IN INCOME TAX APPELLATE TRIBUNAL "F" Bench, Mumbai Before Shri Jason P. Boaz, Accountant Member and Shri Sandeep Gosain, Judicial Member ITA No. 4257/Mum/2014 (Assessment Year: 1995-96) Vallabhnagar Co-operative Income Tax Officer-21(2)(4) Housing Society Ltd. 5th Cloor, C-10, Pratyaksha 51, NS. Road No. 11 Vs. Kar Bhavan, Bandra-Kurla Jai Hind Club, JVPD Scheme Complex, Bandra (E) Ville Parle (W), Mumbai 400056 Mumbai 400050 PAN - AAAAV0288J Appellant Respondent Appellant by: None Vallabhnagar Respondent by: Shri Rajneesh K. Arvind Date of Hearing: 21.09.2016 Date of Pronouncement: 28.09.2016 ORDER Per Jason P. Boaz, A.M. This appeal by assessee is directed against order of CIT(A)- 32, Mumbai dated 25.04.2014 for A.Y. 1995-96. 2. facts of case, briefly, are as under: - 2.1 Coordinate Bench of this Tribunal vide its order in ITA No. 7168/Mum/2008 dated 25.11.2011 restored matter to file of Assessing Officer (AO) for second time for deciding issues involved afresh in accordance with their earlier order dated 17.11.2005, holding as under: - "2. main common issue involved in these appeals relates to determination of head of income under which amount received by assessee as their share of sale consideration of plot of land is chargeable to tax in their hand and same is raised in ground No.1 of ITA No.7168/Mum/2008 and in solitary ground raised in ITA Nos.6369/Mum/2009, 5863 & 5864/Mum/2008. 3. assessee in present case are cooperative housing societies incorporated in year 1947 for providing housing facilities in 2 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. Vileparle area. These four societies alongwith other 10 cooperative housing societies acquired land to develop residential colonies in Vileparle area. said plots were allotted to societies by then Government of Bombay Province. In addition, certain plots marked for amenities and public utilities were also given to these 14 cooperative housing societies with specified share therein. These plots marked for amenities and public utilities which were jointly owned by 14 societies were sold in year under consideration and their share of sale consideration was offered by societies to tax under head "Capital Gains". Keeping in view object of cooperative housing societies of carrying on trade of buying and selling as well as developing land as envisaged in byelaws, AO held that sale consideration received by societies constituted their business income and accordingly their respective share was brought to tax by him in their hands as business income. On appeal, learned CIT(Appeals) confirmed decision of Assessing Officer. matter thereafter was carried before Tribunal in appeals filed by assessee societies in present case and Tribunal vide its order dated 17th Nov., 2005 passed in ITA No.4241/Mum/ 2000 and others restored issue to file of AO to decide same afresh after taking into consideration final decision rendered in case of other cooperative housing societies. During course of set aside proceedings, assesee could not furnish any details about final decision rendered in case of other cooperative housing societies which had received similar amount against sale of plot jointly owned. There was also no response from other cooperative housing societies to notices issued u/s. 133(6). AO, therefore, brought amount of sale consideration of plot to tax in hands of assessee societies again under head "Profits & Gains of business or profession". On appeal, learned CIT(Appeals) upheld action of AO on this issue relying mainly on orders of his predecessor passed assessee's case in first round of litigation. Aggrieved by order of learned CIT(Appeals), assessees have preferred these appeals before Tribunal. 4. We have heard arguments of both sides and also perused relevant material on record. It is observed that amount of similar nature was received by 14 cooperative housing societies including four assessee societies in present case on account of sale consideration of plot of land jointly owned by them. When issue relating to head of income under which said mount was chargeable to tax had come up for consideration in case of assessee before Tribunal in first round, Tribunal found it relevant to ascertain as to what had happened in cases of other societies. None of parties appearing before Tribunal, however, could furnish relevant details in this regard. issue, therefore, was restored by Tribunal to file of AO for deciding same afresh after taking into consideration final decision rendered on similar issue in case of other cooperative housing 3 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. societies. It appears from orders of authorities below that direction of Tribunal, however, has not been complied