IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F , MUMBAI Before Shri Amit Shukla, Judicial Member, and Shri Ashwani Taneja, Accountant Member ITA No.3656/Mum/2014 Assessment Year: 2004-05 Vithal Nagar Co. Operative CIT-21 Housing Society Ltd., Pratyakshkar 51 N.S.S. Rd No.11, Bhavan, BKC Vs. Jia Hind Club, JVPD Scheme, Bandra (E) Mumbai-400056 Mumbai- 400050 (Revenue) (Respondent ) P.A. No.AAAAT3055F ITA No.3655/Mum/2014 Assessment Year: 2004-05 Navyug Co. Operative CIT-21 Housing Society Ltd. Pratyakshkar Plot No. 51 Jain Hind Club Bhavan, BKC Vs. Gldg. N.S. RD no.11, Jai Hind Bandra (E) Society JVPD Scheme Vile Mumbai- 400050 Parle (W) Mumbai-400049 (Revenue) (Respondent ) P.A. No.AAAAT0325L ITA No.3657/Mum/2014 Assessment Year: 2004-05 2 Co.Op. Housing Societies Nutan Laxmi Co. Operative CIT-21 Housing Society Ltd. Pratyakshkar Plot No. 51 Jain Hind Club Bhavan, BKC Vs. Gldg. N.S. RD no.11, Jai Hind Bandra (E) Society JVPD Scheme Vile Mumbai- 400050 Parle (W) Mumbai-400049 (Revenue) (Respondent ) P.A. No.AAAAT1208J ITA No.3658/Mum/2014 Assessment Year: 2004-05 Suvarna Nagar Co. Operative CIT-21 Housing Society Ltd. Pratyakshkar Plot No. 51 Jain Hind Club Bhavan, BKC Vs. Gldg. N.S. RD no.11, Jai Hind Bandra (E) Society JVPD Scheme Vile Mumbai- 400050 Parle (W) Mumbai-400049 (Revenue) (Respondent ) P.A. No.AAAAS4938E ITA No.3659/Mum/2014 Assessment Year: 2004-05 Vallabhnagar Co. Operative CIT-21 Housing Society Ltd. Pratyakshkar Plot No. 51 Jain Hind Club Bhavan, BKC Vs. Gldg. N.S. RD no.11, Jai Hind Bandra (E) Society JVPD Scheme Vile Mumbai- 400050 Parle (W) Mumbai-400049 (Revenue) (Respondent ) P.A. No.AAAAVO288J ITA No.2363/Mum/2014 Assessment Year: 2004-05 3 Co.Op. Housing Societies Jai Hind Co. Operative CIT-21 Housing Society Ltd. Pratyakshkar Plot No. 51 Jain Hind Club Bhavan, BKC Vs. Gldg. N.S. RD no.11, Jai Hind Bandra (E) Society JVPD Scheme Vile Mumbai- 400050 Parle (W) Mumbai-400049 (Revenue) (Respondent ) P.A. No.AAAAJ2782R ITA No.3883/Mum/2014 Assessment Year: 2004-05 Friends Co. Operative CIT-21 Housing Society Ltd. Pratyakshkar Plot No. 51 Jain Hind Club Bhavan, BKC Vs. Gldg. N.S. RD no.11, Jai Hind Bandra (E) Society JVPD Scheme Vile Mumbai- 400050 Parle (W) Mumbai-400049 (Revenue) (Respondent ) P.A. No.AAAAT9169N ITA No.3882/Mum/2014 Assessment Year: 2004-05 Presidency Co. Operative CIT-21 Housing Society Ltd. Pratyakshkar Plot No. 51 Jain Hind Club Bhavan, BKC Vs. Gldg. N.S. RD no.11, Jai Hind Bandra (E) Society JVPD Scheme Vile Mumbai- 400050 Parle (W) Mumbai-400049 (Revenue) (Respondent ) P.A. No.AAAAT4479M ITA No.3881/Mum/2014 Assessment Year: 2004-05 4 Co.Op. Housing Societies Azad Nagar Co. Operative CIT-21 Housing Society Ltd. Pratyakshkar Plot No. 51 Jain Hind Club Bhavan, BKC Vs. Gldg. N.S. RD no.11, Jai Hind Bandra (E) Society JVPD Scheme Vile Mumbai- 400050 Parle (W) Mumbai-400049 (Revenue) (Respondent ) P.A. No.AAAAA1983F Assessee by Ms. Arti Vissanji, Shri Rajesh Shah & Shalin S. Divatia (ARs) Revenue by Shri G.M. Doss (CIT-DR) Date of Hearing: 29/07/2016 Date of Order: 28/09/2016 O R D E R Per Bench: These appeals have been filed by above mentioned appellants against respective orders passed by Commissioner of Income Tax-21, Mumbai, {(in short Ld. CIT }, u/s 263 of Income Tax Act, 1961. In these appeals, issues have arisen out of common subject matter, giving rise to identical issues and therefore, these were heard together and being disposed of by this common order. 2. During course of hearing, arguments were made by Ms Arti Vissanji, Shri Rajesh Shah & Shalin S. Divatia, Authorised Representatives (AR) on behalf of Assessee and by Shri G.M. Doss, Departmental Representative (CIT-DR) on behalf of Revenue. 5 Co.Op. Housing Societies First we shall take up appeal of M/s Vithalnagar Cooperative Housing Society Ltd. in ITA No.3656/Mum/2014 for A.Y. 1995-96: assessee has filed its appeal on following grounds: 1.The Learned Commissioner of Income Tax erred in exercising jurisdiction and passing Order u/s 263 of Act, in respect of Order u/s. 143(3) r.w.s.147, which was had in law as notice u/s. 147 was not served upon assessee. 2. learned Commissioner of Income Tax erred in exercising jurisdiction under provisions of Section 263 of Act. 3. Learned Commissioner of Income Tax erred in holding that provisions of Section 50C were not applied by Assessing Officer. 4. Learned Commissioner of Income Tax, Mumbai erred in exercising jurisdiction regarding applicability of Section 50C, when issue of computation of Capital Gains in respect of same transaction had been adjudicated upon by CIT (A)-32, Mumbai. 5. assessee craves leave to add to or amend grounds of appeal and file detailed statement of facts at time of hearing. 3. brief facts as culled out from orders of lower authorities and submissions made by assessee are that assessee society along with 13 other housing societies (in all 14 societies) were owning plot at Juhu, Mumbai under Juhu Vile Parle Development Scheme. said plot was managed by Association (M/s Juhu Vile Parle Development Cooperative Housing Association Ltd.), which was formed by aforesaid 14 Societies to provide suitable utilities and amenities for their common benefits. 6 Co.Op. Housing Societies Originally, Income Tax Department had assessed income on sale of plot in hands of Association which had sold plot to cooperative society formed for benefit of Indian Police Service Officers. matter went to Commissioner of Income Tax-(Appeals) and he held that impugned transaction resulted into capital loss on sale of property and therefore question of making addition does not arise. Thereafter, matter reached before Income Tax Appellate Tribunal and Tribunal held that since plot did not belong to Association, question of any transfer by Association does not arise and hence no capital gain can be assessed in hands of Association. In pursuance to above order, Assessing Officer reopened assessment of assessee (which is one of 14 societies) to assess aforesaid income in hands of assessee. 3.1. Thereafter, AO passed assessment order in name of assessee society and brought to tax in its hands amount of capital gains arising on account of transfer of impugned plot of land for proportionate share of assessee in total sales consideration, after taking cost of acquisition as nil . assessee society filed appeal before concerned Commissioner of Income Tax-(Appeals), challenging computation of capital gains done by assessee on ground that no indexation was granted by AO and cost of acquisition was wrongly taken at nil. 3.2. In appeal order passed by concerned Commissioner of Income Tax-(Appeals), grounds raised by 7 Co.Op. Housing Societies assessee were dismissed and AO s action in taking cost of acquisition at nil was upheld. On other hand, in meanwhile, Ld. CIT issued show cause notice u/s 263 to assessee, after going through aforesaid assessment order passed u/s 147/143(3) as well as assessment records of assessee. "On verification of records, it is observed that Stamp Duty was paid on valuation of Rs. 11,88,43,200/- as determined by Stamp Duty Authorities. As per provisions of 50C, this value should have been considered as sale value. Thus amount taxable as 'Capital Gains' in hand of assessee would stand at Rs.1,18,84,320/- as against amount of Rs. 7,41,789/- as determined by Assessing Officer". 3.3. assessee contested show cause notice of Ld. CIT and filed detailed submissions challenging validity of aforesaid show cause notice. relevant part of submissions filed by assessee in response to show cause notice, vide its letter dated 02.01.2014 is reproduced hereunder: 3. It is submitted that valuation of Rs. 11,88,43,200/- as determined by stamp duty authorities cannot be basis for determining sale consideration as Rs. 1,18,84,320/-for said computation of capital gain for following reasons: a) T h is p l o t was u n d e r ac q u is i tio n b y th e G o v e r n me n t o f Maharashtra as same was reserved for Recreation Ground, Garden, Police Quarters as per Table 41(g) of Development Control Regulations (DCR) 1991. owners of 14 Societies were, therefore, able to develop plot for its own or society, members' use. Please find enclosed letter dt.21.04.2003 of Chief Engineer (9 Dev. Plan), Municipal Corporation of Greater Mumbai confirming reservation of plot for public purpose, inter alia, Police Quarters. Further, Home Dept. of Government of Maharashtra had taken possession of this 8 Co.Op. Housing Societies plot in 1975 issued by Public Works and Housing Department of Govt. of Maharashtra. It is submitted that provision of Section 50C cannot apply to sale of plot of land to Government or where Plot is reserved for particular purpose by