Shanti Lok Coop. Group Housing Society Ltd., Rewari v. ACIT, Rewari

ITA 7/DEL/2011 | 2007-2008
Pronouncement Date: 29-02-2012 | Result: Dismissed

Appeal Details

RSA Number 720114 RSA 2011
Assessee PAN AAFTS4330L
Bench Delhi
Appeal Number ITA 7/DEL/2011
Duration Of Justice 1 year(s) 1 month(s) 25 day(s)
Appellant Shanti Lok Coop. Group Housing Society Ltd., Rewari
Respondent ACIT, Rewari
Appeal Type Income Tax Appeal
Pronouncement Date 29-02-2012
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 29-02-2012
Date Of Final Hearing 22-02-2012
Next Hearing Date 22-02-2012
Assessment Year 2007-2008
Appeal Filed On 03-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G : NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI B.C. MEENA ACCOUNTANT MEMBER ITA NO.5673/DEL/2010 ASSESSMENT YEAR : 2007-08 ACIT AAYAKAR BHAWAN MODEL TOWN REWARI. VS. SHANTI LOK CO-OP GROUP HOUSING SOCIETY LTD. PLOT NO.3 SHANTI LOK SECTOR 3 REWARI. PAN : AAFTS4330L ITA NO.7/DEL/2011 ASSESSMENT YEAR : 2007-08 SHANTI LOK CO-OP GROUP HOUSING SOCIETY LTD. PLOT NO.3 SHANTI LOK SECTOR 3 REWARI. PAN : AAFTS4330L VS. ACIT AAYAKAR BHAWAN MODEL TOWN REWARI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJEEV JAIN CA REVENUE BY : MS S MOHANTHY DR ORDER PER I.P. BANSAL JUDICIAL MEMBER THESE ARE CROSS APPEALS. THEY ARE DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 19 TH OCTOBER 2010 FOR ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER:- 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN LAW IN DELETING THE ADDITION OF ` 13 07 768/- MADE ON ACCOUNT OF LATE INSTALLMENT FEES/INTEREST ON LATE PAYMENT OF INSTALLMENTS CHARGED FROM MEMBERS BY THE SOC IETY ITA NO.5673/DEL/2010 ITA NO.7/DEL/2011 2 WITHOUT APPRECIATING THE FACTS OF THE CASE NARRATED IN THE ASSESSMENT ORDER. 2. THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 1.1 THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS U NDER:- 1. THAT THE LD. CIT (APPEALS) HAS ERRED ON FACTS AND IN LAW BY CONFIRMING THE ORDER OF LD. ASSESSING OFFICER BY ADD ING THE FORFEITED AMOUNT OF RS.4 11 500/- AS THE INCOME OF APP ELLANT KEPT AS SUSPENSE A/C AND COLLECTED BY THE COOP. GROUP HOUSING SOCIETY (CGHS) FROM ITS MEMBERS WHEREAS THE SAID AMOUN T WAS KEPT IN SUSPENSE PER THE INSTRUCTION OF ASST. REGISTRAR ( AR) COOP. SOCIETIES REWARI SO THAT MEMBERS CAN GO ANY COURT AND MAY RECOVER THE SAID AMOUNT. 2. THAT THE LD. CIT (APPEAL) HAS ACCEPTED THAT THE ASSESS EE SOCIETY IS RUNNING AS PER THE PRINCIPLE OF MUTUALITY IN SPITE OF THAT HE REJECT THE CLAIM OF THE TO TREAT THE FORFEITED AMOUN T OF RS.4 11 500/- AS RECEIPT UNDER MUTUAL ASSOCIATION. 3. THAT THE LD. CIT (APPEALS) HAS NOT FULLY CONSIDERED THE CITED JUDICIAL PRONOUNCEMENT OF HONBLE DELHI HIGH CO URT IN THE RIGHT PERSPECTIVE. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD MODIFY AND/O R DELETE ANY OF THE GROUND OF APPEAL AT THE TIME OF HEARIN G OF APPEAL IF DEEMED NECESSARY IN THE INTEREST OF JUSTICE AND EQUITY. 2. THE ASSESSEE IS A COOPERATIVE GROUP HOUSING SOCIETY. I T FILED ITS RETURN OF INCOME AT A LOSS OF ` 1 18 150/-. THE SOCIE TY IS FORMED FOR THE CONSTRUCTION OF FLATS FOR ITS MEMBERS ON THE LAND ALLOT TED BY HUDA ON NO PROFIT NO LOSS BASIS. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE SOCIETY HAD SHOWN AN AMOUNT OF ` 19 55 637/- ON ACCOUNT OF VIKAS FUND ON THE LIABILITY SIDE OF THE BALANCE SHEET AND HE REQUIRED THE ASSESSEE TO EXP LAIN AS TO WHY THE SAID AMOUNT SHOULD NOT BE TREATED AS INCOME OF THE ASSESSEE AND THE SAID AMOUNT REPRESENTED THE RECEIPTS FROM MEMBERS T OWARDS TRANSFER FEES AND LATE INSTALLMENT FEES/LATE PAYMENT CH ARGES. THE ITA NO.5673/DEL/2010 ITA NO.7/DEL/2011 3 ASSESSING OFFICER ALSO FOUND THAT THE ASSESSEE SOCIETY WAS CHA RGING INTEREST FROM ITS MEMBERS ON LATE PAYMENTS @ 18% PER AN NUM WHEREAS THE INTEREST PAID BY THE ASSESSEE TO HUDA IS @ 15% AND THUS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS ADO PTED THE SAID MODE JUST TO EARN INCOME. THE SECOND REASON STATED BY THE ASSESSING OFFICER IS THAT INTEREST PAID TO HUDA WAS CLAIME D BY THE ASSESSEE AS EXPENDITURE IN FINANCIAL YEAR 2005-06 AND 20 06-07 WHEREAS FOR THE YEAR UNDER CONSIDERATION THE SAME HAS B EEN DEBITED TO VIKAS FUND. THE ASSESSING OFFICER WORKED OUT THE LAT E INSTALLMENT FEE/INTEREST AMOUNTING TO ` 13 07 768/- WHICH HAS BEE N DISALLOWED. 3. THE SECOND ADDITION MADE BY THE ASSESSING OFFICER IS A SUM OF ` 4 11 500/-. IT WAS NOTICED THAT THE SAID AMOUNT WAS FORFEITED BY THE SOCIETY FROM ITS MEMBERS BEING EX MEMBERS OF THE SOCIETY . BY APPLYING THE PROVISIONS OF SECTION 41(1) OF THE ACT T HE DISALLOWANCE OF ` 4 11 500/- WAS MADE. THE APPEAL WAS FILED BEFORE TH E CIT (A). IT WAS SUBMITTED THAT ON THE FIRST DISALLOWANCE OF ` 13 07 76 8/- WHICH REPRESENTED INTEREST ON LATE PAYMENT OF INSTALMENTS TH E ISSUE IS COVERED BY THE PRINCIPLE OF MUTUALITY AND REFERENCE WAS MADE TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE CIT VS. TALANGANG COOP. GROUP HOUSING SOCIETY LTD. IN ITA NO.744/2010 DATED 1.7.2010 WHEREIN IT WAS HELD THAT EQUALIZATION CHARGES MAINTE NANCE FUND ENTRY FEES INTEREST ON DELAYED PAYMENT CAPITAL GAINS FROM SALE OF SHOPS IN THE SOCIETY PREMISES ARE NOT INCOME OF THE SOCIETY SINCE CGHS ATTRACTS PRINCIPLE OF MUTUALITY. ON THE BASIS OF THIS DECISION L EARNED CIT (A) HAS DELETED THE ADDITION OF ` 13 07 768/-. 