with and issue has been decided without complying with direction of Tribunal. At time of hearing before us, learned counsel for f assessee has submitted that although assessee in present case have details about exact address of remaining cooperative housing societies, they are not in position to enforce their attendance before AO or their compliance to notices issued by AO u/s. 133(6). In our opinion, if these details are furnished by assessee to AO, latter is sufficiently empowered to enforce attendance of other cooperative housing societies or necessary compliance on their part so as to decide issue as per direction given by Tribunal in first round vide his order dated 17th Nov., 2005. We, therefore, restore this issue once again to file of AO for deciding same fresh as per direction given by Tribunal vide its order dated 17th Nov., 2005. assessees are directed to furnish addresses of other cooperative housing societies to AO who shall enforce their compliance in order to decide this issue as per direction given by Tribunal. 2.2 Pursuant to order of Coordinate Bench dated 25.11.2011, AO accordingly issued notices under section 142(1) of Income Tax Act, 1961 (in short 'the Act') dated 02.08.2012, 03.09.2012 and 23.11.2012 calling upon assessee to file details in matter. After considering submissions put forth by assessee, extracted at para 4 on page 4 to 8 of order of assessment; AO observed that assessee could not provide any new information and that submissions now put forth were found to be similar to what it had put forward in earlier assessment proceedings before AO, and in appeal before learned CIT(A) and Tribunal. AO, therefore, vide letter dated 14.12.2012 required assessee to summit detailed explanation with regard to facts found in agreement dated 26.04.1960 between Bombay Housing Board and each of 14 Cooperative Societies. Notices were also issued under section 133(6) to all other 13 Cooperative Societies requiring them to provide details of number of plots with specification such as, plot number, area in sq. Yards, etc. allotted by Bombay Housing Board to 14 Cooperative Societies, and elicited responses from only six Cooperative Societies, whose cases were also remanded back to file of AO by Coordinate Bench of this Tribunal. AO noted that these 4 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. six Cooperative Societies could not furnish material evidence/proof of plots allotted to each of 14 Cooperative Societies which could specify area allotted to them to claim ownership right on leasehold land given to them by Bombay Housing Board in 1960. From Schedule-I, AO observed that 7,07,036 sq. yards given, ascertainable in Schedule-I, under head Public Amenity which includes play ground, recreation ground, shops, public building, municipal office, Police station, fire bridge, post office, Bank, etc. From Schedule-II, it was seen that area allotted was 8,15,467 sq. yards which includes play ground, secondary school and primary school for boys and girls, ladies club, hospital, shops and proposed widening of roads of 100 ft. and 60 ft. 2.3 According to AO, main issue involved in case was that assessee had received its amount of share on sale of common plot which was income chargeable to tax under head Profits and Gains of Business and not on capital account as claimed by assessee. Since assessee could not furnish required details such as actual plot number, amount received from sale of plot No. 29 could not be ascertained as to whether it is independent plot forming part of 53 plots allotted to 14 Cooperative Societies; how plot No. 29 was derived/ allotted from total area of land allotted by Bombay Housing Society in 1960; whether plot sold was part of land allotted for public amenities and public utilities, residential facilities, etc., AO treated amount received by assessee on sale of its share of excess land available with these Cooperative Societies as Business Income being adventure in nature of trade and accordingly brought profit on sale thereof of `20,24,000/- arising to assessee to tax in assessee s hands as business profits as against LTCG admitted thereon by assessee. In addition thereto, AO brought to tax in assessee s hands amount of `5,79,725/- received by assessee from members as transfer fees . assessment was accordingly concluded under section 143(3) r.w.s. 253 of Act vide order dated 19.03.013 wherein assessee s income was determined at `39,87,140/-. 5 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. 3. Aggrieved by order of assessment for A.Y. 1995-96 dated 19.03.2013, assessee preferred appeal before CIT(A)-32, Mumbai. learned CIT(A) disposed off this appeal vide order dated 23.04.2013 allowing assessee partial relief. 