF THE APPELLANT AS AGAINST THE OBSERVA TIONS / FINDINGS THE AO IN THE ASSESSMENT ORDER. THE CONTENTIONS AND SUBMISSIONS OF THE APPELLANT ARE BEING DISCUSSED AND DECIDED AS UN DER:- I. IT IS CLEAR FROM THE DIRECTIONS SETTING ASIDE THE I SSUE TO THE FILE OF THE AO THAT THE HON'BLE . ITAT REQUIRED THE AO TO DECIDE THE ISSUE AFRESH AS PER THE DIRECTIONS GIVEN BY THE TRIBUNAL VIDE THEIR ORDER DATED 17.11.2005. II. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS TH E AO REQUIRED THE APPELLANT TO FURNISH THE DETAILS. THE AO OBSERV ED THAT SUCH DETAILS FURNISHED BY THE APPELLANT WERE SIMILAR TO WHAT WAS MADE DURING THE EARLIER ASSESSMENT PROCEEDINGS BEFORE TH E AO AS WELL AS BEFORE THE CIT(A) AND HON'BLE ITAT. THE NAMES AN D ADDRESSES OF 11 CO-OP. SOCIETIES WERE SUBMITTED TO THE AO. TH E AO AT PARA 5 OF THE ASSESSMENT ORDER HAS CLEARLY OBSERVED THAT T HE SUBMISSION WAS NOT AS PER THE REQUIREMENT AND THEREFORE THE AS SESSEE WAS REQUIRED TO SUBMIT DETAILED EXPLANATION WITH REGARD TO THE FACTS FOUND IN THE AGREEMENT DATED 26.04.1960 BETWEEN THE BOMBAY HOUSING BOARD AND EACH OF THE 14 CO-OP. SOCIETIES. III. THE AO ALSO ISSUED NOTICES U/S 133(6) TO ALL THE 13 CO-OPERATIVE SOCIETIES WHO WERE REQUIRED TO PROVIDE THE NUMBER O F PLOTS WITH SPECIFICATION PLOT NO. AREA IN SQ. YARDS ALLOTTED BY BOMBAY HOUSING BOARD TO 14 CO-OPERATIVE SOCIETIES. HOWEVER ONLY 6 CO- OPERATIVE SOCIETIES HAVE RESPONDED OUT OF WHICH T HREE WERE ASSESSED TO TAX IN THE CHARGE OF THE AO HIMSELF WIT H SIMILAR ISSUE. THE AO HAS OBSERVED THAT IN ALL THE CASES WHERE RES PONSE WAS ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 11 RECEIVED THE MATTER HAS BEEN REMANDED BACK TO THE F ILE OF AO BY THE HON'BLE ITAT AS THE FACTS IN THESE CASES WERE A LSO SIMILAR TO THAT OF THE ASSESSEE. IV. THE AO HAS FURTHER OBSERVED THAT THE SIX SOCIETIES WHO RESPONDED COULD NOT SPECIFICALLY GIVE PROOF OF PLOT ALLOTTED TO EACH OF THE 14 COOPERATIVE SOCIETIES OR ANY DOCUMENT/ EVIDENCE WHI CH COULD SPECIFY THE AREA ALLOTTED TO THEM TO CLAIM THE OWNE RSHIP RIGHT ON THE LEASE HOLD LAND GIVEN BY THE BOMBAY HOUSING BOA RD IN THE YEAR 1960. THE AO FURTHER MENTIONED THE TOTAL AREA OF LAND ALLOTTED BY THE BOARD FOR THE PUBLIC AMENITIES AND PUBLIC UTILITY AS PER SCHEDULE I AND II. V. THE AO HAS FURTHER MENTIONED THAT AS THE ASSESSEE C OULD NOT GIVE THE AREA AND THE ACTUAL PLOT SR. NO. THE AMOUNT R ECEIVED FROM THE SALE OF PLOT NO.29 COULD NOT BE ASCERTAINED