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TMI Blog2016 (10) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in ITA Nos.6369/Mum/2009, 5863 & 5864/Mum/2008. 3. The assessee in the present case are cooperative housing societies incorporated in the year 1947 for providing housing facilities in Vileparle area. These four societies alongwith other 10 cooperative housing societies acquired land to develop residential colonies in Vileparle area. The said plots were allotted to the societies by the then Government of Bombay Province. In addition, certain plots marked for amenities and public utilities were also given to these 14 cooperative housing societies with specified share therein. These plots marked for amenities and public utilities which were jointly owned by 14 societies were sold in the year under consideration and their share of the sale consideration was offered by the societies to tax under the head "Capital Gains". Keeping in view the object of the cooperative housing societies of carrying on the trade of buying and selling as well as developing land as envisaged in byelaws, the AO held that the sale consideration received by the societies constituted their business income and accordingly their respective share was brought to tax by him in their hands as business income. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the issue has been decided without complying with the direction of the Tribunal. At the time of hearing before us, the learned counsel for the assessee has submitted that although the assessee in the present case have details about the exact address of the remaining cooperative housing societies, they are not in a position to enforce their attendance before the AO or their compliance to the notices issued by the AO u/s. 133(6). In our opinion, if these details are furnished by the assessee to the AO, the latter is sufficiently empowered to enforce the attendance of the other cooperative housing societies or the necessary compliance on their part so as to decide the issue as per the direction given by the Tribunal in the first round vide his order dated 17th Nov., 2005. We, therefore, restore this issue once again to the file of the AO for deciding the same fresh as per the direction given by the Tribunal vide its order dated 17th Nov., 2005. The assessees are directed to furnish the addresses of the other cooperative housing societies to the AO who shall enforce their compliance in order to decide this issue as per the direction given by the Tribunal." 2.2 Pursuant to the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since the assessee could not furnish required details such as the actual plot number, the amount received from sale of plot No. 29 could not be ascertained as to whether it is an independent plot forming part of the 53 plots allotted to 14 Cooperative Societies; how plot No. 29 was derived/ allotted from the total area of land allotted by the Bombay Housing Society in 1960; whether the plot sold was a part of land allotted for public amenities and public utilities, residential facilities, etc., the AO treated the amount received by the assessee on sale of its share of the excess land available with these Cooperative Societies as 'Business Income' being an adventure in the nature of trade and accordingly brought the profit on sale thereof of Rs. 23,00,000/- arising to the assessee to tax in the assessee's hands as business profits as against LTCG admitted thereon by the assessee. In addition thereto, the AO brought to tax in assessee's hands an amount of Rs. 5,02,000/- received by the assessee from members as 'transfer fees'. The assessment was accordingly concluded under section 143(3) r.w.s. 253 of the Act vide order dated 19.03.013 wherein the assessee's income was determined at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is order which had been summarized at para 4.4(i) to (iv) of the impugned order. It is further submitted that the learned CIT(A) upheld the AO's order on this issue as he was of the view that the assessee was not able to produce any material evidence to controvert the AO's view that the profit on sale of land of the assessee and 13 other Cooperative Societies allotted to them by the Bombay Housing Board in 1960 was to be treated as business profit rather than capital gain as contended by the assessee. 6.2.1 We have heard the learned D.R. for Revenue and perused and carefully considered the material on record. The issue for consideration before us is whether the assessee's share of profit in sale of land in the year under consideration, allotted to it alongwith 13 other Cooperative Societies by the Bombay Housing Board in 1960, is to be brought to tax as Business income as held by the authorities below or as capital gains as claimed by the assessee. The facts of the matter as emanate from the record, the observation/findings of the AO, the submissions of the assessee before the learned CIT(A) and the learned CIT(A)'s decision thereon at paras 3.2 and 3.3 of the impugned order are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been remanded back to the file of AO by the Hon'b1e ITAT as the facts in these cases were also similar to that of the assessee. Names of such cases were listed as under: a. The Vithalngar Co-op Hsg. Society Ltd. ITO 21(2)(4) b. The Vallabhnagar Co-op Hsg. Society Ltd. ITO 21(2)(4) c. The Nutanlaxmi Co-op Hsg. Society Ltd. ITO 21(1)(3) d. The Navyug Co-op Hsg. Society Ltd. e. The Swastik Co-op Hsg. Society Ltd. f. The Azad Nagar Co-op Hsg. Society Ltd. vii. The AO observed that the above six societies could not specifically give proof of plot allotted to each of the 14 co-operative societies or any document/evidence which could specify the area allotted to them to claim the ownership right on the lease hold land given by the Bombay Housing Board in the year 1960. He further observed that the Board has allotted the total 6,07,036 sq.yds. which could be observed from the schedule I under the head Pubic Amenity which includes Play Ground, Public Hall, Recreation Ground, Shop and public building, municipal offie, police station, fire brigade, post office bank and shops. Under schedule II, for public utility, the area allotted was 815,467 sq.yds which include play ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from business. xiii. It is against this action of the AO that the appellant has raised aforesaid two grounds of appeal. 