4. appeal in this case was fixed on number of occasions. On these occasions either none appeared on behalf of assessee or adjournments sought were granted on request of learned A.R. for assessee. On 21.09.2016, when case was called for hearing, neither was anyone present for and on behalf of assessee nor was any adjournment sought on its behalf. learned D.R. for Revenue, however, was present and ready to argue case. In these circumstances, we are of opinion that assessee is not interested in pursuing this appeal seriously and we therefore proceed to dispose off same with assistance of learned D.R. and material on record. 5. In this appeal, assessee has raised following grounds: - 1. Learned Commissioner of Income Tax (Appeals) erred in confirming Order u/s 143(3) r.w.s. 253 of I.T. Act, 1961 of Assessing Officer charging to tax as Business Income, capital receipt of Rs.20,24,000/- received as assessee s share on sale of common plot of land. 2. Learned Commissioner of Income Tax (Appeals) erred in confirming Order u/s 143(3) r.w.s. 253 of I.T. Act, 1961 of Assessing Officer charging to tax contribution of Rs.5,79,725/- received from members, incidental on sale of Plot ( Transfer Fees ) which was exempt on Principle of Mutuality. 3. assessee craves leave to add, alter or amend Grounds of Appeal and submit detailed statement of Facts and Case Laws relied upon at time of hearing. 6. Ground No. 1: 6.1 According to learned D.R. for Revenue, learned CIT(A) had considered in detail submissions put forth by assessee in respect of issue at ground No. 1 which have been summarized at para 3.3(I) to (x) of impugned order. learned D.R. submits that in his decision at para 3.4 of impugned order, learned CIT(A) after considering assessee s submissions and AO s views at para 4.4(i) to (v), has come to 6 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. conclusion that in its submissions assessee has not been able to rebut factual findings rendered by AO at para 8.2 of his order which had been summarized at para 4.4(i) to (iv) of impugned order. It is further submitted that learned CIT(A) upheld AO s order on this issue as he was of view that assessee was not able to produce any material evidence to controvert AO s view that profit on sale of land of assessee and 13 other Cooperative Societies allotted to them by Bombay Housing Board in 1960 was to be treated as business profit rather than capital gain as contended by assessee. 6.2.1 We have heard learned D.R. for Revenue and perused and carefully considered material on record. issue for consideration before us is whether assessee s share of profit in sale of land in year under consideration, allotted to it alongwith 13 other Cooperative Societies by Bombay Housing Board in 1960, is to be brought to tax as Business income as held by authorities below or as capital gains as claimed by assessee. facts of matter as emanate from record, observation/findings of AO, submissions of assessee before learned CIT(A) and learned CIT(A) s decision thereon at paras 3.2 and 3.3 of impugned order are as extracted hereunder: - 3.2 facts of case, observation / findings of AO in this regard in assessment order are summarized as under: - i. Hon'ble ITAT, 'F' Bench, Mumbai vide their order in ITA No,5864/Mum/2008 dated 25.11.2011 set aside issue to file of AO. ii. This issue related to sale of common plot of land no. 29 acquired in 1950 jointly by 14 co-op. societies of JVPD Scheme. portion of sale consideration pertaining to appellant was Rs. 23,00,000/-. appellant in its return of income had offered consequent gains as LTCG whereas sale was treated by AO as adventure in nature of trade and therefore entire sale consideration was added as business income. iii. In their order, Hon'ble ITAT concurring to their earlier decision vide their order dated 17.11.2005 have directed AO to decide issue afresh as per directions given in said order dated 17.11.2005. 7 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. iv. AO accordingly issued notice u/s 142(1) dated 02.08.2012 fixing date of hearing on 13.08.2012. Further notice u/s 142(1) dated 03.09.2012 and 23.11.2012 were also issued. AO observed that assessee could not provide any new information and submission made by assessee was found to be what was made during earlier assessment proceedings before AO as well as before CIT(A) and Hon'ble ITAT. reply submitted by assessee has been reproduced by AO at para 4, page 4 to 8 of assessment order. v. AO observed that as submission made by assessee was not as per requirement, therefore assessee was required to submit detailed explanation with regard to facts found in agreement dated 26.4.1960 between Bombay Housing Board and each of 14 