Government and possession thereof taken by Govt. of Maharashtra. Officers of Police Department proposed to form Cooperative Housing Society. proposed society entered into memorandum of understanding on 2510112000 with 14 societies. As per this MOU, sum of Rs. 14,19,670/- was paid as advance by proposed society. conveyance deed was executed between said proposed society of Police Official and 14 Societies on 14.05.2003 for total consideration of Rs. 77,14,920/- as against consideration of Rs. 70,98,350/ - proposed in MOU dated 25.01.2000. MOU in respect of sale to proposed society of officers of Indian Police Service (IPS) was entered into on 25.01.2000 whereas Section 50C of Act was introduced with effect from 01.04.2003. subsequent deed of conveyance dated 14.05.2003 conveyance dated 14.05.2003 conveying plot was only fulfillment of pre-existing obligation and hence cannot possibly be subjected to rigors of Section 50C of Act which does not have retrospective effect. purpose behind enactment of Section 50-C was set out in Department Circular No.5/2010 dated 03.06.2010- "23.2. With view to preventing leakage of revenue, section 50C is amended, so as to provide that where considering received or accruing as result of transfer of capital asset, being land or building or both is less than value adopted or assessed or assessable by authority of state Government for purpose of payment of stamp duty in respect of such transfer, value so adopted or assessed or assessable shall be deemed to be full value of consideration received or accruing as result of such transfer for computing capital gain" (emphasis supplied) It is humbly submitted that where Reserved Plot is sold pursuant to possession being taken by Government Authority and / or where it can be sued 9 Co.Op. Housing Societies only for public purpose like providing housing for Government employees (in instant case f or Police Quarters) there cannot be any leakage of revenue. Under said circumstances and going by mischief sought to be addressed, provision of Section 50C of Act cannot be made applicable on instant case. d) Indenture dated 14th May 2003 clearly specifies that said plot was sold on "as is where basis is". In alternative and without prejudice it is submitted that value adopted or assessed by Stamp Valuation Authority under sub Section (2) exceeds Fair Market Value of plot on date of transfer plot of land subject to reservation without encumbrances. Further, in instant case, encumbrance was use of plot for Police Quarters. Hence, said plot of land had no value for anybody other than employees of police department and was subject to necessary approvals from Government of Maharashtra. possession thereof had been handed over to Govt. of Maharashtra in 1975. Under circumstances, we have to request you to kindly refer valuation of plot to under provisions of Section 50C (2) of Act. assessee also places reliance on Order dated 03.03.2009 bearing reference CIT (A)XXI/DCIT-21(1)/IT- 359/06-07 passed by CIT(A)-XXI wherein respect of same transaction it has been held that provisions of Section 50C are not applicable under facts and circumstances of case. same was passed when protective assessment was made in case of JVPD, Association. It may be noted that Department has not gone in further appeal against said order of CIT(A) but not on issue of applicability of provision of Section 50C; (copy of ITAT order in ITA 3132/MUM. 2009- 10 enclosed). Hence, assessee stand on applicability of Scheme 50C to above transactions has already been accepted by department. 6. We therefore, humbly submit that proceedings u/s 263 of IT Act be dropped in above matter. 3.4. Ld. CIT considered submissions of assessee but was not satisfied with submissions of assessee and it was 10 Co.Op. Housing Societies held by him that impugned assessment order passed by AO was erroneous and prejudicial to interest of revenue since AO did not apply provisions of section 50C of Act and did not examine impugned transaction through parameters of these provisions in this case inspite of fact that capital gains had arisen to assessee as co- owner of impugned plot of land transferred during year. Accordingly, assessment order u/s 143(3) r.w. section 147 dated 29.12.2011 passed by AO was set aside u/s 263 of Act, and matter was sent back to file of AO for deciding issue afresh after due verification and after giving adequate opportunity of hearing to assessee before finalizing fresh assessment. 3.5. Being aggrieved, assessee has brought this matter before Tribunal by filing appeal against impugned order passed u/s 263 by CIT. During course of hearing, exhaustive submissions were made by Ms. Arti Vissanji, Ld. Counsel appearing on behalf of following appellants: 1. Vithalnagar Co-operative Housing Society Ltd. 3656/Mum/2014 2. Nutan Laxmi Co-operative Housing Society Ltd. 3655/Mum/2014 3. Navyug Co-operative Housing Society Ltd. 3655/Mum/2014 4. Vallabhnaghar Co-operative Housing Society Ltd. 3659/Mum/2014 5. Suvarnagar Co-operative Housing Society Ltd. 3658/Mum/2014 3.6. Similarly, detailed arguments were made by Shri S. Divatia on behalf of M/s Jai Hind Cooperative Housing Society 11 Co.Op. Housing Societies Ltd. (ITA No.2363/Mum/2014). On other hand, arguments were made by Mr. G.M. Doss (CIT-DR) on behalf of Revenue. arguments made by counsels appearing on behalf of appellants can be summarized as under: (i). It has been firstly argued that in this case, impugned assessment order had merged into order of Ld. CIT(A) and therefore, applying Doctrine of Merger, Ld. CIT had no jurisdiction for invoking provisions of section 263. It could not have held assessment order to be erroneous and prejudicial to interest of revenue and therefore, it could not have been set aside. It has been submitted that issue of section 50C was involved before CIT(A) in appellate proceedings of Association i.e. M/s Juhu Vile Parle Development Co-operative Housing Association Ltd., wherein it was inter-alia held that section 50C was not applicable. It was further contended that even in proceedings before AO question of computation of capital gain was involved and complete facts were there before AO. Further, when assessee had filed appeal before concerned Commissioner of Income Tax-(Appeals) against assessment order, issue of computation of capital gain was open before Commissioner of Income Tax-(Appeals). It was further submitted that Commissioner of Income Tax-(Appeals) had power of enhancement and therefore, even if no ground was raised with regard to section 50C, but still issue was well within jurisdiction of Commissioner of Income Tax- (Appeals). Reliance in this regard was placed on judgments 12 Co.Op. Housing Societies in case of CIT vs. Nirma Chemicals Works P. Ltd. 309 ITR 67 (Gujarat High Court), Ms. Pushpa Devi Tibrewala v. ITO (Hyd)( order dated 7th June, 2013), Sonal Garments vs. JCIT 95 ITD 363(ITAT, Mumbai) and Merico Industries Ltd. vs. ACIT 115 TTJ 497(ITAT, Mumbai). (ii). It has been argued by Ld. Counsel that section 50C is not applicable upon impugned transaction. It was submitted that in this case possession was handed over on 29th July, 1975, to Public Works and Housing Department, Government of Maharashtra and thereafter Memorandum of Understanding dated 25.01.2000 was entered between 14 Co-operative Societies, JVPD Co-operative Housing Societies Association Ltd. and Vasundhara C.S.H. Ltd. (i.e. society of IPS Officers of Maharashtra). It was further stated that payment was fully received up to 11th February, 2003 and therefore, transaction was completed before impugned financial year. Under these circumstances, conveyance deed dated 14.05.2003 between aforesaid 14 cooperative housing societies, Association and Vasundhara CHS Ltd. was just legal formality for executing transaction in impugned year. It was further submitted that in any case agreement for sale was done on 25.01.2000 and therefore, sales consideration cannot be deemed as per rates prevailing on 14.05.2003. Ld. Counsel(s) placed reliance in their support upon judgment of Hon ble Allahabad High Court in case of Shindhu Mehar 236 taxman 561. Reliance was also placed upon decision of Hyderabad bench in case 13 Co.Op. Housing Societies of Shri Mohd. Imran Baig order dated 27.11.2015 (ITA No.194/hyd/2014 and others) and Smt. D. Anitha v. ITO 55 taxmann.com 538(Hyd). (iii). It has been also argued by Ld. Counsels on behalf of assessee that in this case Ld. CIT has passed impugned revision order without any independent application of mind. It was submitted that revision order has been passed by Ld. CIT without giving any reasoning and it is very brief and cryptic and therefore it is illegal in eyes of law. In nutshell, Ld. Counsels vehemently submitted that order passed u/s 263 is not valid in eyes of law and therefore it should be quashed. 