ITO Vs RBI Employees Bhagvati Co-op. Housing Society Ltd. (ITAT Mumbai)
Summary: The Mumbai ITAT dismissed Revenue’s appeals and upheld the CIT(A)’s order deleting the addition of ₹4.97 crore made as short-term capital gains in the hands of RBI Employees Bhagvati Co-operative Housing Society Ltd. The Assessing Officer had treated the transfer of development rights under a 2010 redevelopment agreement as a taxable transfer under Sections 2(47)(v) and 50C, but the CIT(A) held that the real owners of the property were the individual members, not the society, relying on CBDT Circular No. 9 of 1969 and the ITAT’s decision in Raj Ratan Palace Co-op. Hsg. Society Ltd. The society had merely acted on behalf of members and received only a refundable security deposit of ₹10 lakh, while the consideration, new flats, and transit compensation were receivable by members directly. The Tribunal found no error in the CIT(A)’s conclusion that income from redevelopment was taxable in members’ hands, not in the society’s. Consequently, Revenue’s appeal against deletion of penalty under Section 271(1)(c) was also rejected, as the quantum addition no longer survived. The assessee’s cross-objection challenging the reassessment was treated as infructuous. All appeals by Revenue and cross-objections by the assessee were thus dismissed.