Co-operative societies, vide AO's letter dated 14.12.2012, contents of which have been reproduced by AO at para 5 page 8 & 9 of assessment order. vi. Further notices u/s.133(6) were issued to all 13 co-operative societies who were required to provide number of plots with specification, plot No., area in sq. yards allotted by Bombay Housing Board to 14 Co-operative societies. AO observed that out of this, only 6 co-operative societies have responded, out of which, three were assessed to tax with AO with similar issue. AO observed that in all responded cases matter has been remanded back to file of AO by Hon'b1e ITAT as facts in these cases were also similar to that of assessee. Names of such cases were listed as under: a. Vithalngar Co-op Hsg. Society Ltd. ITO 21(2)(4) b. Vallabhnagar Co-op Hsg. Society Ltd. ITO 21(2)(4) c. Nutanlaxmi Co-op Hsg. Society Ltd. ITO 21(1)(3) d. Navyug Co-op Hsg. Society Ltd. e. Swastik Co-op Hsg. Society Ltd. f. Azad Nagar Co-op Hsg. Society Ltd. vii. AO observed that above six societies could not specifically give proof of plot allotted to each of 14 co-operative societies or any document/evidence which could specify area allotted to them to claim ownership right on lease hold land given by Bombay Housing Board in year 1960. He further observed that Board has allotted total 6,07,036 sq.yds. which could be observed from schedule I under head Pubic Amenity which includes Play Ground, Public Hall, Recreation Ground, Shop and public building, municipal offie, police station, fire brigade, post office bank and shops. Under schedule II, for public utility, area allotted was 815,467 sq.yds which include play ground, secondary school for boys and girls, ladies club, primary school 8 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. for boys and girls, club, hospital, shop and proposed widening of roads of 100 fts. and 60 fts. viii. AO observed that main issue involved in this case was that assessee society has received amount of share on sale of common plot, as income chargeable to taxes under head Profit and Gains of Business. ix. AO further observed that similar issue in case of M/s. Vithalnagar Co-op Hsg. Ltd. had come up for assessment year 1995-96 and CIT(A) vide order in No.CIT(A)XXX/DC/ Spl.Rg.46/IT.17/97-98 dated 25.5.1999 held that' activities undertaken by assessee were similar to business and amount received from sale were of plot of land were considered as business income. AO further reproduced relevant portion at page no. 11 of assessment order. x. AO further observed that as assessee could not give area and actual plot Sr. No., amount received from sale of plot No.29 could not be ascertained whether it is independent plot forming part of 14 co-operative societies and how plot No.29 was derived / allotted from total area of land acquired from Bombay Housing Board in year 1960. He further observed that assessee has failed to prove piece of land sold not being part of land considered for public amenities and public utilities. Further AO observed that assessee could not prove, as per board allotments of plots to member (society), public utilities and amenities were created out of total land given to them. He observed that co-operative formation was created with aim for construction of residential house with other amenities. xi. AO further observed that in this case approximately 53 plots were allotted to various co-operative societies at free of cost or at nominal price by Bombay Housing Board for common facilities and general utilities which is stated in assessee's own case in order passed by CIT(A)XXI, Mumbai vide order No.CIT(A) XXI/21(2)(4) /IT-350/06-07. xii. Accordingly AO treated amount received on sale of excess land available with societies as "Business Income", even though it was not activity of co-operative housing society. Accordingly profit of Rs.23,00,000/- was taxed under head income from business. xiii. It is against this action of AO that appellant has raised aforesaid two grounds of appeal. 3.3 submissions of appellant are summarized as under :- i. It was submitted that appellant is amongst 14 co-op. housing societies which were incorporated in and around 1947 for providing housing facilities to middle class persons in suburb of Vile Parle in Mumbai. Thereupon lands were acquired by Govt. 9 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. of Bombay and conveyed to Bombay Housing Board. In 1960 Bombay Housing Board earmarked land conveyed by Govt. of Bombay State for residential purposes and for common members. ii. Certain plo6ts were marked as amenities and utility plots which were conveyed jointly to fourteen societies and each of fourteen societies held specified shares in each of common amenities