3.7. Per contra, Ld. CIT-DR, appearing on behalf of Revenue, vehemently assailed all arguments of counsels of assessee and his arguments are briefed hereunder: (i) With regard to argument of assessee on merger of original assessment order with order of Commissioner of Income Tax-(Appeals) by applying Doctrine of Merger , it has been submitted by Ld. CIT-DR that said Doctrine is not applicable here upon given facts of this case. It was submitted that during course of assessment proceedings, no issue with regard to applicability of section 50C was ever raised by AO at all. limited issue raised in assessment order was with regard to determination of cost of impugned property. Society had claimed total cost of acquisition of impugned plot of land at Rs.60,01,030/- whereas, AO determined same at nil 14 Co.Op. Housing Societies value. Thus, when assessee filed appeal before concerned Commissioner of Income Tax-(Appeals), it was aggrieved only with regard to aspect of taking cost of acquisition at nil and therefore only this issue was raised before Commissioner of Income Tax-(Appeals). Our attention has been drawn on grounds raised before Commissioner of Income Tax- (Appeals) in first appeal filed by assessee against original assessment order dated 29.12.2011 as well as statement of facts therein with view of emphasize upon point that no other issue was raised before Commissioner of Income Tax-(Appeals). Our attention was also drawn upon appeal order passed by Commissioner of Income Tax- (Appeals) to show that no such issue has been dealt by him. Thus, it was argued that neither issue was raised in assessment proceedings nor in assessment order nor in grounds of appeal nor written submissions filed by assessee and nor even by Commissioner of Income Tax- (Appeals) in appeal order passed by him. Thus, issue has not been adjudicated at all by Commissioner of Income Tax-(Appeals) and therefore, there cannot be merger of assessment order with order of Commissioner of Income Tax-(Appeals) qua this aspect. Our attention was drawn on explanation 1(c) of section 263 to argue that it was well within powers of CIT to pass revision order on such matters as had not been considered and decided in appeal by Commissioner of Income Tax-(Appeals). Reliance was placed in this regard upon judgment of Hon ble Supreme Court in case of CIT v. Shri Arbuda Mills Ltd. 15 Co.Op. Housing Societies 231 ITR 50 (SC) which was subsequently followed by Supreme Court in another judgment in case of CIT v. Jay Kumar B. Patil 236 ITR 469. reliance was also placed on judgment of Hon ble Allahabad High Court in Mehra Borthers v. CIT order dated 11.03.2015 in writ tax no. 185 of 2015 for proposition that Doctrine of Merger could not have been applied to that part of assessment order which was not subject matter of appeal. It was thus argued by him that since aspect of application or examination of section 50C had never been subject matter of assessment order nor of appeal before Commissioner of Income Tax-(Appeals) and therefore, to this extent, impugned assessment order was open for revision by Ld. CIT and has been rightly done so. (ii) With regard to second argument of Ld. Counsels that section 50C was not applicable in this case as transfer had already taken place, Ld. CIT-DR drew our attention upon assessment order to show that position of taxability of capital gain on transfer of plot of land arising in impugned year has been accepted by assessee. Thus, only dispute was with regard to determination of cost of acquisition, and therefore, assessee is not allowed now to take U-turn at this stage. Without prejudice to these submissions, Ld. CIT-DR drew our attention on Memorandum of Understanding dated 25.01.2000 and submitted that it was merely Agreement to Sale which did not give rise to any transfer of impugned property. It was submitted that this agreement was entered into for sale of impugned plot of land, subject to fulfillment of various conditions as were narrated in 16 Co.Op. Housing Societies detail in said agreement. Our attention was drawn more specifically upon certain clauses of said MOU wherein numerous conditions have been described. It was submitted that it was clearly stipulated in said agreement that transfer of impugned plot of land shall take place only subject to fulfillment of these conditions as well as payment of total consideration. It was submitted that fulfillment of these conditions were dependent upon various other agencies and therefore, unless these conditions were fulfilled or complied with, assessee was not in position to affect transfer. It was further submitted that purchaser was also not in position to use on this plot in its own right until and unless these conditions were fulfilled and transfer was affected. It was further submitted that in case of non-fulfillment of these conditions, amount of sale consideration was to be refunded. It was further submitted that as per MOU (agreement), total amount of consideration agreed was for Rs.70,98,350/- whereas in conveyance deed entered on 14.05.2003, amount of sales consideration was revised to sum of Rs.77,14,920/- which clearly shows that there was some kind of revision or re-negotiation on price. It was thus argued that impugned MOU could not have given effect to any type of transfer of title and that s why assessee had disclosed amount of capital gain in year under consideration. Under these circumstances, provisions of section 50C are mandatorily to be applied while assessing correct amount of capital gain to be taxed in hands of assessee. reliance was also placed on judgment of 17 Co.Op. Housing Societies Hon ble Supreme Court in case of Sanjiv Lal v. CIT 46 taxman.com 300 as well as Poddar Cement (P) Ltd. 226 ITR 625 (SC). It was thus, summarized that section 50C has been rightly directed to be invoked by Ld. CIT in year under consideration for determination of sales consideration in accordance with law. (iii) With regard to argument of Ld. Counsel for alleged non-application of mind by Ld. CIT, it has been submitted by Ld. CIT-DR that perusal of impugned revision order clearly reveals that Ld. CIT had called for records and after going through assessment records as well as order u/s 143(3), show cause notice u/s 263 was issued by Ld CIT. In response of same, assessee had submitted its reply which was duly considered by Ld. CIT before reaching on conclusion that assessment order passed by AO was erroneous and prejudicial to interest of revenue on ground that mandatory provisions of section 50C were omitted to be applied by AO while computing taxable amount of capital gains in hands of assessee. It was lastly submitted by Ld. CIT-DR that Ld. CIT has merely directed AO to examine provisions of section 50C and thus objections on determination of correct sale value raised by assessee before tribunal can very well we raised while these provisions are applied by AO/CIT(A). Thus, in principle, provisions of section 50C must be applied and issues regarding value to be adopted and other similar objections can very well be adjudicated while applying provisions of section 50C. But, in absence of any examination of application 18 Co.Op. Housing Societies of section 50C, assessment order was erroneous and prejudicial to interest of revenue and therefore, revision order passed by Ld. CIT was perfectly valid in eyes of law and facts of this case. 3.8. In rejoinder both Ld. Counsels reiterated their submissions and assailed order of Ld. CIT. 3.9. We have gone through orders passed by lower authorities as well as submissions made by both sides before us. For sake of brevity and to avoid repetition, we are not again discussing here background and facts of case which we have already discussed in initial part of our order. Thus, proceeding further, we shall decide issues raised by both sides on validity of impugned order passed u/s 263 by Ld. CIT. primary argument of Ld. Counsels appearing on behalf of assessee society was that Ld. CIT was precluded from exercising his jurisdiction u/s 263 for reason that in view of Doctrine of Merger , assessment order had got merged into order of Commissioner of Income Tax-(Appeals) on aspect of taxability of capital gains earned on transfer of impugned plot of land. We have examined this argument very carefully. brief facts in this regard are that in consequence to order passed by Tribunal in case of M/s Juhu Vile Parle Development Cooperative Housing Association Ltd Dt 4 th November, 2010 in ITA No 3132/M/2009, AO reopened/opened assessment of these 14 societies with view to bring to tax amount of capital gains in 19 Co.Op. Housing Societies hands of these societies by recording following set of Reasons on identical basis: During course of assessment in case of M/s Juhu Vile Parle Development Co Operative Housing Association Ltd. For Y 2004-05, amount of Rs.74,17,895/- was taxed under head capital gains. M/s. Juhu Vile Parle Development Co Operative Housing Association Ltd e x ecu te d d e ed f or tr sf err in g p lo t no . /47 to th e p r o mo te r s of Vasundhara Co. Op Housing Society formed by Maharashtra Cadre of Indian Police Service. said plot was under acquisition by Govt. of Maharashtra as same was reserved for police quarters. Therefore neither association nor 14 society members were able to develop plot. proposed society entered into MOU on 26.1.2000 with 14 society members including assessee. Thereaf ter conveyance deed was executed between police officers and 14 society members on 14.5.2003 relevant to Y 2004-05 for consideration of Rs.77,14,920/- and amount of Rs.74, 17,695/- was credited in ratio of ownership rights of 14 society members in its books of account. As assessee is o wn e r o f t h e s i d plo t d sh ar e of th e asse ssee amoun ti ng to R s . 