WHETHER IT IS AN INDEPENDENT PLOT FORMING PART OF THE 14 CO-OPERATIV E SOCIETIES AND HOW THE PLOT NO.29 WAS DERIVED / ALLOTTED FROM THE TOTAL AREA OF AND ACQUIRED FROM THE BOMBAY HOUSING BOARD IN THE Y EAR 1960. THE AO HAS FURTHER OBSERVED THAT THE ASSESSEE HAS F AILED TO PROVE THE PIECE OF LAND SOLD NOT BEING THE PART OF THE LA ND CONSIDERED FOR PUBLIC AMENITIES AND PUBLIC UTILITIES. HE FURTHER H AS OBSERVED THAT THE ASSESSEE COULD NOT PROVE AS PER THE BOARD ALLO TMENTS OF PLOTS TO MEMBER (SOCIETY) THE PUBLIC UTILITIES AND THE A MENITIES WERE CREATED OUT OF THE TOTAL LAND GIVEN TO THEM. HE HAS FURTHER OBSERVED THAT THE CO-OPERATIVE FORMATION WAS CREATE D WITH AN AIM FOR CONSTRUCTION OF RESIDENTIAL HOUSE WITH OTHER AM ENITIES AND APPROXIMATELY 53 PLOTS WERE ALLOTTED TO VARIOUS CO- OPERATIVE SOCIETIES AT FREE OF COST OR AT NOMINAL PRICE BY TH E BOMBAY HOUSING BOARD FOR COMMON FACILITIES AND GENERAL UTI LITIES. UNDER SUCH FACTS AND CIRCUMSTANCES THE AO TREATED THE REC EIPT OF MONEY FROM TRANSFER OF PLOT BY THE ASSESSEE AS BUSINESS I NCOME. VI. IN THE SUBMISSION MADE THE APPELLANT HAS NOT BEEN ABLE TO REBUT FACTUAL OBSERVATION GIVEN BY THE AO IN PARA 8.2 OF HIS ORDER AND. SUMMARIZED HERE IN ABOVE. VII. IT IS FURTHER SEEN FROM THE RECORDS AVAILABLE THAT IN THE CASE OF JAI HIND CHS LTD. SIMILAR RECEIPT IN THE A.Y. 1995-96 W AS TREATED AS BUSINESS INCOME AS AGAINST INCOME FROM CAPITAL GAIN S OFFERED BY THE SOCIETY. IN THE SIMILAR FACT IN THE CASE OF HA TKESH CHS LTD. THE RECEIPT FROM THE TRANSFER OF PLOT IN A.Y. 1995-96 W AS TREATED AS BUSINESS PROFIT IN THE FIRST APPELLATE LEVEL. VIII. FROM THE ABOVE FACTS IT IS CLEAR THAT THE PROMINENT AND ONLY VIEW AVAILABLE BEFORE THE AO AT THE TIME OF MAKING DECIS ION WAS THAT SUCH PROFIT HAS BEEN TREATED AS BUSINESS PROFIT AND NOT CAPITAL GAINS IN THE CASE OF SIMILARLY PLACED SOCIETIES. TH E LD. AR OF THE APPELLANT HAS NOT BEEN ABLE TO PRODUCE ANY CONTRARY VIEW TAKEN BY THE AO OF OTHER CO-OP. SOCIETIES SIMILARLY PLACE D EITHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR DURING THE INSTANT PROCEEDINGS. THE LD. AR RATHER THAN DEALING WITH TH E BASIC ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 12 QUESTION HAS CONTENDED THAT THE CONSEQUENT GAIN ARI SEN FROM SALE OF PLOT SHOULD BE TREATED AS CAPITAL GAINS. IX. NO NEW FACTS HAVE BEEN BROUGHT TO MY KNOWLEDGE TO C AUSE DEPARTURE FROM THE FINDINGS OF MY LD. PREDECESSOR I N THIS CASE WHEN HE EXAMINED