and utility plots, it was submitted that entire cost of land (including that held for common amenities) were paid by societies and ultimately borne by members in proportion to their respective size of plot. iii. It was submitted that plots held for common amenities were from time to time allotted by 14 societies to various parties for specified purposes and in most cases for very nominal sums or token annual lease of Rs. 1/- per annum. iv. It was submitted that area comprising various amenity plots and purpose thereof was also specified by Government as part of conveyance of land to societies and hence said societies did not have any discretion in respect of area of said amenity plots or purpose and had to dispose them for user specified or use them for said purpose themselves. Thus where plot is disposed for user which is directed by Government while conveying land, same cannot tantamount to business. v. It was submitted that assessee together with other 13 Co- op. societies, sold its rights in common plot on 'AS IS WHERE IS BASIS' during A.Y. 199596 in manner and under certain compelling circumstances, inter-alia due to encroachment etc. vi. It was further submitted that acquisition of land has taken place only once, there being number of plots for common amenities, same have been given out to deserving institutions as and when requests were made and found suitable and it was not case that same plot was being acquired and sold time and again. It was submitted that sometimes certain amounts are charged from user for purposes like cinema, petrol pump from where user will be carrying on business but fact that plot has not been given free of cost by itself cannot constitute same as business activity. vii. It was submitted that in judicial decisions it has been held that sale of item at prevailing market price or earning of surplus over cost of asset on sale thereof is not indicative of whether same was held as capital asset or stock-in-trade. However shares cannot be treated as stock-in- trade simply because there was appreciation in value of shares. 10 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. viii. assessee further relying on decision in case of Venkatswami Naidu & Co, v. CIT 35 ITR 594 (SC) contended that other things being neutral, ownership of land is prima facie presumed to be on capital account unless there are strong circumstances indicating to contrary. Therefore onus is on revenue to establish that profit earned in transaction is within taxing provisions. ix. It was submitted that in A.Y. 2004-05 where assessee society alongwith 13 other Co-op. societies had sold plot of land to promoters of proposed co-op. housing society to be formed of Maharashtra Cadre of Indian Police Services, CIT(A) had treated transaction under head capital gains and since there was no change in nature of transaction undertaken during 1995-96 and 2004-05 it was requested to treat transaction in A.Y. 1995-96 as capital gains as treated and offered by assessee. x. assessee in alternative and without prejudice submitted that what should be added to total income is Rs. 7,28,000/- since assessee had already offered Rs. 15,72,000/- as capital gains at time of filing return of income. 3.4 I have considered facts of case, oral contentions and written submissions of appellant as against observations / findings AO in assessment order. contentions and submissions of appellant are being discussed and decided as under:- i. It is clear from directions setting aside issue to file of AO that Hon'ble. ITAT required AO to decide issue afresh as per directions given by Tribunal vide their order dated 17.11.2005. ii. During course of assessment proceedings, AO required appellant to furnish details. AO observed that such details furnished by appellant were similar to what was made during earlier assessment proceedings before AO as well as before CIT(A) and Hon'ble ITAT. names and addresses of 11 co-op. societies were submitted to AO. AO at para 5 of assessment order has clearly observed that submission was not as per requirement and therefore assessee was required to submit detailed explanation with regard to facts found in agreement dated 26.04.1960 between Bombay Housing Board and each of 14 co-op. societies. iii. AO also issued notices u/s 133(6) to all 13 co-operative societies who were required to provide number of plots with specification, plot No., area in sq. yards allotted by Bombay Housing Board to 14 Co-operative societies. However only 6 co- operative societies have responded, out of which, three were assessed to tax in charge of AO himself with similar issue. AO has observed that in all cases where response was 11 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. received