The Hatesh Chs Ltd., Mumbai vs Department Of Income Tax

Income Tax Appellate Tribunal20 May 2015

CitationI.T.A. No.7108/Mum/2013

Ratio decidendi

The rule this decision rests on

The penalty under section 271(1)(c) cannot be sustained where the addition on which it rests was made on a claim of mutuality in respect of transfer fees and TDR premium received by the assessee cooperative housing society, and that same claim has been accepted as bona fide by the jurisdictional High Court in the assessee's own case for other years; a claim which the jurisdictional High Court has accepted as a debatable legal position cannot be characterised as a bogus or absolutely incorrect claim, and therefore does not attract penalty under section 271(1)(c) merely because the quantum addition was confirmed for the year under appeal.

Written by Miss Lucy from the judgment below, not taken from a headnote.

Judgment

As delivered

आयकर अपील य अ धकरण, मुंबई यायपीठ "ई" मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI BEFORE S/SHRI VIJAY PAL RAO (JM) AND D. KARUNAKAR RAO, (AM) सव ी वजय पाल राव, या यक सद य एवं डी. क णाकर राव, लेखा सद य के सम

आयकर अपील सं./I.T.A. No.7108/Mum/2013 ( नधारण वष / Assessment Year :1996-97)

Asstt. Commissioner of Income बनाम/ M/s The Hatesh CHS Ltd., tax- 21(1), 6th floor, Plot No.51, Jai Hind Society, Vs. Pratyakshkar Bhavan, 2nd floor, Jai Hind Club, C-10, Bandra Kurla Complex, JVPD Scheme, Vile Parle (W), Bandra (E), Mumbai-400049 Mumbai-51 (अपीलाथ /Appellant) .. ( यथ / Respondent)

आयकर अपील सं./I.T.A. No.7109 to 7111/Mum/2013 ( नधारण वष / Assessment Years :2000-01 to 2002-03)

आयकर अपील सं./I.T.A. No.7112 and 7113/Mum/2013 ( नधारण वष / Assessment Years :2006-07 and to 2007-08)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIR No. :AAALH0017Q

अपीलाथ ओर से / Revenue by Shri Neil Philip यथ क ओर से/ Assessee by Shri Rahul K Hakani 2 I T A N o s . 7 1 0 8 / Mu m / 2 0 1 3 and other 5 appeals सन ु वाई क तार ख / Date of Hearing : 6.5.2015 घोषणा क तार ख /Date of Pronouncement : 20.5.2015

आदे श / O R D E R

PER BENCH

These six appeals by the revenue are directed against the six separate orders of ld. CIT(A) dated 23.9.2013 arising from the penalty order passed under section 271(1)( c) of the Income Tax Act, 1961 (the Act) for the assessment years 1996-97, 2000-01 to 2002-03, 2006-07 and to 2007-08. Since, issues raised in all these appeals are common, therefore, for the sake of convenience, we have heard these appeals together and are being disposed of by this consolidated order.

2. The revenue has raised identical grounds in AYs 1996-97, 2000-01 to 2002-03 in these appeals except difference in figures of the amount in the quantum addition and consequential penalty. For the sake of brevity, we are reproducing the grounds of appeal taken by the revenue in assessment year 1996-97.

"1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting he penalty amounting to Rs.4,74,600/- on the quantum addition made on account of receipt of transfer fees of Rs.13,56,000/- ignoring that these were not voluntary contributions and there is no principle of mutuality involved,

2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting penalty amounting to Rs.4,74,600/- ignoring that the decision of the Hon'ble ITAT deleting similar quantum addition made in respect of receipt of transfer fees for AYs 2003-04, 2004-05 and 2005-06 has not been accepted by the department and further appeal has been filed".

3. The Revenue has also raised following grounds in AYs-2006-07 and 2007-

08.

"1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting he penalty amounting to Rs.22,00,031/- on the quantum addition made on account of receipt of transfer fees of Rs.15,45,000/- and TDR premium receipts of Rs.56,44,670/- ignoring 3 I T A N o s . 7 1 0 8 / Mu m / 2 0 1 3 and other 5 appeals that these were not voluntary contributions and there is no principle of mutuality involved,

2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting penalty amounting to Rs.22,00,031/- ignoring that the decision of the Hon'ble ITAT deleting similar quantum addition made in respect of receipt of transfer fees for AYs 2003-04, 2004-05 and 2005-06 has not been accepted by the department and further appeal has been filed".