THE ISSUE IN DETAIL IN THE FIRST R OUND OF APPELLATE PROCEEDINGS. THIS IS ALSO IN CONSONANCE O F THE FINDINGS OF THE AO IN TREATING RECEIPTS AS BUSINESS RECEIPTS IN A.Y. 95-96 AND THE APPELLANT HAS NOT BEEN ABLE TO GIVE .ANY CO NTRARY DECISION IN THE CASE OF ANY OF THE REMAINING 13 CO-OP. SOCIE TIES. X. THE APPELLANT HAS REFERRED TO THE DECISION IN FIRST APPEAL FOR A.Y. 2004-05 IN THE CASE OF THE ASSESSEE. IN THIS REGARD IT IS STATED THAT IN THAT YEAR ISSUE WAS REGARDING ALLOWANCE OF COST OF ACQUISITION OF THE PLOT AND NOT OF CAPITAL GAIN V/S BUSINESS IN COME. XI. ACCORDINGLY THE ACTION OF THE AO IN TREATING THE GA IN ON SALE OF LAND IS TREATED AS BUSINESS INCOME OF THE SOCIETY A ND IS THEREFORE UPHELD. ACCORDINGLY GROUND NO. 1 IS DISMISSED . 6.2.2 FROM A CAREFUL APPRECIATION OF THE ASSESSEES SUBMISSIONS BEFORE THE AUTHORITIES BELOW THE AOS VIEWS AND THE LEARNED C IT(A)S VIEWS AND FINDINGS ON THE ISSUE BEFORE US IT IS SEEN THAT A S SUBMITTED BY THE LEARNED D.R. AT PARA 5.1 (SUPRA) INSPITE OF THE AO ALLOWIN G THE ASSESSEE ADEQUATE OPPORTUNITY AND REQUIRING IT TO FURNISH SPECIFIC DE TAILS IN RESPECT OF ALL THE 14 COOPERATIVE SOCIETIES WHO WERE ALLOTTED LAND BY THE BOMBAY HOUSING BOARD VIDE AGREEMENT DATED 26.04.1960 SUCH AS TOTA L AREA ALLOTTED TO THEM TO CLAIM LEASEHOLD RIGHTS ON THE LAND THE NUM BER OF PLOTS ALLOTTED WITH SPECIFICATION PLOT NUMBERS AREA IN SQ. YARDS ETC. THE ASSESSEE WAS NOT ABLE TO FURNISH THE SAME. NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT BY THE AO TO THE 14 COOPERATIVE SOCIETIES INVOL VED ALSO COULD NOT ELICIT ANY SUITABLE RESPONSE FROM MOST OF THEM. IT IS SEEN THAT EVEN THE SIX SOCIETIES WHICH RESPONDED COULD NOT SPECIFICALLY GI VE PROOF OF PLOT ALLOTTED TO EACH OF THE 14 COOPERATIVE SOCIETIES OR DOCUMENT S/EVIDENCE WHICH COULD SPECIFY THE AREA ALLOTTED TO THEM OR THAT PUBLIC UT ILITIES AND PUBLIC AMENITIES AS PER SCHEDULE-I AND II WERE CREATED BY THEM THEREON. IN THIS FACTUAL MATRIX THE CASE WE ARE OF THE CONSIDERED V IEW AND AGREE WITH THE FINDINGS OF THE LEARNED CIT(A) THAT AS PER THE SUBM ISSIONS PUT FORTH BY IT THE ASSESSEE HAS NOT BEEN ABLE TO CONTROVERT THAT F ACTUAL FINDINGS OF THE AO IN LEADING HIM TO TREAT THE RECEIPT OF MONEY BY THE ASSESSEE FROM TRANSFER OF PLOT AS BUSINESS INCOME. WE THEREFORE UPHOLD T HE FINDINGS OF THE ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 13 AUTHORITIES BELOW AND CONSEQUENTLY DISMISS GROUND N O. 1 OF ASSESSEES APPEAL. 