COLOMBIA COOPERATIVE HOUSING SOCIETY LIMITED,BANDRA vs. ASSESSMENT UNIT, NFAC
Before: SHRI SANDEEP GOSAIN & SHRI GIRISH AGRAWALColombia Co-operative Housing Society Limited C-486/B, Plot B, St. Domnie Road, Bandra (West), Mumbai 400050
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of National
Faceless Appeal Centre (NFAC), Delhi vide Order No. ITBA/NFAC/S/
250/2025-26/1076003708(1) dated 02.05.2025 passed against the assessment order u/s. 147 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 18.03.2024 for AY 2015-16. 2. Grounds taken by the assessee are reproduced as under:
“GROUND NO. 1: Reopening and Reassessment
A. The Ld. CIT(A) erred in law and on facts in confirming the action of the Ld.AO of reopening and reassessment. Your appellant prays that the reopening and 2
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Colombia Co-operative Housing Society the consequent reassessment be held to be bad in law and the order of reassessment be quashed in as much as there was gross violation of the provisions of s. 147, 148A, 148, 149 and 151 and 151A of the Income Tax Act besides the provisions of s.142(1) and 143(2) of the Act.
B. The Ld. CIT(A) again erred in law and on facts in not appreciating the fact
The consideration was originally received under an agreement of 2002 from the said builder for the said development rights and was not brought to tax in the hands of the society and he further failed to appreciate that the additional consideration of Rs. 2.28 crores during the year under the Supplementary
Agreement of 2014 was of the same colour and the character and therefore the order of reassessment passed by AO was based on the change of opinion not permissible in law and not following rule of consistency.
C. The Ld.AO erred in law and on facts in passing an order beyond the time limit permitted u/s. 149(1) and (2) without establishing that he was in possession of Books of Account, etc to which he revealed that the income chargeable to tax that escaped assessment represented any asset, etc and the amount of escaped income exceeded Rs. 50 lakh.
D. The Ld.AO/CIT(A) erred in passing / upholding the order passed in violation of the provisions of s. 144B of the Act.
GROUND NO. 2: Taxability of Receipt of Rs. 2,28,00,000
A. The Ld. CIT(A) again erred in law and on facts in taxing an amount of Rs.
2,28,00,000 under the head Capital Gains in the hands of the appellant society altogether ignoring and overlooking the fact that the said amount was due to taxable in the hands of the appellant society. and was received by the 40
members of the appellant society and was not B. The Ld.AO/CIT(A) failed to appreciate that the said amount of Rs. 2.28 crores was received in respect of the permission to construct the building that was made possible on account of the change in the Development Control Rules, 1991
for which there was no cost of acquisition in the hands of the society or the members and therefore such receipt was not taxable u/s. 45 under the head capital gains at all for the year under consideration in view of the decisions of the Bombay High Court in the cases of Sambhaji Nagar CHSL, Bhatia Nagar
CHSL and Maheshwar Prakash No.2 CHSL.
C. The Ld. CIT(A) again erred in law and on facts in not appreciating that the said amount of Rs. 2,28,00,000 so received by the members was offered for tax by the members and was taxable and/or was taxed in the hands of the members as per law and also in terms of various decisions of the Court and the Circular of the CBDT including in the case of Raj Ratan Palace CHSL, 362 ITR
1 (SC) (St) and Circular No. 9 dt. 25.03.1969 of the CBDT.
D. The Ld. CIT(A) again erred in law and on facts in not appreciating the fact that an amount of Rs. 36,00,000 received by the society in 2 instalments of Rs.
18,00,000 each represented refundable security deposit.
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E. The Ld. CIT(A) again erred in law failing to appreciate that the receipts under the original agreement of 2002 were taxed in the hands of the members for A.Y.
2003-04 and thereby erred in not following the Rule of consistency.
GROUND NO. 3: Violation of Natural Justice
A. The Ld. CIT(A) again erred in law and on facts in completely denying the opportunity of being heard during the course of appeal, virtually or physically as was required by the law, rules, SOP and the decisions of the Court and further erred in not appreciating and considering the overwhelming evidences appeal. and the detailed submissions made before him by the society in writing in the appeal.
B. The Ld. CIT(A) again erred in law and on facts in not appreciating that the order passed by the Ld.AO suffered from gross violation of Natural Justice including on account of; i) in altogether ignoring the detailed submissions and explanations by alleging that the appellant had not submitted any explanations or evidence in support of its claim, ii) the failure of the AO to afford an opportunity of hearing to inquire and examine the facts with the members, developer and other related parties and iii) more particularly when he denied the request of the opportunity of hearing of virtual conference.
C. Your appellant prays that the order passed by the AO and the CIT(A) be held to be bad in law and be quashed.
GROUND NO. 4: Deduction u/s. 80P
The Ld. CIT(A) again erred in law and on facts in denying the deduction u/s.
80P of the Income Tax Act for reasons not tenable in law and your appellant prays that the deduction u/s. 80P be allowed in computing the total income.
GROUND NO. 5: Assessment of Total Income and assessment in wrong status
A. The Ld. CIT(A) again erred in law and on facts in confirming the action of the Ld.AO in reassessing the total income at Rs. 2,32,35,084 under the head capital gains in violation of various provisions of the Income Tax Act, express or otherwise and therefore your appellant prays that such an order be quashed and the income assessed / reassessed at Rs. NIL.
B. The Ld. CIT(A) erred in passing the order of reassessment in the residential status of an AOP (Association of Persons) ignoring the fact that your appellant is a cooperative society which is a separate assessable entity and for which special rates of taxation are provided in the finance act.
GROUND NO. 6: Interest u/s. 234A to 234D
A. The Ld. CIT(A) again erred in law and on facts in upholding the levy of interest u/s. 234A to 234D in reassessment and ignoring the fact that the levy suffered from computational errors and the interest was levied without affording an opportunity to the appellant for challenging the levy and ignoring the fact that the interest was levied without passing a speaking order.
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B. Your appellant prays that the interest so levied by the Ld.AO and confirmed by the CIT(A) be deleted.”
1. The above stated grounds raised by the assessee are not in accordance with the prescribed rules and, therefore, assessee was asked to furnish concise grounds of appeal which were furnished vide covering letter dated 23.09.2025. The concise grounds are as under which shall be dealt with while adjudicating on the matter: “GROUND NO. 1: Reopening and Reassessment
A. The Ld. CTT(A) erred in law and on facts in confirming the action of the Ld
AO of reopening and reassessment which was in violation of the provisions of s.147 to 151A of the Act.
B. The Ld. CIT(A) again erred in law and on facts in upholding the AO's order that was passed beyond the time limit u/s 149 without establishing that there was escapement of income exceeding Rs. 50 lakhs represented by an asset, etc
C. The Ld. CIT(A) again erred in law and on facts in upholding the order of the AO passed by violating Rule of Consistency in as much as the income if any arising on the original agreement of 2002 was not taxed in the hands of the society appellant.
D. The Ld.AO / CIT(A) erred in passing upholding the order passed in violation of the provisions of s. 144B of the Act.
GROUND NO. 2: Taxability of Receipt of Rs. 2,28,00,000
A. The Ld. CIT(A) erred in law and on facts in confirming the action of the Id. AO of taxing an amount of Rs. 2,28,00,000 under the head Capital Gains in the hands of the appellant society ignoring that no such amount was received by the society but was received by the members and that Kamla Landmark, the developer, was required as per internal pg. 19 of the Supplementary Agreement dt 11.04.2014 to make individual agreements with 40 members and the case was covered by Circular No.9 of 1969 of the CBDT and the decision of the SC in case of Raj Ratan Palace CHSL, 362 ITR 1 (SC)
B. The Ld. CIT(A) again erred in law and on facts in confirming the order of the AO which ignored the fact that the rights if transferred had no cost of acquisition and the receipt was not taxable at all in view of the decisions of the Bombay
High Court in the case of Sambhaji Nagar CHSL 370 ITR 325 (Bom) and Maheshwar Prakash No.2 CHSL dt 24.09.2009. C. The Ld. CTT(A) again erred in law and on facts in confirming the erroneous finding of the AO that the appellant had received the consideration while in fact the appellant had rece only Rs. 36,00,000 towards refundable security deposit for permission to park the cars.