matter has been remanded back to file of AO by Hon'ble ITAT as facts in these cases were also similar to that of assessee. iv. AO has further observed that six societies who responded could not specifically give proof of plot allotted to each of 14 cooperative societies or any document/ evidence which could specify area allotted to them to claim ownership right on lease hold land given by Bombay Housing Board in year 1960. AO further mentioned total area of land allotted by Board for public amenities and public utility as per Schedule I and II. v. AO has further mentioned that as assessee could not give area and actual plot Sr. No., amount received from sale of plot No.29 could not be ascertained whether it is independent plot forming part of 14 co-operative societies and how plot No.29 was derived / allotted from total area of and acquired from Bombay Housing Board in year 1960. AO has further observed that assessee has failed to prove piece of land sold not being part of land considered for public amenities and public utilities. He further has observed that assessee could not prove, as per board allotments of plots to member (society), public utilities and amenities were created out of total land given to them. He has further observed that co-operative formation was created with aim for construction of residential house with other amenities and approximately 53 plots were allotted to various co-operative societies at free of cost or at nominal price by Bombay Housing Board for common facilities and general utilities. Under such facts and circumstances AO treated receipt of money from transfer of plot by assessee as business income. vi. In submission made, appellant has not been able to rebut factual observation given by AO in para 8.2 of, his order and. summarized here in above. vii. It is further seen from records available that in case of Jai Hind CHS Ltd. similar receipt in A.Y. 1995-96 was treated as business income as against income from capital gains offered by society. In similar fact, in case of Hatkesh CHS Ltd. receipt from transfer of plot in A.Y. 1995-96 was treated as business profit in first appellate level. viii. From above facts it is clear that prominent and only view available before AO at time of making decision was that such profit has been treated as business profit and not capital gains in case of similarly placed societies. Ld. AR of appellant has not been able to produce any contrary view taken by AO of other co-op. societies similarly placed either during course of assessment proceedings or during instant proceedings. Ld. AR rather than dealing with basic 12 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. question has contended that consequent gain arisen from sale of plot should be treated as capital gains. ix. No new facts have been brought to my knowledge to cause departure from findings of my Ld. Predecessor in this case when he examined issue in detail in first round of appellate proceedings. This is also in consonance of findings of AO in treating receipts as business receipts in A.Y. 95-96 and appellant has not been able to give .any contrary decision in case of any of remaining 13 co-op. societies. x. appellant has referred to decision in first appeal for A.Y. 2004-05 in case of assessee. In this regard it is stated that in that year issue was regarding allowance of cost of acquisition of plot and not of capital gain v/s business income. xi. Accordingly action of AO in treating gain on sale of land is treated as business income of society and is therefore upheld. Accordingly Ground No. 1 is dismissed. 6.2.2 From careful appreciation of assessee s submissions before authorities below, AO s views and learned CIT(A) s views and findings on issue before us, it is seen that, as submitted by learned D.R. at para 5.1 (supra), inspite of AO allowing assessee adequate opportunity and requiring it to furnish specific details in respect of all 14 cooperative societies who were allotted land by Bombay Housing Board vide agreement dated 26.04.1960, such as total area allotted to them to claim leasehold rights on land, number of plots allotted with specification, plot numbers, area in sq. yards, etc. assessee was not able to furnish same. Notices issued under section 133(6) of Act by AO to 14 cooperative societies involved also could not elicit any suitable response from most of them. It is seen that even six societies which responded could not specifically give proof of plot allotted to each of 14 cooperative societies or documents/evidence which could specify area allotted to them or that public utilities and public amenities as per Schedule-I and II were created by them thereon. In this factual matrix case, we are of considered view and agree with findings of learned CIT(A) that as per submissions put forth by it, assessee has not been able to controvert that factual findings of AO in leading him to treat receipt of money by assessee from transfer of plot as business income. We, therefore, uphold findings of 13 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. authorities below and consequently dismiss ground No. 1 of assessee s appeal. 