5,93,424/- is cr ed ited to asse ssee s ac c oun t, th e s ame h as e sc ap ed assessment for year under consideration. Therefore, I have reasons to believe that amount of Rs.5,93,424/- has escaped assessment. 3.10. During course of assessment proceedings, assessee submitted following reply (taking sample reply in case of M/s. Vithalnagar Cooperative Housing Society Ltd.): assessment in aforesaid case is proposed to be made pursuant to notice issued under Section 148 dated 28.03.2011. aforesaid notice has been issued pursuant to decisions of Hon'ble ITAT Bench J", Mumbai in ITA No.3232/Mum/2009 for A. Y. 2004-05 in case of ACIT 20 Co.Op. Housing Societies Cir.21(1) vs. Juhu Vile Parle Development Housing Association Ltd. issue in above matter was pertaining to assessment of capital gains on sale of common plot, which is not subject matter of assessment in hands of society, to extent of its share in said pot. area of land comprising aggregate of building plots and area of common amenities and public utilities were conveyed to societies by Bombay Housing Board vide indenture dated 261h day of April 1960. We would like to draw yourkind attention to recital at Page Nos. 4 and 5 of Indenture conveying said plot: AND WHEREAS on basis of total cost of completing scheme on left bank of Irla Nalla including cost of earth filling and construction for roads and canalization cost payable by each Society works out to about Rs10.00 per square yard of building plots to be allotted to each Society including proportionate cost of acquisition and development of common amenity and utility plots roads and canalization AND WHEREAS all fourteen Societies have paid proportionate costs payable by them amounting in all to Rs.60,01,030, which is total estimate cost of acquisition and development of whole area (emphasis supplied). assessee places reliance on Supreme Court' judgement in case of B.C. Srinivasa Shetty 1981 128 ITR 294 and humbly submits that if Cost of acquisition of above mentioned asset is taken as 'NIL' then receipt of money in hands of assessee s capital receipt without any cost and same cannot be taxed as long term capital gains." 3.11. Thereafter, AO concluded assessment without accepting aforesaid submissions of assessee with regard to adoption of cost at Rs.60,01,030/-, and adopted cost at Nil and taxed capital gain worked out accordingly. In assessment order dated 29.12.2011 passed u/s 143(3) r.w. section 147, which subsequently became subject matter of revisions in impugned revisions order passed by Ld. CIT u/s 263, assessee had filed appeal against 21 Co.Op. Housing Societies aforesaid assessment order before concerned Commissioner of Income Tax-(Appeals) wherein following grounds were taken: (1) Learned Assessing officer erred in taking cost of acquisition of common plot sold during year as Rs. Nil and in consequently calculating long term capital gain of Rs.7,41,789/- instead of loss of Rs.5,92,345/- as claimed by assessee. (2) In alternative and without prejudice Learned Assessing Officer erred in charging to tax Rs.7,41,789/- as long term capital gains even though cost of acquisition was taken as nil. 3.12. Thereafter, said Commissioner of Income Tax- (Appeals) considered submissions of assessee with respect to determining appropriate amount of cost and accepted submissions of assessee and deleted addition made by AO, vide his appeal order 27.11.2012, with following observations: 3 . 3 . I h av e c o n s i d e r e d th e ar g u m e n ts o f L d . R d p e r u s e d th e assessment order. indenture dated 26.4. 1960 by which all 14 societies were allo tted plo t by Bombay Housing Board, on paymen t of certain amounts by all 14 societies was available before AO. It was as per said indenture dated 26/4/1960 that ownership of plot to all 14 societies was conferred. said indenture is registered agreement which is valid evidence indicating ownership by 14 societies. Even in conveyance deed dated 14/5/2003, there is mention of indenture dated 26/4/1960 by which 14 societies had become owner of said plot. Hence claim of AO that there was no evidence of payment of cost to acquire o wnership is misplaced. On page 3 of said indenture dated 26/4/1960, it is clearly mentioned that said plot was allotted to cooperative housing societies which had agreed to pay cost of acquisition and development of said land and conveyance was executed in f avour of societies 22 Co.Op. Housing Societies subject to payment of balance cost and liabilities. Page 4 & 5 of said inden ture re ads as under: "AND WHEREAS on basis of total cost of completing scheme on left bank of Irla Nalla including cost of earth f illing and construction of roads n d c n l i z t i o n t h e c o s t payable by each Socie ty works ou t to abou t R s. 1 0 . 0 0 p er sq u ar e ! , 1 d of th e b u ild in g p lo ts to b e al l o tte d to e ac h S o c ie ty including th e propor tion ate cost of acqu isitio n and d e v e l o p m e n t o f common amenity and utility plots roads and canalization AND. WHEREAS all fourteen Societies have paid proportionate costs payable by them amounting in all to Rs.60,01,030.00 which is total e s tim te d c o s t o f ac quis it io n nd d e ve lo p m e n t o f th e w h o le re a" . (emphasis supplied) This clearly shows that societies were allotted land in 1960 on payment of cost and hence cost of acquisition cannot be Nil. It does not make any difference whether cost is paid towards earth filling or road or canalization work, if allotment of plot is in lieu of payment of such ch ar g e s b y 14 so c ie tie s as e v id en t f ro m th e in de n tu r e d ate d 26 /4/1960 . Once property has been acquired prior to 1/4/1981 for cost, then as per provisions of section 48 & 49, cost of acquisition shall be taken to be indexed cost of FMV as on 1/4/1981. valuation report of registered valuer dated 26/7/2006 va1uing total common plot at Rs 28,81,500 was before AO but AO, has not pointed out any mistake or or discrepancy in said valuation report. In fact while deleting addition of capital gains for AY 2004-05 on protective basis in hands of JVPD Association, then CIT(A) also, based on same valuation report had held that FMV at Rs 28,81,800 as on 1/4/1981 was required to be allowed after indexation. Since ITAT Mumbai has held that capital gains, if any on transfer of common plot is assessable in hands of 14 societies and not in hands of JVPD association, then it is logical to apply same cost in hands of 14 societies also in ratio of their 23 Co.Op. Housing Societies respective shares. Hence action of AO in treating cost as Nil is erroneous and not as per law and facts. If deduction of indexed cost as per registered valuer's report dated 26/7/2006 is allowed for share of appellant, it will result in Long term capital loss. Accordingly addition of LTCG of Rs 7,41,789 made by AO is directed to be deleted. In result appeal is allowed. 