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2016 (7) TMI 750 - BOMBAY HIGH COURT

2016 (7) TMI 750 - BOMBAY HIGH COURT - [2016] 386 ITR 132 - Profit from the sale of residential units - taxability - non assessability in the hands of assessee as per ITAT - Held that:- We find that both the CIT(A) as well as the impugned order have found that the shares of the respondent-assessee company carry with it right to occupy the premises in the building constructed by the respondent-assessee. In this case, M/s. Calico Associatesone of its shareholders had right to occupy 67 flats in th .....

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er. Thus, the concurrent findings of fact rendered by the CIT(A) and the Tribunal not being shown to be perverse and/or arbitrary, no interference is called for. - The questions as raised before us in respect of impairment of land (use of FSI) was not canvassed before the Tribunal. Therefore, the question as raised does not arise out of the Tribunal's order. In any case, the finding of fact rendered by the CIT(A) that land continues to be owned by the respondent-assessee and there is no tran .....

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Tribunal)for the Assessment Year 2006-07. 2. The Revenue urges the following questions of law for our consideration: (a) Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in law in holding that profit from the sale of residential units were not assessable in the hands of the assessee without appreciating the fact that the assessee was the owner of the land (along with all benefits by way of FSI etc attached thereto) on which such residential units w .....

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in the business of construction of building. It also owns land on which it constructed the building. Respondent-assessee is a non-profit making company, working on the principle of mutuality. It entitles its shareholders to occupy flats in building constructed by it on only recovering the cost of construction. During the year under consideration, one of the respondent-assessee's major shareholder - M/s. Calico Associates sold its shares to a third party. This sale would entitle the new share .....

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that the flats were owned by the respondent-asseseee and the principle of mutuality would not apply to the facts of the present case as it is a colourable device to avoid payment of tax. Moreover, the Assessing Officer held that as the land was owned by the respondent-asseseee and its FSI was utilized, the land was impaired and profits on sale of flats is compensation for the above. Therefore, the Assessing Officer in his order dated 31st December, 2008 passed under Section 143(3) of the Act ho .....

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sociates. The sale of shares by its shareholder - M/s. Calico Associates was brought to tax under the head 'capital gain' in the hands of the shareholder for the subject Assessment Year. It also held that there is no sale of the land by the respondent-asseseee nor any sale of FSI available on the land which continues to be owned by the respondent-asseseee. In these circumstances, it allowed the respondent-asseseee's appeal. 5. Being aggrieved, the Revenue agitated the issue before th .....

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