7. GROUND NO. 2. 7.1 IN THIS GROUND THE ASSESSEE HAD CHALLENGED THE LEARNED CIT(A)S ORDER IN UPHOLDING THE AOS ACTION IN BRINGING TO T AX AS BUSINESS INCOME AN AMOUNT OF ` 5 02 000/- RECEIVED FROM MEMBERS AS TRANSFER FEES INCIDENTAL TO SALE OF PLOT WHICH IS AGAINST THE PRI NCIPLE OF MUTUALITY. 7.2 ACCORDING TO THE LEARNED D.R. FOR REVENUE THAT THE AMOUNT OF ` 5 02 000/- WAS RECEIVED BY ASSESSEE FROM TRANSFER O F STRUCTURE BY SHRI PRAKESH R. TOLAT AND GAUTAM TOLAT ON PLOT NO. 26 TO MEHTA & SHAH IS NOT DISPUTED. THE LEARNED A.R. FOR THE ASSESSEE SUBMITT ED THAT THE LEARNED CIT(A) WAS OF THE VIEW THAT SINCE THE NEW OWNERS M EHTA & SHAH WERE ENROLLED AS NOMINAL MEMBERS WITH NO VOTING RIGHTS O R ANY RIGHTS OR INTEREST IN THE PROPERTY OF THE ASSESSEE SOCIETY EXCEPT FOR THE FLAT PURCHASED AND OCCUPIED BY THEM THIS WAS NOT IN CONSONANCE WITH T HE PRINCIPLES OF MUTUALITY. IN COMING TO THIS FINDING PLACED RELIANC E ON THE DECISION OF A COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF HA TKESH CO-OPERATIVE HOUSING SOCIETY LTD. 9ITA NO. 479 TO 500/MUM/2011) WHICH HAD CONSIDERED THE JUDICIAL PRONOUNCEMENTS CITED BY THE ASSESSEE AND CONSEQUENTLY UPHELD THE AOS ACTION IN BRINGING THE TRANSFER FEES RECEIVED BY THE SOCIETY TO TAX IN ITS HANDS. 6.3.1 WE HAVE HEARD THE LEARNED D.R. FOR REVENUE AN D PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. THE FA CTS OF THE CASE THE OBSERVATIONS/FINDINGS OR THE AO AND LEARNED CIT(A) AS LAID OUT AT PARAS 4.2 TO 4.4 OF THE IMPUGNED ORDER ARE EXTRACTED HEREUNDE R: - 4.2 THE FACTS OF THE CASE OBSERVATIONS/FINDINGS OF TH E ASSESSING OFFICER ARE SUMMARIZED AS UNDER: - I. THE SOCIETY HAS RECEIVED TRANSFER FEES OF RS.5 02 0 00/- FOR GIVING NO OBJECTION CERTIFICATE. II. SHRI PRAKASH R TOLAT AND SHRI GAUTHAM R TOLAT BEING OWNERS OF THE ORIGINAL PLOT NO.26 SOLD THE STRUCTURE STANDING ON PLOT NO.26 TO MEHTA & SHAH. IN TURN MR. SHAH PAID TRANSFER FEE S OF RS.2 50 000/- FOR GETTING CONSENT FROM THE SOCIETIE S AND ALSO PAID DONATION OF RS. 10 00 000/-. ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 14 III. THE ORIGINAL OWNER MR. BLAT AND BROTHERS FILED A SU IT IN THE CO- OPERATIVE COURT FOR ALLOTTING PERMISSION OF FSI TO MEHTA & SHAH. AS THE OUTCOME OF THE COURT PROCEEDING WAS NOT BROU GHT BEFORE THE AO THE TRANSFER FEES RECEIVED FROM MEHTA WAS T REATED AS BUSINESS INCOME OF THE SOCIETY. IV. ACCORDINGLY THE TRANSFER FEE OF RS.5 02 000/- RECEI VED BY THE SOCIETY WAS TAXED IN THE HANDS OF THE ASSESSEE. HOW EVER IT IS SEEN THAT IN THE COMPUTATION OF THE ASSESSMENT ORDE R THE AMOUNT ADDED S RS. 2 50 000/- ONLY. V. IT IS AGAINST THIS ACTION OF THE AO THAT THE APPELL ANT HAS RAISED AFORESAID GROUND OF APPEAL. 