3.13. Thus, perusal of Reasons recorded by AO, reply of assessee filed in course of assessment proceedings, assessment order passed by AO, grounds of appeal filed by assessee before Commissioner of Income Tax- (Appeals), submissions made before CIT(A) as well as appeal order passed by Ld. CIT(A) reveal that issue with regard to section 50C had never been subject matter of discussion. It has been fairly admitted by both parties before us that no query whatsoever with regard to application of section 50C was ever raised by AO in any manner and during course of assessment proceedings, issue with regard to application of section 50C never came up for discussion. Similarly, during course of appellate proceedings before CIT(A) also, no inquiry was made with respect to application or examination of provisions of section 50C. limited aspect involved in proceedings before Ld. CIT(A) was confined to determination of cost of acquisition and computation of long term capital gain, accordingly. Thus, determination of sale consideration in light of mandatory provisions of section 50C has never been subject matter of inquiry or discussion. Thus, admitted fact on record are that issue with regard to application of section 50C and 24 Co.Op. Housing Societies adoption of appropriate amount of sales consideration as per law had neither been raised nor adjudicated by Commissioner of Income Tax-(Appeals). 3.14. Thus, in view of aforesaid fact, we shall now deal with arguments made by both sides. We shall first like to refer to explanation 1(c) of section 263(1) which reads as under: (c) Where any order referred to in this sub-section and passed by Assessing officer had been subject matter of any appeal filed on or before or after 1st day of June, 1988, powers of Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. 3.15. perusal of aforesaid explanation clearly reveals that these provisions are widely worded and clearly lay down that power of Commissioner of Income Tax to revise assessment order shall continue to extend in all those matters which have not been considered and decided in any appeal. It is not disputed by any party that matter pertaining to application of section 50C has neither been considered nor decided in appeal by Commissioner of Income Tax- (Appeals). Thus, as per plain provisions of law, Ld. CIT had requisite power under law to consider and examine application of section 50C for revision u/s 263, since Doctrine of Merger would not apply upon such matter. However, Ld. Counsel has placed reliance upon judgment of Hon ble Gujarat High Court in case of CIT v. Nirma 25 Co.Op. Housing Societies Industries Chemical Work (P) Ltd. (supra) 309 ITR 67. We have gone through said judgment. In said case, issue arisen was with respect to allowbility of deduction u/s 80I. It was contended by said assessee that issue of allowbility u/s 80I was considered by AO and CIT(A) had given part relief to assessee and therefore, issue of allowbility of deduction u/s 80I was subject matter of appeal and therefore, Doctrine of Merger applied upon assessment order. Under these peculiar facts of said case, Hon ble High Court was pleased to hold that assessment order on this issue was not open for revision by CIT since CIT(A) had examined and adjudicated issue of deduction u/s 80I. Similarly, in other judgment of Sonal Garments, (supra) issue involved was that of computation of deduction u/s 80HHC and it was held by Hon ble Bench that since this issue was subject matter of consideration before CIT(A), therefore, it could not be subject matter of revision u/s 263. Similar facts were involved in case of Merico Industries Ltd. (supra) where subject matter under consideration was about allowbility of deduction u/s 80IB. Thus, these judgments have different factual situations. Reliance was also placed by Ld. Counsel on decision of Hyderabad Bench in case of Ms. Pushpa Devi Tibrewala. We have gone through this judgment. It is noted that issue under consideration in said case was with regard to determination of nature of capital gains. It was observed by bench while analyzing facts of said case that whole issue of capital gain arising out of development 26 Co.Op. Housing Societies agreement as well as sale invoking of plot was not only considered by AO while completing assessment u/s 143(3) of Act, but was also subject matter of appeal before CIT(A) and it was quite evident from assessment order passed that AO had not only inquired into issue and applied his mind to facts and materials on record but also dealt with issue of capital gain in assessment order. In view of totality of facts, it was held by bench that whole issue of capital gain was subject matter of appeal before CIT(A) he had decided issue much prior to issuance of notice u/s 263 of Act. Thus, facts of said case are not comparable with facts of case before us. 3.16. On other hand, we find that judgments relied upon by Ld. CIT-DR, appear to be applicable on facts of this case. He relied upon heavily on judgment of Hon ble Supreme Court in case of CIT v. Shri Arbuda Mills Ltd. 231 ITR 50 wherein it was held that powers u/s 263 of Act, shall extend to such matters as had not been considered and decided in any appeal. He also drew our attention upon decision of Hon ble Andhra Pradesh High Court in case of CIT v. New Srinivasa Construction Co. 236 ITR 503, wherein following aforesaid judgment of Hon ble Supreme Court, Hon ble Andhra Pradesh High Court laid down principle that untouched part of assessment order, which did not fall for consideration before CIT(A), was still open for revision u/s 263 of Act before CIT. 3.17. Under these circumstances and facts of case before 27 Co.Op. Housing Societies us, we find force in argument of Ld. CIT-DR that in this case section 50C has not been touched at all by AO and therefore it was not subject matter of appeal before CIT(A). Though, CIT(A) has co-terminus powers with AO but unless and until issue is touched either by AO or by CIT(A), it remains open for revision u/s 263 by CIT, subject to compliance of other conditions of section 263. law on this issue has been properly explained by Hon ble Supreme Court in at least two judgments as stated earlier also. In case of CIT v. Shri Arbuda Mills Ltd.(supra), Hon ble Supreme Court took note of explanation 1(c) to section 263(1) and held that powers u/s 263 of Commissioner shall extend and shall be deemed to always have extended to such matters as had not been considered and decided in appeal. This judgment was given by Bench comprising of three Hon ble Judges had come up again for consideration before Hon ble Supreme Court in case of CIT v. Jaykumar B. Patil wherein Revenue had sought reference of following two questions before Hon ble Supreme Court: (1) Whether, on facts and in circumstances of case Tribunal was right in law, in holding that Commissioner of Income Tax had no jurisdiction and powers to initiate proceedings under section 263 of Income tax Act 1961, in respect of issues not touched by Commissioner of Income Tax (Appeals) in this appellate order? (2) Whether, on facts and in circumstances of case, Tribunal was justified in law in holding that not only issues dealt with in assessment order but also order issues were merged in Commissioner of Income Tax (Appeal) s order ignoring provisions 28 Co.Op. Housing Societies contained in clause (c) of Explanation to sub-section (1) of section 263 of Income Tax Act, 1961? 3.18. Hon ble Supreme Court after considering these two questions held as under: Notice on special leave petition has been served upon respondent but he has not chosen to appear. notice stated that matter might be disposed of at special leave petition stage in view of judgment of this court dated January 23, 1996, in TRC No.11 of 1983 CIT v. Shri Arbuda Mills Ltd. (1998) 231 ITR 50. That judgment covers two questions that were sought to be raised they were questions of law and High Court ought to have called for reference thereof, but, having regard to fact that this court has in aforementioned case squarely dealt therewith we shall deem this to be reference of questions to ourselves and, following aforementioned case, answer questions thus: in negative and in favour of Revenue. appeal is allowed accordingly, with no order as to costs. 3.19. It may be noted from perusal of above judgment of Hon ble Supreme Court that ratio decidendi in case of Shri Arbuda Mills Ltd (supra) has been followed and these questions have been decided in favour of Revenue. In other words, Hon ble Supreme Court held that Commissioner of Income Tax had jurisdiction and powers to initiate proceedings u/s 263 of Act in respect of issues not touched by Commissioner of Income Tax-(Appeals) in his appeal order in view of explanation (c) to sub-section (1) of section 263 of Act. No other contrary judgment of Hon ble Supreme Court has been brought to our knowledge by assessee. It is further noted that Ld. CIT-DR had relied upon detailed judgment from Hon ble Allahabad High Court in 29 Co.Op. Housing Societies case of M/s Mehra Brothers vs CIT dated 11th March 2015 in writ tax no. 185 of 2015. We have gone through these judgments and find that Hon ble High Court has discussed entire law available up to date on issue of jurisdiction of CIT to make revision u/s 263 of issues which were not subject matter of appeal before CIT(A). Hon ble High Court inter-alia followed judgment of Hon ble Supreme Court in case of CIT v. Arbuda Mills Ltd.