TMI Blog2010 (7) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... of income on 27.10.2005 declaring total income of Rs. Nil. The return was processed under section 143(1) but subsequently notice under section 148 was issued in response to which the assessee stated that the return filed originally may be considered as having been filed also in response to the said notice. In the course of reassessment proceedings, the Assessing Officer noticed from the income and expenditure account and the computation of the income that during the year the assessee had collected share transfer fees of ₹ 62,20,000/- nominee occupancy charges and repairs of ₹ 3,00,000/-, security deposits (non-refundable) of ₹ 5,85,000/- besides interest and dividend of ₹ 11,95,577/-. The assessee had claimed exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that it is an incorporated company does not affect the applicability of the principle. He held that so long as the contributors to the common fund are also entitled to participate in the surplus, the principle of mutuality will apply and the particular form which the association takes is not relevant. As regards the share transfer fee, he noticed that according to the judgement of the Hon ble Bombay High Court in the case of Sind Co-operative Housing Society (in ITA No. 1063 of 2004), the transfer fee has to be collected as per the articles of association. He accordingly asked the assessee to clarify whether the articles of association permitted the assessee to collect transfer fees from intending purchasers. The assessee produced the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A), the tenants who reimburse the nominee occupancy charges to their landlords who are members of the assessee company indirectly become contributors to the common fund thus affecting the principle of mutuality. In this view of the matter, he upheld the assessment of the nominee occupancy charges. 6. As regards the interest of ₹ 11,73,754/- received on account of fixed deposits with bank, ICICI bonds, BEST deposits and on income-tax refund, the assessee relied on the decision of the CIT(A) for the assessment year 2004-05 and also the judgement of the Karnataka High Court in the case of Canara Bank Golden Jubilee Staff Welfare Fund Vs. DCIT., 308 ITR 202 to contend that it is exempt from tax on the principle of mutuality. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal was followed by the Tribunal in the assessment year 2004-05 in its order dated 3rd August, 2009 in ITA No.2991/Mum/2008. In paragraph 7 of this order, the Tribunal referred to its earlier order for the assessment year 1995-96 and observed that earlier the Tribunal had accepted that the principle of mutuality is applicable in the case of the assessee being a company. Thus, we have two orders of the Tribunal in the assessee s own case holding that the principle of mutuality is applicable to the assessee, which is an incorporated company. In the case of CIT Vs. Bankipur Club Ltd., (1997) 226 ITR 97, the Supreme Court referred to Halsbury Laws of England, 4th Edition in which it was observed that if there is complete identity betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in the surplus is preserved, the CIT(A) has rightly exempted the receipt from tax on the principle of mutuality. There is no infirmity in his decision which is upheld and the ground is dismissed. 11. Ground nos. 3 to 5 are really argumentative in nature, the main argument being that the concept of mutuality will not apply to an incorporated company. We have already held that such an argument is not sound having regard to the legal position adumbrated in two orders of the Tribunal in the assessee s own case and in the judgement of the Supreme Court in the case of Bankipur Club Ltd. (supra). 12. Ground no.4 raises the point that the judgement of the Hon ble Bombay High Court in the case of Sind Co-operative Housing Society Ltd. (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciple of mutuality. Respectfully following the judgement, we hold that the CIT(A) was not right in upholding the assessment of the nominee occupancy charges of ₹ 3 lakhs received from the members. The Assessing Officer is directed to exempt the same. The ground is allowed. 16. The second ground relates to the assessment of interest income of ₹ 11,72,061/-. This issue is to be decided in favour of the assessee respectfully following the order of the Tribunal for the assessment year 2004-05(supra). In paragraph 6 of this order, it has been held following the order of the Tribunal in the case of Bombay Gymkhana Ltd. in ITA No.7624/Mum/2007 dated 20th April, 2009 that the interest earned by the mutual association from banks, bond ..... X X X X Extracts X X X X X X X X Extracts X X X X
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