4.3 THE SUBMISSIONS OF THE APPELLANT ARE SUMMARIZED AS UNDER :- I. IT WAS SUBMITTED THAT THE LD. AO HAS TREATED THE TRANSFER FEES RECEIVED OF RS. 2 50 000/- FROM THE INCOMING MEMBER AS BUSINESS INCOME AS AGAINST CLAIMED AS EXEMPT ON THE GROUNDS OF MUTUALITY BY THE APPELLANT. II. THE APPELLANT RELIED ON THE ORDER OF ITAT MUMB AI BENCH IN THE CASE OF SUVARNA-NAGAR CHS LTD. FOR A.Y. 2002-03 WHE REIN THE AMOUNT OF TRANSFER FEE RECEIVED WAS HELD TO BE EXEM PT ON THE BASIS OF PRINCIPLES OF MUTUALITY. III. THE ASSESSEE FURTHER RELIED UPON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF SIND CO-OP. HOUSING SOCIE TY VS. ITO 317 ITR 147 (BORN) AND IN THE CASE OF MITTAL COURT PREMISES CO- OP. SOCIETY VS. ITO 320 ITR 414 (BOM). 4.4 I HAVE CONSIDERED FACTS OF THE CASE ORAL CONTENTI ONS AND WRITTEN SUBMISSIONS OF THE APPELLANT AS AGAINST THE OBSERVA TIONS / FINDINGS OF THE AO IN THE ASSESSMENT ORDER. THE CONTENTIONS AND SUBMISSIONS OF THE APPELLANT ARE BEING DISCUSSED AND DECIDED AS UN DER:- I. IT IS THE FACT OF THE CASE THAT THE QUESTION AMO UNT HAS BEEN RECEIVED BY THE APPELLANT SOCIETY FROM TRANSFER OF STRUCTURE BY SHRI PRAKASH R. TOLAT AND SHRI GAUTHAM R. TOLAT ON PLOT NO. 26 TO MR. MEHTA & SHAH. THIS AMOUNT HAS BEEN ADDED BY THE AO AS TRANSFER FEE. II. IN THESE SET OF FACTS IT IS CLEAR THAT SHRI PRA KASH R TOLAT AND SHRI GAUTHAM R TOLAT BEING OWNERS OF THE ORIGINAL PLOT N O.26 SOLD THE STRUCTURE STANDING ON PLOT NO.26 TO MEHTA & SHAH. I N TURN MR. SHAH PAID TRANSFER FEES OF RS.2 50 000/- FOR GETTIN G CONSENT FROM THE SOCIETIES AND ALSO PAID DONATION OF RS.10 00 00 0/-. THE ORIGINAL OWNER MR. TOLAT AND BROTHERS FILED A SUIT IN THE CO- OPERATIVE COURT FOR ALLOTTING PERMISSION OF FSI TO MEHTA & SHAH. AS THE OUTCOME OF THE COURT PROCEEDING WAS NOT BROU GHT BEFORE THE AO AND THE TRANSFER FEES RECEIVED FROM MEHTA WA S TREATED AS BUSINESS INCOME OF THE SOCIETY. ACCORDINGLY THE TRA NSFER FEE RECEIVED BY THE SOCIETY WAS TAXED IN THE HANDS OF T HE ASSESSEE. ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 15 III. THE NEW OWNERS OF THE STRUCTURE VIZ. MR. MEHTA & SHAH WOULD HAVE BEEN ENROLLED AS NOMINAL MEMBERS OF THE SOCIET Y. THE NOMINAL MEMBERS WHO ARE RECOGNIZED AS SUCH IN RES PECT OF THE OCCUPANCY AND OWNERSHIP OF THE FLAT. SOLD TO THEM HAVE NO VOTING RIGHTS AND THEY HAVE NO RIGHTS OR INTEREST O N THE PROPERTY OF THE SOCIETY EXCEPT THE FLAT PURCHASED AND OCCUPI ED BY THEM. THIS ASPECT CLEARLY IS IN BREACH OF CONCEPT OF MUTU ALITY IN SO FAR AS NOMINAL MEMBERS ARE DISCRIMINATED AGAINST THE ME MBERS. IT IS ALSO SEEN IN THE FACTS DISCUSSED HERE IN ABOVE T HAT THE MONEY WHICH IS CHARGED FROM THE NOMINAL MEMBERS ARE USED FOR GIVING BENEFITS TO THE MEMBERS. THIS ALSO LACKS IN THE CON CEPT OF MUTUAL CONCERN. IV. IT IS FURTHER STATED THAT THE MONEY WHICH IS CO LLECTED BY THE SOCIETY FROM THE MEMBERS AS WELL AS NOMINAL MEMBERS MUST BE GETTING DEPOSITED IN THE FIXED DEPOSITS OR THE SAVI NG DEPOSIT. THE INTEREST EARNED THEREON IS NORMALLY USED FOR ADMINI STRATIVE EXPENSES OF THE SOCIETY WHEREBY THE BENEFITS ARE GI VEN TO THE MEMBERS AND SUCH BENEFITS ARE ALSO ENJOYED BY THE N OMINAL MEMBERS WHICH HAVE NO VOTING RIGHTS INTEREST OR RI GHTS OF THE PROPERTY OF THE SOCIETY INCLUDING THE PLOT ON WHICH THE FLAT PURCHASED BY THE NOMINAL MEMBER EXISTS. THIS ASPECT ALSO GOES AGAINST THE CONCEPT AND PRINCIPLES OF MUTUALITY. V. THE HON'BLE ITAT H-BENCH MUMBAI IN THEIR ORDER DATED 04.09.20 13 IN THE CASE OF HATKESH CO-OP. HOUSING S OCIETY LTD. VS. ACIT 21(1) MUMBAI IN ITA NO. 494-500/MUM/2011 FOR A.Y. 1996-97 AND 2000-01 TO 2002-03 2006-07 & 2007-08 A FTER DETAILED DISCUSSION ON THE FACTS SIMILAR TO THOSE OF THE APPELLANT HAVE HELD THAT THE CONCERNED SOCIETY DOES NOT REPRESENT THE MUTUAL CONCERN AND TO SUCH ACTIVITIES THE CONCEPT OF MUTUALITY CANNOT BE APPLIED. IN THEIR DETAILED ORDER THE HON' BLE ITAT HAVE CONSIDERED THE VARIOUS CASE LAWS INCLUDING ONES RELIED UPON BY THE APPELLANT. VI. THE APPELLANT HAS RELIED UPON THE DECISION OF H ON'BLE MUMBAI ITAT IN THE CASE OF SUVARNA NAGAR CHS LTD. FOR A.Y. 2002-03. SUCH ORDER WAS PASSED BY E . -BENCH OF HON'BLE MUMBAI ITAT ON 11.04.2014. IN THIS REGARD IT IS STATED THAT THE HO N'BLE MUMBAI ITAT IN THE CASE OF HATKESH CHS LTD. HAVE IN DETAIL DISCUSSED ABOUT THE PRINCIPLES OF MUTUALITY AND IN THIS DECIS ION THE DECISIONS OF BOMBAY HIGH COURT RELIED UPON BY THE A SSESSEE HAVE BEEN REFERRED TO AND CONSIDERED. IN THE ORDER OF SUVARNANAGAR CHS LTD. FOR A.Y. 2002-03 DATED 11.04. 