Reassessment : Notice u/s.148 of Income-tax Act, 1961 : A.Ys. 1991-92 and 1993-94 : Assessee Co-operative Housing Society : Notice u/s.148 issued claiming that transfer fee is liable to tax relying on judgment of Bombay High Court in CIT v. The Presidency

I. Unreported :

[Mittal Court Premises Co-operative Society Ltd. v. ITO
(Bom.), W. P. No. 526 of 1996, dated 17-7-2009]

In this case the assessee is a co-operative society of
commercial premises. As provided in the bye-laws the assessee had received
transfer fees from the transferees. On the basis of principles of mutuality
the transfer fees were not offered for tax. The Assessing Officer issued
notice u/s.148 proposing to assess the transfer fees to tax relying on the
judgment of the Bombay High Court in the case of CIT v. The Presidency
Co-operative Housing Society, 216 ITR 321 (Bom.).

On a writ petition challenging the notice u/s.148, the
Bombay High Court quashed the notice and held as under :

“(i) Notices basically have been issued on the ground
that the transfer fees received by the petitioners from incoming members was
assessable to tax considering the judgment of this Court in the case of
CIT v. The Presidency Co-operative Housing Society, 216 ITR 321 (Bom.)

(ii) We have in the judgment delivered today in
Income-tax Appeal No. 931 of 2004 and other connected appeals distinguished
the same on the ground that the issue of mutuality had not at all been in
issue before the learned Bench when it decided the reference. Once we have
held the transfer fee even paid by incoming members is not assessable to tax
applying the doctrine of mutuality, the notice issued would be without
jurisdiction and consequently will have to be set aside.”