4. The penalty has been levied by the AO in respect of all these assessments against the addition on account of transfer fees received by the assessee society. Whereas for the assessment years 2006-07 and 2007-08 against the addition on account of transfer fees as well as TDR premium. In the quantum, for the assessment years for all the assessment years this issue have been decided by this Tribunal vide consolidated order 4.9.2013 against the assessee. However, for the assessment years 2003-04, 2004-05 and 2005-06 which is not a subject matter of the appeals before us, the Tribunal decided the quantum appeals in favour of the assessee vide consolidated order dated 24.6.2011. The ld. AR of the assessee has pointed out that against the order dated 24.6.2011 of this Tribunal, the revenue has filed appeals before the Hon'ble High Court which are dismissed by the Jurisdictional High Court vide order dated 17.7.2014, therefore, the issue is now finally decided by the Hon'ble High Court in favour of the assessee. He has further contended that, even otherwise, this is a debatable issue and disallowance/addition made by the AO and confirmed by this Tribunal in some of the cases would not attract the penalty under section 271(1)( c) of the Act.

5. On the other hand, the ld. DR has not disputed the factual aspect that for the assessment years 2003-04 to 2005-06, the issue in quantum appeals were decided in favour of the assessee and further, the Hon'ble High Court has dismissed the appeals filed by the revenue.

6. Having considered the rival submissions as well as relevant material on record, we note that there are divergent view and findings of the Tribunal in assessee's own cases on the issue of addition on account of transfer fees and 4 I T A N o s . 7 1 0 8 / Mu m / 2 0 1 3 and other 5 appeals TDR premium received by the assessee. For the assessment years 2003-04 to 2005-06, this Tribunal vide order dated 24.6.2011 decided the quantum appeals in favour of the assessee whereas for the assessment years under consideration of all these appeals, the Tribunal subsequently, decided the issue against the assessee vide order dated 4.9.2013. The issue is now settled by the decision of the Jurisdictional High Court vide order dated 17.7.2014 in the appeals filed by the revenue for the assessment years 2003-04 to 2005-06 against the order of the Tribunal dated 24.6.2011. The Hon'ble High Court has dismissed the appeal filed by the revenue in Income Tax Appeal No.427 of 2012 with Income Tax Appeal No.590 of 2012 and Income Tax Appeal No. 428 of 2012 vide order dated 17.7.2014 as under :

"Having heard Ms. Bharucha, learned counsel, appearing in support of this appeal and Mr. Hakani, learned counsel, appearing on behalf of the respondent assessee, we are of the opinion that the appeals do not raise any substantial question of law. The findings rendered by the tribunal are in consonance with the functioning and administration of a cooperative housing society that has been recognized by a division bench of this Court and the decision to that effect in Mittal court Premises co-operative Housing Society Ltd V/s Income Tax Officer reported in (2010) 320 ITR 414 concludes the issue. In the light of this division bench order and which has been followed in the case of Jai Hind Co-operative Housing society Ltd, Suprabhat Housing Society Ltd. that we are of the opinion that the appeal deserve to be dismissed. They are accordingly dismissed. No costs"

Thus, it is clear that in the quantum appeals for the assessment years 2003-04 to 2005-06 the issue is decided in favour of the assessee, therefore even if the Tribunal confirmed the addition for the assessment year under consideration it does not lead to the conclusion that the claim of the assessee by applying the principle of mutuality in respect of transfer fee and TDR premium is bogus claim or absolutely incorrect claim. When the issue is decided by the Hon'ble Jurisdictional High Court in favour of the assessee then the claim of the principle of mutuality of this receipt is a bonafied claim and does not attract the penalty under section 271(1)( c) of the Act. Accordingly, we do not find any illegality of infirmity in the order of ld. CIT(A) in deleting the penalty levied under section 271(1)( c ) of the Act for all these assessment years.

5 I T A N o s . 7 1 0 8 / Mu m / 2 0 1 3 and other 5 appeals

7. In the result, the appeals of the revenue are dismissed.

The above order was pronounced in the open court on 20th May, 2015.

घोषणा खल ु े यायालय म दनांकः 20th May, 2015 को क गई ।

Sd sd (डी. क णाकर राव/D. KARUNAKAR RAO) ( वजय पाल राव/VIJAY PAL RAO) लेखा सद य / ACCOUNTANT MEMBER या यक सद य / JUDICIAL MEMBER मुंबई Mumbai: May, 2015. व. न.स./ SRL , Sr. PS

आदे श क त ल प अ े षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आयु त(अपील) / The CIT(A)- concerned

4. आयकर आयु त / CIT concerned

5. वभागीय त न ध, आयकर अपील य अ धकरण, मुंबई / DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

आदे शानस ु ार/ BY ORDER, True copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ धकरण, मंब ु ई /ITAT, Mumbai

This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.

Research this judgment with Miss Lucy

Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.

Try Miss Lucy free