2014 THE HON'BLE ITAT DID NOT HAVE OCCASION TO CONSIDER THE DECISION IN THE CASE OF HATKESH CHS LTD. (SUPRA). VII IN VIEW OF FACTS OF THE CASE DISCUSSION HERE I N ABOVE FURTHER RELYING ON ABOVE DECISION OF HON'BLE ITAT IN THE CA SE OF HATKESH CO-OP. HOUSING SOCIETY LTD. VS. ACIT 21(1) (SUPRA) AND RESPECTFULLY FOLLOWING THE SAME THE CONTENTIONS AN D SUBMISSIONS ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 16 MADE BY APPELLANT ARE NOT FOUND TO BE ACCEPTABLE AN D ARE THEREFORE REJECTED. 6.3.2 FROM THE DISCUSSION OF THE LEARNED CIT(A) IN THE IMPUGNED ORDER ON THIS ISSUE (SUPRA) IT IS NOT DISPUTED THAT AN AMOU NT OF ` 5 02 000/- WAS RECEIVED BY THE ASSESSEE SOCIETY FROM THE TRANSACTI ON OF THE STRUCTURE ON PLOT NO. 26 BY PRAKASH R. TOLAT AND GAUTAM R. TOLAT TO MEHTA & SHAH. THIS FACT WAS NOT BROUGHT TO THE NOTICE OF THE AO. ON DETECTION THEREOF THE AO BROUGHT THE SAID TRANSFER FEE RECEIVED BY THE AS SESSEE TO TAX IN THE ASSESSEES HANDS. IN RESPECT OF THE ASSESSEES CLAI M THAT THE SAID TRANSFER FEE RECEIVED BY IT WAS NOT EXIGIBLE TO TAX BASED ON THE CONCEPT OF MUTUALITY WE FIND THAT THE LEARNED CIT(A) ON EXAMINATION OF T HE FACTS ON THE ISSUE RIGHTLY CONCLUDED THAT THE CONCEPT OF MUTUALITY DID NOT OPERATE IN THIS TRANSACTION. MEHTA & SHAH WHO PAID THE SAID TRANSFE R FEE WERE ONLY NOMINAL MEMBERS OF THE ASSESSEE SOCIETY AND EXCEPT FOR THE STRUCTURE PURCHASED AND OCCUPIED BY THEM HAD NO VOTING RIGHT S OR INTEREST IN THE PROPERTY OF THE SOCIETY. FOLLOWING THE DECISION OF THE COORDINATE BENCH IN THE CASE HATKESH CO-OP HOUSING SOCIETY LTD. (SUPRA) WHEREIN THE COORDINATE BENCH IN A DETAILED ORDER AFTER CONSIDE RING JUDICIAL PRONOUNCEMENTS RELIED ON BY THE ASSESSEE WHICH WER E ON SIMILAR FACTS AS THOSE OF THE CASE ON HAND WE ALSO HOLD THAT THE AS SESSEE DOES NOT REPRESENT MUTUAL CONCERNS AND TO SUCH ACTIVITIES TH E CONCEPT OF MUTUALITY CANNOT BE APPLIED. IN THIS FACTUAL AND LEGAL MATRIX OF THE CASE WE CONCUR WITH THE FINDINGS OF THE AUTHORITIES BELOW THAT THE SAID TRANSFER FEE RECEIVED BY THE ASSESSEE WAS TO BE TAXED IN ITS HAN DS. CONSEQUENTLY THE ASSESSEES GROUND AT S. NO. 2 IS DISMISSED. 8. IN THE RESULT THE ASSESSEES APPEAL FOR A.Y. 1995- 96-10 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER 2016. SD/ - SD/ - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 28 TH SEPTEMBER 2016 ITA NO. 4256/MUM/2014 VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 17 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -32 MUMBAI 4. THE CIT - 21 MUMBAI 5. THE DR F BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.