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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI G.S. PANNU & SHRI PAWAN SINGH
The captioned appeal by the assessee is directed against the order of the CIT(A)-32, Mumbai dated 6.6.2014, pertaining to the Assessment Year 2010-11, which in turn has arisen from the order passed by the Assessing Officer dated 21.11.2012 under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).
In its appeal, assessee has raised the following Grounds of appeal:-
The Navyug Co-op. Hsg. Socy. Ltd.
1. The Learned Commissioner of Income Tax (Appeals) erred in confirming the Order u/s 143(3) of the I.T. Act, 1961 of the Assessing Officer charging to tax contribution of Rs.47,65,000/- received from members, incidental to the sale of Plot (“Transfer Fees ) which was exempt on the Principal of Mutuality.
2. Without prejudice and in the alternative Learned Commissioner of Income Tax (Appeals) erred in confirming the Order u/s. 143(3) of the Act of the Assessing Officer denying deduction u/s 80P(2)(c) and 80P(2)(d) of the Act.”
The appellant before us is a co-operative housing society and the only dispute is with regard to the action of the income-tax authorities in denying the exemption claimed by the assessee with respect to an amount of Rs.47,65,000/- representing Transfer fee from incoming members. Before the Assessing Officer, assessee had, inter-alia, relied upon the judgment of the Hon'ble Bombay High Court in the case of Sind Co-op Housing Society, 317 ITR 47 (Bom) and claimed that the impugned sum was exempt on the principles of mutuality. Apart from the judgment of the Hon'ble Bombay High Court, assessee had also relied upon the decision of the Mumbai Bench of the Tribunal in the case of Nutan Laxmi Co-operative Housing Society Ltd. in & 7204/Mum/2013 dated 24.8.2016. The Assessing Officer did not accept the plea of the assessee and so far as the reliance placed by the assessee on the judgment of the Hon'ble Bombay High Court in the case of Sind Co-op Housing Society (supra) was concerned, the Assessing Officer observed that the said decision “has not become final as the Department has challenged the decision before the Hon'ble Supreme
The Navyug Co-op. Hsg. Socy. Ltd.
Court”. Accordingly, the Assessing Officer brought to tax a sum of Rs.47,65,000/-.
4. Before the CIT(A), assessee not only reiterated the submissions made before the Assessing Officer, but also pointed out that in assessee’s own case for Assessment Year 2004-05, the Tribunal vide its order in dated 22.2.2012 has held that income by way of Transfer fee received from the members was exempt following the judgment of the Hon'ble Bombay High Court in the case of Sind Co-op Housing Society (supra). The CIT(A) disagreed with the stand of the assessee and has instead upheld the action of Assessing Officer by noticing that the Mumbai Bench of the Tribunal in a subsequent decision dated 4.9.2013 in the case of Hatkesh Co-op. Housing Society Ltd. in ITA No. 494-500/Mum/2011 has taken a view that income of the impugned nature does not qualify for exemption under the principles of mutuality. Accordingly, the CIT(A) has confirmed the assessment made by the Assessing Officer.
5. Before us, the learned representative for the assessee vehemently supported the stand of assessee based on the decision of the coordinate Bench of the Tribunal in assessee’s own case dated 22.2.2012 (supra). Insofar as the reliance placed by CIT(A) on the decision of the Tribunal in the case of Hatkesh Co-op. Housing Society Ltd. (supra) is concerned, the learned representative pointed out that the said decision has since been set-aside by the Hon'ble Bombay High
The Navyug Co-op. Hsg. Socy. Ltd.
Court vide its order dated 22.8.2016, a copy of which has been placed on record.
On the other hand, the ld. DR appearing for the Revenue has primarily relied on the orders of authorities below in support of the case of Revenue.
