Mumbai tribunal deletes ₹18.4 crore redevelopment tax addition against Cumballa Hill housing society

A Cumballa Hill co-operative housing society has won relief from a ₹18.4 crore tax addition linked to its redevelopment arrangement.

The Mumbai Income-tax Appellate Tribunal held that the society acted as a representative of its flat-owning members, rather than as the recipient of redevelopment gains. The tax officer had treated an amount appearing in Annual Information Report records as the society’s long-term capital gain.

The tribunal noted that the development agreement granted development rights while the society retained ownership of the land. The developer separately signed Permanent Alternate Accommodation Agreements with individual members, with the society listed as a confirming party. Schedules to the agreement identified members and the hardship and displacement compensation payable to them.

No sale consideration was credited to the society’s bank account, the tribunal found. A transaction appearing against a society’s PAN alone did not establish that the society had sold an asset or received the money.

The order also referred to Maharashtra’s Section 79A directive, under which housing societies execute redevelopment agreements on members’ behalf. Societies entering redevelopment deals may need clear developer agreements, member-wise payment schedules and bank records if tax queries arise.