7. Ground No. 2. 7.1 In this ground, assessee had challenged learned CIT(A) s order in upholding AO s action in bringing to tax as business income amount of `5,79,725/- received from members as transfer fees incidental to sale of plot which is against principle of mutuality. 7.2 According to learned D.R. for Revenue, that amount of `5,79,725/- was received by assessee from transfer of structure by Shri Prakesh R. Tolat and Gautam Tolat on plot No. 26 to Mehta & Shah is not disputed. learned A.R. for assessee submitted that learned CIT(A) was of view that since new owners, Mehta & Shah were enrolled as nominal members with no voting rights or any rights or interest in property of assessee society except for flat purchased and occupied by them, this was not in consonance with principles of mutuality. In coming to this finding placed reliance on decision of Coordinate Bench of this Tribunal in case of Hatkesh Co-operative Housing Society Ltd. 9ITA No. 479 to 500/Mum/2011) which had considered judicial pronouncements cited by assessee and consequently upheld AO s action in bringing transfer fees received by society to tax in its hands. 6.3.1 We have heard learned D.R. for Revenue and perused and carefully considered material on record. facts of case, observations/findings or AO and learned CIT(A) as laid out at paras 4.2 to 4.4 of impugned order are extracted hereunder: - 4.2 facts of case, observations/findings of Assessing Officer are summarized as under: - i. society has received transfer fees of Rs.5,02,000/- for giving No objection certificate. ii. Shri Prakash R Tolat and Shri Gautham R Tolat being owners of original plot No.26 sold structure standing on Plot No.26 to Mehta & Shah. In turn Mr. Shah paid transfer fees of Rs.2,50,000/- for getting consent from societies and also paid donation of Rs. 10,00,000/-. 14 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. iii. original owner Mr. blat and brothers filed suit in co- operative court for allotting permission of FSI to Mehta & Shah. As outcome of court proceeding was not brought before AO, transfer fees received from Mehta was treated as business income of society. iv. Accordingly transfer fee of Rs.5,02,000/- received by society was taxed in hands of assessee. However it is seen that in computation of assessment order amount added s Rs. 2,50,000/- only. v. It is against this action of AO that appellant has raised aforesaid ground of appeal. 4.3 submissions of appellant are summarized as under :- i. It was submitted that Ld. AO has treated Transfer Fees received of Rs. 2,50,000/- from incoming member as business income as against claimed as exempt on grounds of mutuality by appellant. ii. appellant relied on order of ITAT, Mumbai Bench in case of Suvarna-nagar CHS Ltd. for A.Y. 2002-03 wherein amount of transfer fee received was held to be exempt on basis of principles of mutuality. iii. assessee further relied upon decision of Hon'ble Bombay High Court in case of Sind Co-op. Housing Society vs. ITO, 317 ITR 147 (Born) and in case of Mittal Court Premises Co- op. Society vs. ITO 320 ITR 414 (Bom). 4.4 I have considered facts of case, oral contentions and written submissions of appellant as against observations / findings of AO in assessment order. contentions and submissions of appellant are being discussed and decided as under:- i. It is fact of case that question amount has been received by appellant society from transfer of structure by Shri Prakash R. Tolat and Shri Gautham R. Tolat on plot no. 26 to Mr. Mehta & Shah. This amount has been added by AO as transfer fee. ii. In these set of facts it is clear that Shri Prakash R Tolat and Shri Gautham R Tolat being owners of original plot No.26 sold structure standing on Plot No.26 to Mehta & Shah. In turn Mr. Shah paid transfer fees of Rs.2,50,000/- for getting consent from societies and also paid donation of Rs.10,00,000/-. original owner Mr. Tolat and brothers filed suit in co- operative court for allotting permission of FSI to Mehta & Shah. As outcome of court proceeding was not brought before AO and transfer fees received from Mehta was treated as business income of society. Accordingly transfer fee received by society was taxed in hands of assessee. 