1994 (9) TMI 114 - AT - Income Tax

Summary

Issues Involved:
1. