ITO 5(1)(4), MUMBAI vs. HILL PROPERTIES LTD, MUMBAI
In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The ITAT held that the principles of mutuality, as applied to co-operative societies, also extend to corporate entities in this context. The Tribunal followed its own previous decisions in the assessee's own case, which had ruled in favour of the assessee on similar issues.
What were the facts?
The assessee, an unlisted public company, collects share transfer fees, nominee occupancy charges, and security deposits from its members. The Assessing Officer made additions to the income, which were partly allowed by the CIT(A). The revenue appealed to the ITAT.
What were the issues?
Whether the principle of mutuality applies to a corporate entity for income like share transfer fees and occupancy charges, and whether these receipts are taxable.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “H”
Before: SHRI R. C. SHARMA, AM &
Hill Properties Ltd. ITO 5(1)(4), R. No. 509, 5th floor, बिधम/ Hill Park Estate, A. G. Bell Road, Malabar Hill, AayakarBhavan, M.K. Vs. Mumbai-400006. Road, Mumbai-400020. स्थायीलेखासं./जीआइआरसं./ PAN No. AABCH7578L (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant by : Shri M. C. Omi Ningshen, DR प्रत्यथीकीओरसे/Respondentby : Shri FarukhIrani, AR सुनवाईकीतारीख/ : 16.04.18 Date of Hearing घोषणाकीतारीख / : 01.05.18 Date of Pronouncement आदेश / O R D E R
Per Sandeep Gosain, Judicial Member:
The present Appeal filed by the revenue is against the order of Ld. CIT (Appeal) – 10, Mumbai dated 26.09.16 for AY 2013-14on the grounds mentioned herein below:-
Hill Properties Ltd. 1. "Whether on the facts and circumstances of the case and in law, the LdCIT(A) has erred in allowing the appeal of the assessee without considering the facts that the Principles of mutuality applies only to Co- operative societies and does not apply to corporate entity.
2. Whether on the facts and circumstances of the case and in law the LdCIT(A) has erred in holding that share transfer fees of Rs. 25,50,000/- on transfer of flats, nominee occupancy charges of Rs. 10,00,000/- from non-members (tenants) and non-refundable security deposit of Rs. 3,27,500/- for repairs to flats received by the assessee company are exempt from income-tax on the principal of mutuality which applies only to co-operative societies and does not apply to a corporate entity?"
3. "Whether on the facts and circumstances of the case and in law the LdCIT(A) has erred in not adjudicating the addition made on alternate ground that even if it is assumed that the principal of mutuality applies to the assessee, the share transfer fees and nominee occupancy charges are taxable in the hands of the assessee as it has been collected in excess against the directive of Govt. of Maharashtra which shows that the impugned income is tainted by commerciality?
Hill Properties Ltd.
The brief facts of the case are thatthe assessee is an unlisted public company, owing premises on which five residential buildings are constructed. Every Member of the assessee company is entitled to rent free occupation of a flat and is obliged to pay a due proportion of all expenses and outgoings necessary for the maintenance, upkeep, running and management of the company’s property. The return of income for the year under consideration was filed 20.09.13 declaring total income at Rs.25,17,465/-. Subsequently, the case was selected for scrutiny and after serving statutory notices and seeking reply of the assessee, order of assessment u/s 143(3)was passed on 30.09.15 by AO thereby determining total income at Rs. 65,05,420/- by making additions/disallowances.
Aggrieved by the order of AO, the assessee preferred the appeal before Ld. CIT and the Ld. CIT(A) after considering the case of both the parties partly allowed the appeal filed by the assessee.
Hill Properties Ltd. Aggrieved by the order of Ld. CIT(A), the revenue has filed the present appeal before us on the grounds mentioned hereinabove.
Ground No. 1 to 3.
Since all the grounds raised by the revenue are inter- related and inter-connected and relates to challenging the order of Ld. CIT(A)in allowing the appeal of the assessee without considering the facts that the Principles of mutuality applies only to Co-operative societies and does not apply to corporate entity, therefore, we thought it fit to decide all the above grounds of the present consolidated order.
We have heard the counsel for both the parties and we have also perused the material placed on record as well as orders passed by the revenue authorities. We find that Ld. CIT(A) has decided the above issues raised by the revenue in para number 2 to 4 of its order. We find that Ld. CIT(A) after appreciating the facts of the present case and while relying upon the orders of Hill Properties Ltd. Hon’ble ITAT had rightly allowed the grounds raised by the assessee.
After careful consideration of the facts, we find that there are series of orders passed in favour of assessee by the Hon’ble ITAT and even the Hon’ble ITAT in appeal filed by the revenue in for assessment year 2009-10 decided on 12.08.16, has categorically held that all the three issue raised by the revenue i.e. share transfer fee received by the assessee company on transfer of flat, nominee occupancy charges and non-refundable security deposits are squarely covered in favour of the assessee. It was categorically held by the Ld. CIT(A) that similar issues had already been decided by the Tribunal in favour of assessee and rightly relied upon the orders passed by the Coordinate Bench of Hon’ble ITAT in assessee's own case.
Therefore, considering the facts of the present case, we are of the opinion that since the Coordinate Bench of Hon’ble ITAT had already decided the issue in favour of assessee and therefore respectfully following the orders of the coordinate bench and in Hill Properties Ltd. order to maintain judicial consistency and judicial discipline, we dismiss these grounds raised by the revenue.
In the net result, the appeal filed by the revenue stands dismissed. Order pronounced in the open court on 1st May, 2018 Sd/- Sd/- (R. C. Sharma) (Sandeep Gosain) लेखासदस्य / Accountant Member न्याययकसदस्य / Judicial Member मुंबई Mumbai;यदनांकDated : 01.05.2018 Sr.PS. Dhananjay आदेशकीप्रनिनिनिअग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी/ The Appellant प्रत्यथी/ The Respondent 2. 3. आयकरआयुक्त(अपील) / The CIT(A) 4. आयकरआयुक्त/ CIT- concerned 5. यवभागीयप्रयतयनयध, आयकरअपीलीयअयधकरण, मुंबई/ DR, ITAT, Mumbai गार्डफाईल / Guard File 6. आदेशधिुसधर/ BY ORDER,
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