We have carefully considered the rival submissions. Quite clearly, the taxability of Transfer fee received from the incoming members was considered by the Tribunal in assessee’s own case for the Assessment Year 2004-05 vide order dated 22.2.2012 (supra) wherein it has been held that the same enjoys the exemption on the principle of mutuality following the judgment of the Hon'ble Bombay High Court in the case of Sind Co-op Housing Society (supra). It was also a common point between the parties that the said decision of the Tribunal continues to hold the field and has not been altered by any higher authority. The case before us is one where the CIT(A) has chosen not to follow the decision of the Tribunal in assessee’s own case and has instead preferred to follow a contrary decision of the Tribunal in the case of Hatkesh Co-op. Housing Society Ltd. (supra), which has been rendered on a date subsequent to the date of the order of the Tribunal in the case of the assessee. In fact, in the case of Hatkesh Co-op. Housing Society Ltd. (supra), as observed by the Hon'ble Bombay High Court, a similar situation had arisen albeit at the level of the Tribunal. In that case too, the subsequent Bench of the Tribunal did not follow the earlier decision of the Tribunal in the assessee’s own case. This The Navyug Co-op. Hsg. Socy. Ltd.
approach has been negated by the Hon'ble High Court, and the following discussion in the order of the Hon'ble Bombay High Court is worthy of notice in this regard :-
We find that the impugned order makes reference to the appellant's submission that the issue arising in the appeal before it is covered by the order of a Coordinate Bench of the Tribunal dated 24 June 2011 in its own case in respect of Assessment Years 2003-04 2004-05 and 2005-06. The order dated 24 June 2011 of the Tribunal was with regard to the two issues, which arose for consideration before the Tribunal in these six Assessment Years, namely, the application of principle of mutuality in respect of transfer fees and TDR premium received by the Assessee from its members. The order dated 24 June 2011 inter alia considered the decision of this Court in Sind Co. Op. Hsg. Society vs. ITO before coming to the conclusion that transfer fees as well as TDR premium received from Cooperative Societies is covered by the principle of mutuality.
The impugned order of the Tribunal after making a note of its Coordinate Bench's order dated 24 June 2011 seeks to take a different view. This different view was taken in the impugned order inter alia by relying upon the decision of this Court in Sind Co.Op. Hsg. Society (supra) which was also subjected to consideration in its order dated 24 June 2011. We are of the view that when an identical issue, which had earlier arisen before the Coordinate Bench of the Tribunal on identical facts and a view has been taken on the issue then judicial discipline would demand that a subsequent bench of the Tribunal hearing the same issue should follow the view taken by its earlier Co- ordinate Bench. No doubt this discipline is subject to the well settled exceptions of the earlier order being passed per incurim or sub silentio or in the meantime, there has been any change in law, either statutory or by virtue of judicial pronouncement. If the earlier order does not fall within the exception which affects its binding character before a coordinate bench of the Tribunal, then it has to follow it. However, if the Tribunal has a view different then the view taken by The Navyug Co-op. Hsg. Socy. Ltd.
its Coordinate Bench on an identical issue, then the order taking such a different view must record its reasons as to why it does not follow the earlier order of the Tribunal on an identical issue, which could only be on one of the well settled exceptions which affect the binding nature of the earlier order. It could also depart from the earlier view of the Tribunal if there is difference in facts from the earlier order of Coordinate Bench but the same must be recorded in the order. The impugned order is blissfully silent about the reason why it choses to ignore the earlier decision of the Tribunal rendered after consideration of Sind Co. Op. Hsg. Society(supra), and take a view contrary to that taken by its earlier Coordinate Bench. It is made clear that in case a subsequent bench of the Tribunal does not agree with the reasons indicated in a binding decision of a coordinate bench, then for reason to be recorded, it must request the President of the Tribunal to constitute a larger bench to decide the difference of view on the issue.”
The Hon'ble High Court found it fit to set-aside the order of the Tribunal and restore the matter back to the file of Tribunal for afresh disposal. Be that as it may, what we are trying to point out is that there is no justification for the CIT(A) to depart from the binding nature of the order of Tribunal dated 22.2.2012 (supra) in the assessee’s own case. In any case, in view of the judgment of the Hon'ble Bombay High Court in the case of Hatkesh Co-op. Housing Society Ltd. (supra), the reliance placed by the CIT(A) on the decision of the Tribunal in the case of Hatkesh Co-op. Housing Society Ltd. (supra) is also rendered unsustainable. For all the above reasons, we, therefore, set-aside the order of CIT(A) and following the decision of the Tribunal dated 22.2.2012 (supra) in assessee’s own case, direct the Assessing Officer to allow relief to the assessee with regard to the income received by way of Transfer fee from the incoming members.
The Navyug Co-op. Hsg. Socy. Ltd.
In the result, appeal of the assessee is allowed, as above.
Order pronounced in the open court on 26th April, 2017.