3.3 The submissions of the appellant are summarized as under :- i. It was submitted that the appellant is amongst 14 co-op. housing societies which were incorporated in and around 1947 for providing housing facilities to middle class persons in suburb of Vile Parle in Mumbai. Thereupon the lands were acquired by Govt. of Bombay and conveyed to the Bombay Housing Board. In 1960 the Bombay Housing Board earmarked the land conveyed by the Govt. of Bombay State for residential purposes and for common members. ii. Certain plo6ts were marked as amenities and utility plots which were conveyed jointly to the fourteen societies and each of the fourteen societies held specified shares in each of the common amenities and utility plots, it was submitted that the entire cost of the land (including that held for common amenities) were paid by the societies and ultimately borne by the members in proportion to their respective size of the plot. iii. It was submitted that the plots held for common amenities were from time to time allotted by 14 societies to various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee society alongwith the 13 other Co-op. societies had sold a plot of land to the promoters of the proposed co-op. housing society to be formed of the Maharashtra Cadre of the Indian Police Services, the CIT(A) had treated the transaction under the head capital gains and since there was no change in the nature of transaction undertaken during 1995-96 and 2004-05 it was requested to treat transaction in A.Y. 1995-96 as capital gains as treated and offered by the assessee. x. The assessee in the alternative and without prejudice submitted that what should be added to the total income is Rs. 7,28,000/- since the assessee had already offered Rs. 15,72,000/- as capital gains at the time of filing the return of income. 3.4 I have considered facts of the case, oral contentions and written submissions of the appellant as against the observations / findings the AO in the assessment order. The contentions and submissions of the appellant are being discussed and decided as under:- i. It is clear from the directions setting aside the issue to the file of the AO that the Hon'ble. ITAT required the AO to decide the issue afresh as per the directions given by the Tribunal vide their o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee could not prove, as per the board allotments of plots to member (society), the public utilities and the amenities were created out of the total land given to them. He has further observed that the co-operative formation was created with an aim for construction of residential house with other amenities and approximately 53 plots were allotted to various co-operative societies at free of cost or at nominal price by the Bombay Housing Board for common facilities and general utilities. Under such facts and circumstances the AO treated the receipt of money from transfer of plot by the assessee as business income. vi. In the submission made, the appellant has not been able to rebut factual observation given by the AO in para 8.2 of, his order and. summarized here in above. vii. It is further seen from the records available that in the case of Jai Hind CHS Ltd. similar receipt in the A.Y. 1995-96 was treated as business income as against income from capital gains offered by the society. In the similar fact, in the case of Hatkesh CHS Ltd. the receipt from the transfer of plot in A.Y. 1995-96 was treated as business profit in the first appellate level. viii. From the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which responded could not specifically give proof of plot allotted to each of the 14 cooperative societies or documents/evidence which could specify the area allotted to them or that public utilities and public amenities as per Schedule-I and II were created by them thereon. In this factual matrix the case, we are of the considered view and agree with the findings of the learned CIT(A) that as per the submissions put forth by it, the assessee has not been able to controvert that factual findings of the AO in leading him to treat the receipt of money by the assessee from transfer of plot as business income. We, therefore, uphold the findings of the authorities below and consequently dismiss ground No. 1 of assessee's appeal. 7. Ground No. 2. 7.1 In this ground, the assessee had challenged the learned CIT(A)'s order in upholding the AO's action in bringing to tax as business income an amount of Rs. 5,02,000/- received from members as 'transfer fees' incidental to sale of plot which is against the principle of mutuality. 7.2 According to the learned D.R. for Revenue, that the amount of Rs. 5,02,000/- was received by assessee from transfer of structure by Shri Prakesh R. Tolat and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the grounds of mutuality by the appellant. ii. The appellant relied on the order of ITAT, Mumbai Bench in the case of Suvarna-nagar CHS Ltd. for A.Y. 2002-03 wherein the amount of transfer fee received was held to be exempt on the basis of principles of mutuality. iii. The assessee further relied upon the decision of Hon'ble Bombay High Court in the case of Sind Co-op. Housing Society vs. ITO, 317 ITR 147 (Born) and in the case of Mittal Court Premises Co- op. Society vs. ITO 320 ITR 414 (Bom). 4.4 I have considered facts of the case, oral contentions and written submissions of the appellant as against the observations / findings of the AO in the assessment order. The contentions and submissions of the appellant are being discussed and decided as under:- i. It is the fact of the case that the question amount has been received by the appellant society from transfer of structure by Shri Prakash R. Tolat and Shri Gautham R. Tolat on plot no. 26 to Mr. Mehta & Shah. This amount has been added by the AO as transfer fee. ii. In these set of facts it is clear that Shri Prakash R Tolat and Shri Gautham R Tolat being owners of the original plot No.26 sold the structure sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se laws including ones relied upon by the appellant. vi. The appellant has relied upon the decision of Hon'ble Mumbai ITAT in the case of Suvarna Nagar CHS Ltd. for A.Y. 2002-03. Such order was passed by E.-Bench of Hon'ble Mumbai ITAT on 11.04.2014. In this regard it is stated that the Hon'ble Mumbai ITAT in the case of Hatkesh CHS Ltd. have in detail, discussed about the principles of mutuality and in this decision the decisions of Bombay High Court relied upon by the assessee have been referred to and considered. In the order of Suvarnanagar CHS Ltd. for A.Y. 2002-03 dated 11.04.2014, the Hon'ble ITAT did not have occasion to consider the decision in the case of Hatkesh CHS Ltd. (Supra). vii In view of facts of the case, discussion here in above, further relying on above decision of Hon'ble ITAT in the case of Hatkesh Co-op. Housing Society Ltd. vs. ACIT 21(1) (Supra) and respectfully following the same, the contentions and submissions made by appellant are not found to be acceptable and are therefore rejected." 6.3.2 From the discussion of the learned CIT(A) in the impugned order on this issue (supra), it is not disputed that an amount of Rs. 5,02,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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