V.Swaminathan B.Sc., BL. FCA
The extracts below, from that judgment might help in appreciating in proper light the crux of the dispute and the essence of the controversy raised and fought for by the two sides in that matter of a civil appeal:
Learned senior counsel (for the Appellant) placed reliance on the judgments of this Court in Bacha F. Guzdar,Bombay Vs. Commissioner of Income Tax, Bombay,(1955) 1 SCR 876, and VODAFONE INTERNATIONAL HOLDINGS B.V. vs. Union of India & Anr., (2012) 6 SCC 613. Learned senior counsel also submitted that the ratio laid down by this Court in Ramesh Himatlal Shah Vs. Harsukh Jadhavji Joshi, (1975) 2 SCC 105, is not applicable to the case on hand, since in that case this Court was dealing with the interest of a member in an immovable property of a Cooperative Society governed by the provisions of the Maharashtra Cooperative Societies Act, 1960, which is inapplicable in the case of right of a shareholder in a in a limited liability company registered under the
Indian Companies Act, 1956.
Learned senior counsel (for the Respondents) submitted that THE QUESTION AS TO WHETHER THE FLAT BELONGS TO A MEMBER OF A COOPERATIVE SOCIETY OR A SHAREHOLDER OF A COMPANY MAKES NO DIFFERENCE, SINCE THE RIGHT, TITLE AND INTEREST AND THE RIGHT TO OCCUPY IS THE SPECIES OF PROPERTY, WHICH HAS THE STAMP OF TRANSFERABILITY.
To be noted,- one of the court cases cited and relied on by counsel for the Appellant is the tax case of Vodafone. As may be recalled, in that case, in which the long drawn tax dispute still remains to be finally resolved, the Revenue’s stance has been that it is the SUBSTANCE not the FORM which should prevail . Further that, accordingly, the documentation (s) evidencing a transaction requires to be looked into/through; not simply at it.
On a close reading of the SC judgment, but in between lines, one is left with an indelible impression that the court, in deciding the issue in the Respondent’s favour, though not explicitly said so, appears to have been inclined to go by the SUBSTANCE, instead of the FORM.
Be that as it may, as per one’s reading and understanding, the intricate legal implications of the State law specially governing “Flat” do not seem to have been argued and stressed; so much so, not addressed and gone into by the court.
However, hopefully, courts would have occasions to do so, in other cases of similar civil disputes either pending as of now or likely to come up in future.
Because of the intricacies of the subject matter, it might be worthwhile and most deserving, for, besides concerned others, legal pundits/counseling lawyers, active in field practice, to spare mind and time to make an in-depth study, to help selves in forming a profoundly right or better opinion; thereby, be equipped , for devotedly assisting the appellate authorities and the judiciary in their functions.
ADD-on , to UPDATE(:
Attention may have to be invited to the Order of the ITAT Mumbai, in the case of ITO Vs. Hill Properties Ltd, I.T.A. No.2999/M/2012 (AY: 2009-2010), Date of Pronouncement:20.12.2013
It is seen that, the ITAT has favorably decided the taxpayers’claim for tax exemption on certain receipts, by applying the principle of mutuality. Similar claim in respect of interest income from bank deposits, however, as conceded by taxpayer’s counsel, has been remanded to the AO, for consideration of the claim in the light of the SC Judgment in re. Bangalore Club, cited and relied upon by the Revenue.
In that case, however, interest from non-member banks having been volunteered and offered for tax, – no knowing as to what was the rationale or thought behind- the only dispute was on taxability of interest from member-banks. Now, in Hill Properties case, it is unclear, whether or not the disputed interest is received from a shareholder- (member-) bank of the company . If not, then the apex court judgment will, for obvious reason , have provided no useful guidance or clues to fall back, for AO in deciding either way. That means a fresh spate of controversy and prolonged litigation might follow.
Anyone with independent thoughts or view to spare and share !
The instant write-up is intended to update the earlier one analysing the itat order in re. Shantikumar D Majithia vs. DCIT