(supra) as well as CIT v. Jaykumar B. Patil. Hon ble High Court also discussed and followed various other judgments in this case. facts were that assessee had claimed deduction u/s 10B of Act. AO granted benefit of deduction u/s 10B partly by reducing amount of export turnover shown by assessee against which assessee filed appeal before CIT(A). Subsequently, notice u/s 263 was issued by Ld. CIT questioning very eligibility of deduction u/s 10B in impugned assessment order. assessee filed writ against notice u/s 263 before Hon ble High Court on ground that in view of Doctrine of Merger , Ld. CIT was ousted from its jurisdiction to invoke provisions of section 263 with regard to claim of deduction u/s 10B. On other hand, Revenue pleaded that in given facts Doctrine of Merger did not apply because issue of very applicability/eligibility of deduction u/s 10B was not examined by AO and was therefore not subject matter of appeal before Ld. CIT(A). Hon ble High Court after analyzing aforesaid two judgments of Hon ble Supreme Court observed as under: 30 Co.Op. Housing Societies 29. In EIMCO K.C.P. Ltd. vs. C.I.T. [(2000) 242 ITR 659 (SC)], question arose whether Commissioner can exercise power under Section 263 of Act, 1961, while agreeing with order of assessment against which appeal is pending before Commissioner (A), involving point upon which notice under Section 263 is issued, Court up held notice issued under Section 263 and held that such notice can be issued. 30. decision in CIT Vs. Abuda Mills Ltd. (Supra) has also been followed by this Court in CIT Vs. Dhampur Sugar Mills Co. Ltd. [(2004) 270 ITR 576 (All)], CIT Vs. Indo Persian Rugs [(2008) 299 ITR 300 (All)] and CIT Vs. Span International [(2004) 270 ITR 538 (All)]. 31. In CIT Vs. Amrit Banaspati Co. Ltd. [(2005) 277 ITR 559 (All)], Court held that in respect of items which have not been considered in appeal, power of Commissioner under Section 263(1) shall be extended to that extent. 32. Now looking to facts of present case, in light of exposition of law discussed above, we find that claim of assessee seeking exemption under Section 10B of Act, 1961 for assessment year 2011-12, was not doubted by Assessing Officer. Applicability of Section 10B of Act, 1961 for assessment year 2011-12, as claimed by assessee, was accepted by him. Thus, this aspect was not in appeal at any stage. It is only on question of "quantum of profit" for which exemption was claimed that appeal was filed. Assessing Officer discussed matter and found that instead of Rs.4,97,28,163.45 which was claimed by assessee, it was entitled to exemption to extent of Rs.4,61,90,179.58 under Section 10B and there is taxable income of Rs.3537980/-. On taxability of aforesaid amount, assessee preferred appeal and only that aspect was considered by CIT(A) as also Tribunal. At no stage, issue whether assessee was entitled to claim exemption under Section 10B at all or not, having already exhausted beyond period of exemption permissible under Section 10B, was not subject matter of consideration before appellate authorities. Hence, this 31 Co.Op. Housing Societies question was open to be looked into by Commissioner. In our view, he has rightly exercised power under Section 263 of Act, 1961, by taking aforesaid view we find support from decision in CIT Vs. Ratilal Bacharilal And Sons [(2006) 282 ITR 457 (Bom.)], wherein almost in similar circumstances, Court said as under :- "........... At instance of assessee, allowance on sum of Rs. 5,63,350 could not have been subject matter of appeal before Commissioner of Income-tax (Appeals) as assessee was never aggrieved with that part of order. In other words, so far as weighted deduction under section 35B in sum of Rs. 5,63,350 is concerned, same was not subject matter of appeal before Commissioner of Income-tax (Appeals). Factually, in this case, doctrine of merger could not have been applied by Tribunal to that part of order which was not subject matter of appeal as indicated, so as to exclude revisional jurisdiction of Commissioner of Income-tax under section 263 of Act." 33. On behalf of petitioner, reliance has been placed on Division Bench decision of Karnataka High Court in CIT Vs. Tata Elxsi Ltd. [2012 (247) CTR 334], but having gone through aforesaid decision, we find no application thereof to issues which which we are concerned in this writ petition. aforesaid decision therefore renders no help to petitioner at all. 34. In circumstances, questions no. 1 and 2, are answered against petitioner. question no. 3 is returned in favour of Revenue, holding that notice issued by Commissioner under Section 263 of Act, 1961, impugned in this writ petition is perfectly valid and in accordance to law. 35. In result writ petition lacks merit Dismissed. 3.20. From above analysis it is noted that Hon ble Allahabad High Court took note of judgment of Hon ble Bombay High Court in case of CIT Vs. Ratilal Bacharilal 32 Co.Op. Housing Societies and Sons, (supra) wherein it was held that Doctrine of Merger could not have been applied by Tribunal to that part of order which was not subject matter of appeal so as to exclude revisional jurisdiction of Commissioner of Income Tax under section 263 of Act. In given facts of said case, it was held that since at no stage issue whether assessee was entitled to claim exemption u/s 10B at all or not, was subject matter of consideration before appellate authorities, therefore, this question was open to be looked into by Commissioner, because it is only on question of quantum of profit upon which exemption was claimed, appeal was filed and only to that extent allowbility of exemption u/s 10B was subject matter of appeal and NOT in its entirety. On similar lines, judgment relied upon by Ld. Counsel in case of CIT vs Forteleza Developers 374 ITR 510 (Bom) is not applicable on facts of case before us. In said case also, issue involved before AO as well as Ld CIT(A) was computation of amount of deduction allowable u/s 80IB. Hon ble High Court primarily and substantially decided case in favour of said assessee on merits of issue. It was observed by Hon ble High Court that AO had examined all conditions prescribed under law before allowing deduction u/s 80IB(10) and that view was taken by AO after deliberations and that interpretation placed by assessee was correct on facts and law. It was briefly observed while concluding judgment in addition to above observations that order passed u/s 263 was held to be invalid applying doctrine of merger for reason that all 33 Co.Op. Housing Societies facets of deduction u/s 80IB were under consideration before AO/CIT(A) and that is why order of AO had merged into order of CIT(A). But, in case before us, issue of section was 50C was not touched by any of authorities. 3.21. Turning back to facts of case before us, it is noted that AO had touched issue of computation of capital gains with respect to ascertaining cost of acquisition of plot of land sold by assessee on which capital gain was assessed by AO, against which assessee preferred appeal before concerned CIT(A) and thus, only this issue i.e. ascertaining correct amount of cost of acquisition, was subject matter of appeal before CIT(A). AO did not touch at all applicability of mandatory provisions of section 50C nor was so done by CIT(A). Thus, mandatory provisions of section 50C were not subject matter of appeal before CIT(A). It is noted by us that provisions of section 50C are deeming provisions and stand on independent basis de-horse aspect of determination of cost of acquisition, also because determination of sales consideration, in accordance with provisions of statute, is distinct exercise. Under these circumstances, it would be too far to stretch argument based upon imagination that since cost of acquisition has been determined by AO, and then it should be presumed that AO has determined sales consideration also in accordance with law. No such exercise was shown to have been done by AO. records also did not indicate any such exercise having been done by AO. 34 Co.Op. Housing Societies Under these circumstances, there could not have been any appeal on this aspect before CIT(A). CIT(A) had also not touched issue of application of section 50C. In our opinion, according to Doctrine of Merger , judgments of lower courts merge into judgments of higher court and after merger there remains no judgment of lower courts and therefore, obviously and admittedly, there can be no revision of judgment which does not even