9911796707
TMI Blog1982 (5) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000 made up of as follows : "a. Rs. 45,625 : value of shares and deposits paid by the vendor to the said society which the said society will be requested to transfer to the name of the purchasers ; b. Rs. 15,375 : agreed value or fittings, fixtures and furnitures and general expenses ; and c. Rs. 1,89,000 : compensation to the vendor for relinquishing her rights in the said flat No. 4 and the said garage No. 4." By another agreement dated February 1974, the assessee agreed to sell flat No. 5 in favour of Mr. and Mrs. Nasiruddin H. Jhaveri for a consideration of Rs. 2,10,000 which is made up as follows : "a. Rs. 43,625 : value of share and deposits paid by the vendor to the said society which the said society will be requested to transfer to the name of the purchasers ; b. Rs. 7,375 : agreed value of fittings and fixtures and general expenses; and c. Rs. 1,50,000 : compensation to the vendor for relinquishing her right in the flat No. 5." 3. By virtue of the transfer effected by the assessee, as indicated above, the assessee became liable to pay tax on capital gain. We are not concerned with various contentions raised by the assessee in regard to the levy of capital gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and Transfer) Act, 1963 (which is hereinafter called as "the Maharashtra Act" for convenience). From a conspectus of various provisions mentioned in the above enactments coupled with the relevant provisions of the Income-tax Act, such as, section 2(14), defining "capital asset", section 2(47), defining "transfer", section 45, dealing with levy of tax on capital gains and finally section 80T, his main argument, as we have understood, is that the assessee, being a member of the co-operative society, is entitled to occupy a flat or flats and this right to occupy is a right in land and building as contemplated under section 80T(b)(i). He particularly drew support from the various observations made by the Supreme Court in the case of Ramesh Himmatlal Shah v. Harsukh Jadhavji Joshi AIR 1975 SC 1470. Shri Joshi also invited our attention to the provisions of the General Clauses Act defining "immovable property" and the Commentary of Mulla's Transfer of Property Act, 6th edn., at pages 49 and 50, which deals with the concept of a benefit or interest arising out of land, in order to show that the same concept should be applied in construing the expression "rights" in land and building use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arat High Court in the case of Artex Manufacturing Co. v. CIT [1981] 131 ITR 559. The learned counsel also brought to our notice a decision of the Bombay High Court in the case of Contessa Knitwear v. Udyog Mandir Co-operative Housing Society [1980] Bom. CR 493. In the last, Shri Patil referred to a decision of the Gujarat High Court in the case of CIT v. Premanand Industrial Co-operative Service Society Ltd. [1980] 124 ITR 772, though we will presently show that this decision fully supports the revenue's stand. 8. Before we deal with the above contentions of both the parties, it is useful to refer to the decision of the Supreme Court in the case of Ramesh Himmatlal Shah, inasmuch as, it deals with a housing co-operative society which is identical with the co-operative housing society of which the assessee is a member. The Supreme Court examined the various provisions of the Co-operative Societies Act and the bye-laws (the bye-laws of housing co-operative society of which the assessee is a member are exactly similar to those bye-laws dealt with by the Supreme Court). The Supreme Court reviewed those provisions for deciding the issue as to whether the right of a member of a co-oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al provisions to the contrary, it will not be in public interest nor in the interest of commerce to impose a ban on saleability of these flats by a tortuous process of reasoning. The prohibition, if intended by the Legislature, must be in express terms. We have failed to find one." 9. It is clear from the aforesaid observations of the Supreme Court that it may be totally unnecessary to deal with the contentions raised by both the sides in greater detail, since, in our opinion, the observations of the Supreme Court clinch the issue in favour of the revenue. The Supreme Court brought out a distinction between the right of a member of the society to hold shares and the right to occupy a flat. The right to occupy a flat is treated as a distinct right, though it is inextricably connected with the right to hold shares. The right to occupy naturally flows from the right to hold shares, though the former is a distinct and separate right recognised in law. According to the decision of the Supreme Court, such a right is clearly alienable and heritable. That right is clearly a right arising out of the flat which is nothing but a building. Prima facie, therefore, the right to occupy is a righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by applying to the co-operative society. Even when the shares are only transferred what is in substance transferred is the right to occupy. In a case of a co-operative housing society when a member transfers his shares to another, it automatically means that the right to occupy, which is a substantive right, is transferred. Otherwise there is no meaning in transferring the shares only. Transfer of shares in the context of housing co-operative society is only a matter involving a procedural formality, while the substance of the transaction is that of a transfer of a right to occupy a flat or flats. It is, therefore, clear that even if there is only transfer of shares, it inextricably involves a transfer of a right to occupy and such a right is definitely in relation to or in respect of land and building and as such coming under section 80T(b)(i). In this view of the matter, the principles regarding transfer of shares in a company or interest in a partnership firm have no relevance. 12. The decision of the Gujarat High Court in the case of Premanand Industrial Co-operative Service Society, referred to by Shri Patil, undoubtedly helps the case of the revenue and fully supports the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
