Transfer Fees received from Members in excess of those provided in by law by a plot society not taxable

Undisputed facts are that the assessee is a plot society and not a flat society. Thus, notification dated 9th August 2001, issued by Govt. of Maharashtra, does not apply to the facts of the case. The first appellate authority had followed the judgment of Hon’ble Jurisdictional High Court in Sind Co. Operative Housing Society, [2009] 26 DTR 149 (Bom.), and granted relief to the assessee. As all the receipts are admittedly from the members, we have to necessarily uphold the order of the first appellate authority and dismiss the appeal of the Revenue.

INCOME TAX APPELLATE TRIBUNAL, MUMBAI

ITA No. 3399/Mum./2010- (Assessment Year: 2004- 05)

Income Tax Officer

V/s

M/s. Navyug CHS Ltd.

Date of Order – 22.02.2012

O R D E R

PER J. SUDHAKAR REDDY, A.M.

This Appeal preferred by the Revenue, is directed against the impugned order dated 12th February 2010, passed by the Commissioner (Appeals)-XXXII, Mumbai, for assessment year 2004-05, on the following grounds:-

“1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the premium on transfer fees of Rs. 10,60,000 received from members relying on the decision of the Mumbai High Court in the case of Sind Coop. Hsg. Socy. (2009) 26 DTR (Bom.) 149.

2(i) In doing so, the learned CIT(A) has erred in ignoring certain paras of the above cited judgment wherein it is categorically stated that this case law would pertain to the assessment years prior to notification dated 9.8.2001, of Govt. of Maharashtra for Co. Hsg. Societies. In the instant case, the assessment year being previous to this notification dated 27.11.1989, would be applicable which specified a maximum of upto 1000/- as transfer premium payable as per the then bye law of society.

(ii) In the instant case, the assessment year in question pertains to period prior to the notification dated 27.11.1989 of Govt. of Maharashtra for C.H.S. by ignoring this point, the learned CIT(A) has failed to appreciated that principle of mutuality will not apply in the case of premium on “transfer fee as the society has charged more amount than the permissible limits as per the bye law of co.op. Hsg. Scty or Govt. notification & therefore the society is bound to repay the same & if it retains such excess amount, then it will be in the nature of profit making & such sum will be eligible to tax.

3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting a sum of Rs. 3,33,662, being TDR premium received from the members relying on the decision of Mumbai High Court in the case of Sind CHS (2009) 26 DTR 149.”

2. After hearing rival contentions, we find that the undisputed facts are that the assessee is a plot society and not a flat society. Thus, notification dated 9th August 2001, issued by Govt. of Maharashtra, does not apply to the facts of the case. The first appellate authority had followed the judgment of Hon’ble Jurisdictional High Court in Sind Co. Operative Housing Society, [2009] 26 DTR 149 (Bom.), and granted relief to the assessee. As all the receipts are admittedly from the members, we have to necessarily uphold the order of the first appellate authority and dismiss the appeal of the Revenue.

3. In the result, Revenue’s appeal is dismissed.

Order pronounced in the open Court on 22.02.2012