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2017 (2) TMI 1497 - AT - Income TaxCapital gain in the hand of members of society - real owner - agreement with a developer for development of said property entered -whether transfer of lease hold was not covered by provisions of section 50C - HELD THAT:- The developer had made payments to the Society as well as to the members and they had offered the amounts, received by them, for taxation. In our opinion, once the members had shown the income received by them in their hands there can - not be any justification for taxing the same in the hands of society. No double taxation and no double deduction is one of the well recognised and fundamental principles of taxation. In our opinion, signing of agreement by the members or society cannot be base for taxing of income. As per the scheme of the Act, income received by any person or income accrued to him has to be taxed. In the case under consideration, income was received by the members and they had offered the same for taxation. We also hold that Society was only the lessee and what was transferred to the developer was development rights not land or building - No authority is required to hold that terms ‘land or building’ ‘or both’ do not include development rights and that in the case before there was transfer of such rights only. In light of the above discussion and respectfully, following in the case of Raj Ratan CHS [2011 (2) TMI 96 - ITAT MUMBAI] we hold that FAA was not justified in taxing the sum in the hands of the assessee, as same was the income of the members of the society. GOA. 2 is decided in favour of the assessee. Addition of receipt towards corpus fund - FAA held that payment by the developer to the society could not be treated as payment towards corpus of the society, that the AO had rightly held that the disputed amount was to be assessed as income from other sources - AR argued that the assessee had received only during the year, that the CIT(A) had wrongly assessed the income under the head income from other sources - HELD THAT:- We find that the FAA had held that ₹ 3. 50 crores only were to be taxed during the year under consideration, that the income was to be taxed under the head income from other sources. It is a fact that society had not given possession of land to the developer during the year under consideration. In our opinion, the money received by the assessee during the year i. e. ₹ 3. 50 crores was to be assessed under the head capital gains, as claimed by the assessee. Fourth Ground is decided in favour of the assessee. Payment to MHADA treated as income of the assessee - HELD THAT:- There is a difference between an amount which a person is obliged to apply out of his income and an amount which by the nature of the obligation cannot be said to be a part of the income of the assessee. Where by the obligation income is diverted before it reaches the assessee, it is deductible; but where the income is required to be applied to discharge an obligation after such income reaches the assessee, the same consequence, in law, does not follow. It is the first kind of payment which can truly be excused and not the second. The second payment is merely an obligation to pay another a portion of one's own income, which has been received and is since applied. We are of the opinion that disputed amount falls in first category. In the case before us, the obligation income was diverted before it reached the assessee. Besides, the payment is not in doubt and it is also a fact that same was made in connection with the development of the property. So, as a corollary, it has to be allowed as an allowable expenditure. - Decided in favour of assessee. Benefit of deduction u/s 80P(2)(d) and 80P(2)(c)(ii) - AO had invoked the provisions of Sec. 80P (2) (f)and denied the society the benefits claimed by it - HELD THAT:- The sub sections of 80P deal with different claims and operate in different fields. The provisions of one sub section cannot be imported to another sub section. It is a fact that the Registrar of Co-op. Hsg. Society had not cancelled the registration of the Housing Society on the alleged violation of principle of mutuality or bye laws. In these circumstances, in our opinion the FAA has rightly held that deduction claimed by the assessee under sub-sections (d) and (c)(ii) cannot be denied the assessee. Upholding his order, we dismiss the ground raised by the AO.
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