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2012 (7) TMI 309 - AT - Income TaxPrinciple of mutuality - assessee is a cooperative society engaged in the construction of flats - Held that:- The assessee has failed to satisfy the basis of mutuality on various grounds which inter-alia included that proper bye laws were not furnished to demonstrate the existence of complete identity between the cooperative society and the members. The affairs of the society were not carried out in the manner as prescribed under the Act. In the absence thereof, it cannot be ascertained as to whether there is complete identity between the members and the assessee. Besides, the provisions about distribution of surplus in the event of dissolution of cooperative society cannot be examined or verified For quantum addition CIT(A) held that AO has erred in adding both credits and debits in the profit & loss account as income of the assessee alongwith the surplus income Officer had not brought anything so as to treat the expenditure as bogus or out of the undisclosed sources, the double additions were deleted. Interest income has been earned by the assessee by deposit of the surplus funds and there is no doubt that the interest income is to be treated as “income from other sources”. No borrowed funds have been used for earning this interest in various years. Dis allowance of expenditure - Held that:- It will be a distorted view to disallow all the expenditure only because the record is seized. Since a fair and reasonable estimate of income has to be made, the reasonable expenditure is to be allowed to the assessee in all these years Claim of exemption u/s 54F - LTCG received by the assessee on acquisition of land from GDA - Held that:- As assessee’s claim of exemption u/s 54 is devoid of merits as the concept of mutuality has not been extended to the assessee besides the constructed houses or the properties of the respective members cannot be deemed to be purchased or construction of the houses belonging to the society - set aside the issue back to the file of the AO to allow the assessee benefit of long term capital gains by indexation of cost as per law
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