exist. However, in tax statutes like Income Tax Act, 1961, legislature has not thought it fit to apply Doctrine of Merger , but Doctrine of Partial Merger has been adopted. Thus, once issue of merger is governed by provisions of statute, then, obviously under income tax proceedings it is statute which shall prevail over general Doctrine of Merger . Doctrine of Partial Merger would apply for purpose of section 263 of Act, to extent as explained under relevant provisions contained in clause (c) of explanation 1 of section 263(1) of Income Tax Act 1961. This provision has already been discussed in earlier part of our order which clearly provide that powers of Commissioner under this section shall extend to such matters as had not been considered and decided in appeal. Thus, going by common sense approach as well as cardinal principles of law as well as judgments of various courts if applied on facts of this case, clearly suggest that CIT had requisite powers and jurisdiction u/s 263 to examine application of provisions of section 50C which were omitted to be applied by AO and 35 Co.Op. Housing Societies therefore, argument of assessee with regard to Doctrine of Merger fails in given facts of this case. 3.22. It was also argued by Ld. Counsel that in appeal proceedings of JVPD Association i.e. M/s JVPD Cooperative Housing Association Ltd (which was formed by these 14 societies to take care of maintenance of plot), concerned CIT(A) had given observations about non applicability of provisions of section 50C upon impugned transaction and thus, it could be said that these facts were there before AO when impugned assessment order in case of assessee was passed. In this regard, it is noted by us that in appeal filed by Revenue against order passed by CIT(A) in case of JVPD Association, reasoning of CIT(A) about non-applicability of provisions of section 50C has not been expressly approved by Tribunal. In fact this issue was not touched by Tribunal. Tribunal had held that JVPD Association was not owner of plot and therefore, there was no question of assessing capital gain in hands of JVPD Association. Further, once it was held that JVPD Association was not owner of plot, then whatever observations were given by CIT(A) in case of JVPD Association, that would have no bearing in hands of present assessee who is admittedly legal owner of impugned plot of land. Even otherwise, 36 Co.Op. Housing Societies order passed by CIT(A) in case of JVPD Association is not part of proceedings before AO who had passed impugned assessment order. Further, there is nothing on record to show that Assessing Officer while passing impugned assessment order had applied his mind and took conscious decision for not applying provisions of section 50C and that too by relying upon order of CIT(A) of JVPD Association. Therefore, under these circumstances, jurisdiction of CIT in exercising its power u/s 263 is not excluded from examining applicability of provisions of section 50C in hands of present assessee. 3.23. Now, we shall deal with other arguments of assessee with regard to its objections about applicability of provisions of section 50C and more specifically about substitution of amount of sales consideration with value adopted by stamp valuation authority for effecting transfer of impugned plot of land. objections of assessee in this regard are twofold. primary objection of assessee is that provisions of section 50C could not have been applied in year under consideration, since transaction had already taken place and second objection is that value adopted by stamp valuation authority at time of registration of conveyance deed could not have been adopted in year under consideration. 37 Co.Op. Housing Societies 3.24. We have considered all objections very carefully. It has been contended that impugned plot was not in exclusive possession of assessee and that assessee was not enjoying usage of plot for its own purposes for reasons that its possession was handed over to Public Works and Housing Department, Government of Maharashtra on 29th of July, 1975. In this regard, it is observed by us that it is admitted case of assessee that assessee, along with other 13 society members was legal owner of said plot of land; title of said plot was very much held by assessee and that s why assessee had legally entered into agreement/memorandum of understanding dated 25.01.2000 with association of officers of Indian Police Services for transfer of impugned plot of land. It is in pursuance of said agreement/MOU, that assessee was able to execute conveyance deed during year under consideration on 14th May, 2003 for effecting transfer of legal title of ownership in favour of M/s. Vasundhara C.H.S. Ltd. (i.e. Society of Indian Police Service officers of Maharashtra Cadre). issue with regard to dispute in ownership and assessment of capital gain arose in hands of JVPD Association i.e. M/s JVPD Cooperative Housing Association Ltd (which was formed by these 14 societies to take care of maintenance of plot). AO of JVPD Association had assessed resultant capital gain in hands of JVPD Association by treating it as owner of plot. issue had reached up to Tribunal and Tribunal did not approve action of Revenue and held that said JVPD 38 Co.Op. Housing Societies Association was not owner and these 14 societies were co- owners of plot. Relevant part of observations of Tribunal contained in its order dated 4th November, 2010 in ITA No.3132/M/2009 is reproduced as under: On appeal, CIT(A) noticed that conveyance deed was executed between proposed society of Police Officers and 14 society members on 14.05.2003 for total consideration of Rs.77,14,920/- and that 14 members societies agreed to deposit sale consideration with assessee in proportion to their ownership in plot. amount was so deposited with assessee society which after deducting expenses incurred on development and maintenance of plot credited balance of Rs.74,17,895/- in ratio of ownership rights to accounts of 14 societies members in its books of account. CIT(A) further found that memorandum of understanding had been entered into between 14 members societies and proposed Vasundhara Co-operative Housing Society and finally conveyance deed was executed on 14.05.2003. On these facts, he held that Assessing Officer was right in considering net sale proceeds of Rs.74,17,895/- for purpose of working out capital gains, but held that if 1.4.1981 value was adopted as cost of acquisition in terms of section 48, and indexation benefit is also allowed, there would be net capital loss of Rs.57,65,385/-. In this view of matter, he deleted addition of capital gains on protective basis in assessment of assessee. 5. revenue is in appeal to contend that assessee is practically owner of plot and since monies are still lying with it, not having been handed over to 14 societies, Assessing Officer was right in holding that assessee should be protectively assessed in respect of capital gains. On other hand, learned counsel for assessee submitted that assessee was merely holding possession of plot, that it was not owner of plot and there was no transfer of plot by assessee and therefore there was no question of any 39 Co.Op. Housing Societies capital gains being assessed in hands of assessee on protective basis. 6. On careful consideration of facts and rival contentions, we are inclined to uphold decision of CIT(A). It is not case of department that assessee was owner of plot and therefore it should be assessed to capital gains. There is no dispute that plot was owned by 14 different co-operative housing societies in specific shares and that assessee was merely put in possession of plot for purpose of common management. plot was originally allotted to 14 co-operative housing societies by Bombay Housing Board under indenture dated 26.04.1960 (pages 47 to 74 of paper book) and in light of this indenture it cannot be said that assessee became owner of plot. byelaws of assessee society, copy of which is placed at pages 105 to 112 of paper book, shows that 14 cooperative housing societies were holding residential plot, which was part of land in JVPD scheme. proportionate share of these societies in property and their liability to pay cost of development of property is also mentioned in byelaws. There is no document to which our attention was drawn on behalf of department transferring ownership of plot to assessee society. finding of CIT(A) which is not challenged before us is that conveyance deed was executed by 14 societies members on 14.5.2003 in favour of Vasundhara Co- operative Housing Society Ltd. formed by Maharashtra Cadre of IPS. Earlier to this conveyance, there was memorandum of understanding