15 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. iii. new owners of structure viz. Mr. Mehta & Shah would have been enrolled as nominal members of society. nominal members who are recognized, as such, in respect of occupancy and ownership of flat. sold to them, have no voting rights and they have no rights or interest on property of society except flat purchased and occupied by them. This aspect clearly is in breach of concept of mutuality in so far as nominal members are discriminated against members. It is also seen in facts discussed here in above that money which is charged from nominal members are used for giving benefits to members. This also lacks in concept of mutual concern. iv. It is further stated that money which is collected by society from members as well as nominal members must be getting deposited in fixed deposits or saving deposit. interest earned thereon is normally used for administrative expenses of society whereby benefits are given to members and such benefits are also enjoyed by nominal members which have no voting rights, interest or rights of property of society including plot on which flat purchased by nominal member exists. This aspect also goes against concept and principles of mutuality. v. Hon'ble ITAT, H-Bench, Mumbai in their order dated 04.09.20 13 in case of Hatkesh Co-op. Housing Society Ltd. vs. ACIT 21(1), Mumbai in ITA No. 494-500/Mum/2011 for A.Y. 1996-97 and 2000-01 to 2002-03, 2006-07 & 2007-08 after detailed discussion, on facts similar to those of appellant, have held that concerned society does not represent mutual concern and to such activities concept of mutuality cannot be applied. In their detailed order Hon'ble ITAT have considered various case laws including ones relied upon by appellant. vi. appellant has relied upon decision of Hon'ble Mumbai ITAT in case of Suvarna Nagar CHS Ltd. for A.Y. 2002-03. Such order was passed by E.-Bench of Hon'ble Mumbai ITAT on 11.04.2014. In this regard it is stated that Hon'ble Mumbai ITAT in case of Hatkesh CHS Ltd. have in detail, discussed about principles of mutuality and in this decision decisions of Bombay High Court relied upon by assessee have been referred to and considered. In order of Suvarnanagar CHS Ltd. for A.Y. 2002-03 dated 11.04.2014, Hon'ble ITAT did not have occasion to consider decision in case of Hatkesh CHS Ltd. (Supra). Vii In view of facts of case, discussion here in above, further relying on above decision of Hon'ble ITAT in case of Hatkesh Co-op. Housing Society Ltd. vs. ACIT 21(1) (Supra) and respectfully following same, contentions and submissions 16 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. made by appellant are not found to be acceptable and are therefore rejected. 7.3.2 From discussion of learned CIT(A) in impugned order on this issue (supra), it is not disputed that amount of `5,79,725/- was received by assessee society from transaction of structure on plot No. 26 by Prakash R. Tolat and Gautam R. Tolat to Mehta & Shah. This fact was not brought to notice of AO. On detection thereof, AO brought said transfer fee received by assessee to tax in assessee s hands. In respect of assessee s claim that said transfer fee received by it was not exigible to tax based on concept of mutuality, we find that learned CIT(A) on examination of facts on issue rightly concluded that concept of mutuality did not operate in this transaction. Mehta & Shah who paid said transfer fee were only nominal members of assessee society and except for structure purchased and occupied by them, had no voting rights or interest in property of society. Following decision of Coordinate Bench in case Hatkesh Co-op Housing Society Ltd. (supra) wherein Coordinate Bench in detailed order, after considering judicial pronouncements relied on by assessee, which were on similar facts as those of case on hand, we also hold that assessee does not represent mutual concerns and to such activities concept of mutuality cannot be applied. In this factual and legal matrix of case, we concur with findings of authorities below that said transfer fee received by assessee was to be taxed in its hands. Consequently, assessee s ground at S. No. 2 is dismissed. 8. In result, assessee s appeal for A.Y. 1995-96-10 is dismissed. Order pronounced in open court on 28th September, 2016. Sd/- Sd/- (Sandeep Gosain) (Jason P. Boaz) Judicial Member Accountant Member Mumbai, Dated: 28th September, 2016 17 ITA No. 4257/Mum/2014 Vallabhnagar Co-operative Housing Society Ltd. Copy to: 1. Appellant 2. Respondent 3. CIT(A) -32, Mumbai 4. CIT - 21, Mumbai 5. DR, F Bench, ITAT, Mumbai By Order //True Copy// Assistant Registrar ITAT, Mumbai Benches, Mumbai n.p. Vallabhnagar Co-operative Housing Society Ltd. v. Income tax officer-21(2)(4), Mumbai