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D. The Ld. CIT(A) erred in law and on facts in confirming the actions of the AO that ignored the fact that the amounts were received as compensation for baring the hardship and inconvenience.
GROUND NO. 3: Violation of Natural Justice
A. The CIT(A) erred in law and on facts by denying the appellant an opportunity of being heard (virtual/physical), ignoring detailed written submissions and evidence, and upholding an assessment order vitiated by gross violation of principles of natural justice. The assessment and appellate orders deserve to be quashed as bad in law
GROUND NO. 4: Deduction u/s. 80P
The Ld. CIT(A) again erred in law and on facts in denying the deduction u/s.
80P of the Income Tax Act for reasons not tenable in law and your appellant prays that the deduction u/s. 80P be allowed in computing the total income.
GROUND NO. 5: Assessment of Total Income and assessment in wrong status
A. The Ld. CIT(A) again erred in law and on facts in confirming the actions of the Id. AO in reassessing the total income at Rs. 2,34,35,084 in the residential status of AO.
GROUND NO. 6: Interest u/s. 234A to 234D
A. The Ld. CIT(A) again erred in law and on facts in upholding the levy of interest u/ss. 234A-234D in reassessment despite computational errors, absence of opportunity to contest the levy, and failure to pass a speaking order.”
Brief facts of the case are that assessee is a Co-operative Housing Society registered under the Maharashtra Co-operative Societies Act, 1960 under Registration No. BOM/HSG/2674 of 1970 having its registered office at Mumbai. Assessee functions solely for the benefit and maintenance of its members. Assessee did not file its return of income u/s. 139. Specific information in respect of assessee was flagged as per the Risk Management Strategy (RMS) formulated by CBDT through its ITBA software under the head “NMS”. As per the specific information, assessee had carried out transaction in relation to sale of immovable property amounting to Rs. 2,28,00,000/-.
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1. In this respect, proceedings u/s. 147 r.w.s. 148 under the new regime of reassessment proceedings was initiated. Notice u/s.148 was issued dated 31.03.2022. Assessee filed its return of income on 06.06.2022, in response to the said notice u/s.148, reporting total income at NIL after claiming deduction u/s. 80P of Rs. 4,35,084/- in relation to interest income. The major issue which needs to be dealt with in the present appeal before us, is in respect of taxation of Rs.2,28,00,000/- made by ld. AO under the head capital gains, which was received by the members of the assessee society from the developer Kamala Landmark Construction Private Limited, in respect of permission to construct building made possible on account of change in the Development Control Rules, 1991, for which there was no cost of acquisition in the hands of the assessee society or its members. Claim of the assessee is that it never received the said amount in its bank account as it was paid directly by the developer to the individual 40 members of the society.
2. Relevant facts in respect of this issue are that assessee for and on behalf of its 40 members maintain a building containing 40 apartments, constructed on a plot of land in the year 1970 or their about. These 40 apartments are acquired, occupied and owned by the 40 members for the purpose of residence of their families. Each of the 40 members or their predecessors had purchased the premise for a valuable consideration paid to the developer who after constructing the building conveyed the land and building to the society for no monetary consideration in the year 1970 or their about. Entire consideration was paid and contributed by the 40 members. The building so constructed is named as “Colombia” on land bearing Survey No.183/184 admeasuring 2817.45 square yards equivalent to 2355 square meters approximately. Development Control Regulation (DCR) for greater
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Mumbai, 1991 as amended on 15.10.1997, allowed construction of extensions to existing floors and additional floors on the said building by utilising Transferrable Development Rights (TDR) to the extent of 100% area of said property. This TDR benefit belonging to 40 existing members of the assessee society was availed through the developer
Kamala
Landmark
Construction
Private
Limited as per the terms agreed with the members. To this effect a development agreement was entered into on 07.10.2002 between the assessee society and the developer which was registered with Sub-