entered into between these parties on 26.1.2000, copy of which is at pages 75 to 104 of paper book. perusal of memorandum of understanding shows that it was executed between 14 co-operative housing societies, assessee and promoters of Vasundhara Cooperative Housing Society Ltd. Clause (iii) of preamble states that society was formed by 14 societies and registered under Maharashtra Co-operative Societies Act to take possession of property from managing committees of 14 co- operative housing societies and to hold and utilise property for providing suitable utilities and amenities such 40 Co.Op. Housing Societies as play ground, schools, colleges etc. and to do all such acts and things as are of common interest to 14 societies. memorandum of understanding does not show assessee as owner of property. Capital gains can arise to person only if he owns plot and transfers same for consideration. assessee not being owner of plot but merely holding possession thereof on behalf of 14 co-operative societies and managing same for common benefit of member societies cannot be considered as owner of property in order to bring sale price to tax in its hands as capital gains. This is also supported by accounting entries which show that respective shares of 14 housing societies in sale consideration, after deducting common expenses, has been divided in proportion to their respective shares in property and credited to their accounts and shown as deposits in assessee s balance sheet. In absence of any transfer by assessee, no capital gains can be assessed in its hands even on protective basis. 7. We thus affirm decision of CIT(A) but for different reasons and dismiss appeal filed by revenue with no order as to costs. 3.25. Thus, it is noted from observations of Tribunal that impugned plot of land was owned by these 14 society members (present assessee being one of them) with specific shares and said JVPD Association was formed merely for purpose of common management of subject property. Subsequently, after order of Tribunal, respective assessing officers of these 14 societies reopened assessment in hands of these societies after recording Reasons that assessee had effected transfer of impugned plot of land in A.Y. 2004-05 and therefore, resultant capital gain was to be assessed as income under head of capital gains in impugned assessment year. It is noted 41 Co.Op. Housing Societies that during course of reassessment proceedings, though assessee filed detailed replies raising objection about adoption of cost of acquisition at nil, but no objection was raised with regard to fact that plot was owned by assessee and its transfer of title of legal ownership has been effected during year under consideration and consequently capital gain was liable to be assessed in year under consideration. Further, when appeal was filed before CIT(A), there also no such dispute was raised. dispute was confined to ascertaining correct amount of cost of acquisition. Thus, issue of ownership of plot, its transfer during year under consideration and assessability of capital gain in hands of assessee in year under consideration had attained finality and became fait accompli. This issue was no more res-integra. Under these circumstances, only dispute that could have been raised was with regard to various aspects related to adoption of correct amount of sales consideration, cost of acquisition of plot and determining correct amount of capital gain to be taxed in hands of assessee. 3.26. It is noted that provisions of section 50C are deeming provisions and mandatory in nature. application of such provisions is made by operation of law. Exception to these provisions can be made only in accordance with law, as provided in section 50C only. It is noted that AO did not raise any query with regard to application of section 50C, as has been fairly admitted by both parties during course of 42 Co.Op. Housing Societies hearing. Under these circumstances, AO committed mistake of law and thus, it rendered order of AO as erroneous and since non application of section 50C would also amount to under assessment of income and tax payable thereon, therefore, it was prejudicial to interest of revenue. Thus, in given facts of case, it can be undoubtedly said that impugned assessment order was erroneous and prejudicial to interest of revenue. 3.27. Further, various objections have been raised by assessee with regard to value to be adopted for purpose of section 50C. In our opinion, these objections are to be examined in light of merits of objections and keeping in view of facts of this case and law applicable in this regard. But that exercise can be done only when impugned transaction is examined through prism of mandatory provisions of section 50C. It is also worth noting that case of assessee did not fall in any of exception also. 3.28. assessee had relied upon in this regard upon judgment of Hon ble Allahabad High Court in case of CIT v. Shimbu Mehra (Supra) in its support. We have gone through said judgment and find that in said case, said assessee had disputed factum of transfer of property in year under consideration. Therefore, applicability of provisions of section 50C was challenged in year under dispute. On other hand, facts of case before us are that year of transfer of plot and taxability of resultant capital gain has been admittedly to 43 Co.Op. Housing Societies be year under consideration and issue on that aspect has already been settled as was discussed by us in earlier part of order. 3.29. It is further noted by us that assessee is having few objections with regard to value to be adopted viz stamp value at date of aforesaid MOU shall be taken or stamp value as on date of conveyance deed shall be adopted and one more objection that since plot was received for police quarters, therefore, it is FMV cannot be taken as per free market value and only discounted value could have been taken as its FMV. We agree with assessee on this aspect to this extent that these objections need to be dealt with as per law before finally adopting appropriate value u/s 50C. But, as stated by us earlier also that all these objections or any other objection with regard to manner in which section 50C has to be applied can be dealt with in accordance with law and procedure as has been laid down u/s 50C itself. But that would be possible only when provisions of section 50C are applied and impugned transaction is tested through prism of these provisions. Under these circumstances, we uphold revision order passed by CIT order u/s 263 with liberty to assessee to raise these objections on manner and procedure of application of section 50C following due procedure prescribed u/s 50C. In case assessment order has already been passed, then assessee may file these objections before CIT(A), which shall be duly considered by him and remand report shall be called from AO if considered appropriate by CIT(A), so as to meet principles 44 Co.Op. Housing Societies of nature justice while following mandate of law. We direct accordingly. With these directions order passed by CIT is upheld and appeal of assessee is dismissed. Now we shall take up ITA No.2363/Mum/2014 in case Jai Hind Co. Operative Housing Society Ltd. of Assessment Year: 2004-05 4. In this case ground no.1 was not pressed by Ld. Counsel during course of hearing and therefore same is dismissed. 5. remaining grounds are identical to ITA No.3656/Mum/2014; no distinction has been made out in facts or in legal position by either party, therefore, we uphold order of CIT u/s 263 and dismiss appeal of assessee with same directions as have been given in ITA No.3656/Mum/2014. lower authorities are directed to follow our directions given in ITA No.3656/Mum/2014. Other appeals in ITA No.3881/Mum/2014, ITA No.3882/Mum/2014, ITA No.3883/Mum/2014, ITA No.3657/Mum/2014, ITA No.3658/Mum/2014, ITA No.3655/Mum/2014 & ITA No.3659/Mum/2014. 6. In these appeals, it was informed to us that grounds are identical. No distinction has been made on facts or law, therefore, lower authorities are directed to follow our direction as given in ITA No.3656/Mum/2014. Accordingly, these appeals are 45 Co.Op. Housing Societies dismissed and order passed by Ld. CIT is upheld with directions as given above. 7. In result, appeals filed by Assessee are dismissed. Order pronounced in open court on 28th September, 2016. Sd/- Sd/- (Amit Shukla ) (Ashwani Taneja) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated : 28 /09/2016 ct x ? P.S/. . . Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT, Mumbai. 4. CIT(A)- , Mumbai 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai Vithal Nagar Co. Operative Housing Society Ltd. v. CIT, Mumbai