By Accommodation Times Bureau
The residents of six societies of Bandra-East middle income group (MIG) housing are engaged in a battle with the income tax (I-T) department. Each of the six societies received a principal sum of Rs 30-200 crore from the builder. Every flat owner, besides getting a bigger apartment for free, got compensation between Rs 50 lakh and Rs 1 crore. This prompted the I-T department to issue notices to individual flat owners and their housing societies.
The Bandra MIG redevelopment project is the Mumbai’s biggest project.
“This is double taxation,” said a resident’s representative,that’s why the societies have now challenged the department and managed to obtain a favourable I-T tribunal decision in one case and also a high court stay, in another.
The resident’s contention is that tax cannot be levied on housing societies since individual members have already settled their dues with the I-T department. In one case, a demand of Rs 73 crore, including interest and penalty, was made of the MIG Group 4 housing society. Its 168 members, rehabilitated in a new tower, were also paid Rs 62-80 lakh each by the builder Rustomjee as part of the redevelopment package.
“We have challenged the notice before the commissioner of I-T (appeals) on the grounds that the society did not receive the amounts. The society was only the custodian, which negotiated the agreement on behalf of the members,” said Jimmy Francis, a member.
The I-T department has also frozen the bank accounts of one society (Model MIG). A resident said this has made it difficult for the society to meet everyday expenses.
Another society, MIG Group 3, received a tax notice of Rs 39 crore. The society approached the Bombay high court, which stayed the notice in December.
Radius Developers, which is redeveloping MIG Group 1, is believed to have paid a corpus of Rs 200 crore to its 196 members. Each member received almost Rs 1 crore. The society has received a tax notice of Rs 142 crore