4. SO FAR AS IT RELATES TO OTHER ADDITION OF ` 4 11 5 00/- LEARNED CIT (A) HAS FOUND THAT THE SAID AMOUNT REPRESENTED THE FOR FEITURE OF AMOUNT BY EX MEMBERS OF THE SOCIETY AS POINTED OUT BY SUB-INSPECTOR (AUDIT) CO-OP. SOCIETIES. SINCE THE SAID AMOUNT REP RESENT FORFEITED ITA NO.5673/DEL/2010 ITA NO.7/DEL/2011 4 AMOUNT FROM THE EX MEMBERS OF THE SOCIETY THE QUESTIO N OF GOING TO COURT FOR RECOVERY DOES NOT ARISE AND THEREFORE THE SAME CEASED TO BE THE LIABILITY OF THE SOCIETY AND THIS ADDITION HAS BEE N UPHELD BY HIM. 5. THE REVENUE IN ITS APPEAL IS AGGRIEVED BY THE DELE TION OF A SUM OF ` 13 07 768/-. THE ASSESSEE IN ITS APPEAL IS AGGRIEVE D BY THE SUSTENANCE OF ADDITION OF ` 4 11 500/-. 6. AFTER NARRATING THE FACTS THE LEARNED DR RELYIN G UPON THE ORDER OF THE ASSESSING OFFICER PLEADED THAT THE ADDITION HAS WRONGLY BEEN DELETED BY LEARNED CIT (A) ON THE BASIS OF PRINCIPLE OF MUTUALITY. SHE SUBMITTED THAT THE ASSESSING OFFICER HAS MENTIONED THE RE ASONS FOR DISALLOWANCE AND LEARNED CIT (A) HAS FAILED TO CONSIDE R THE SAME AND THUS SHE PLEADED THAT THE DISALLOWANCE SHOULD BE RESTOR ED. 7. ON THE OTHER HAND RELYING UPON THE AFOREMENTION ED DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. TALAN GANG COOP. GROUP HOUSING SOCIETY LTD. IT WAS SUBMITTED BY THE LEARNED AR THAT THE RELIEF HAS RIGHTLY BEEN GRANTED TO THE ASSESSEE. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. IN THE AFOREMENTION ED DECISION OF HONBLE DELHI HIGH COURT INTEREST ON DELAYED PAYMEN TS HAS BEEN CONSIDERED TO BE ARISING OUT OF PRINCIPLE OF MUTUALIT Y. THEREFORE WE SEE NO INFIRMITY IN THE ORDER OF THE CIT (A) VIDE WH ICH THE RELIEF HAS BEEN GRANTED TO THE ASSESSEE. WE DO NOT FIND MERIT IN THE DEPARTMENTAL APPEAL AND THE SAME IS DISMISSED. 9. NOW COMING TO THE ASSESSEES APPEAL IT HAS BEEN FOUN D BY LEARNED CIT (A) THAT THE AMOUNT RECEIVED BY THE ASSESSE E WAS FROM ITS MEMBERSHIP FORFEITED AND THE ASSESSING OFFICER HAS APPLIE D SECTION ITA NO.5673/DEL/2010 ITA NO.7/DEL/2011 5 41(1) OF THE ACT. THE LEARNED AR COULD NOT SHOW THA T HOW THE PROVISIONS OF SECTION 41(1) WAS NOT APPLICABLE TO THE CASE OF THE ASSESSEE. THIS AMOUNT WAS FORFEITED BY THE SOCIETY FROM I TS MEMBERS WHO DID NOT DEPOSIT THEIR INSTALMENTS AND WERE ALSO NOT INTERESTED IN TAKING THE FLATS. THEREFORE THEY LOST THE CHARACTER OF MEMBERS. MOREOVER THIS FORFEITURE IS NOT AT THE TIME OF RECEI VING THE AMOUNTS FROM THE MEMBERS BUT IS A LATER HAPPENING. IN THE ABSENCE OF ANY MATERIAL BEING BROUGHT ON RECORD TO SHOW THAT HOW TH E PROVISIONS OF SECTION 41 (1) WERE NOT APPLICABLE WE ARE OF THE O PINION THAT THE DISALLOWANCE HAS RIGHTLY BEEN SUSTAINED BY LEARNED CIT (A). WE DECLINE TO INTERFERE. THE APPEAL FILED BY THE ASSESSEE IS DISMISSE D. 10. IN THE RESULT THE CROSS APPEALS ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 29.02.20 12. SD/- SD/- [B.C. MEENA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 29.02.2012. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES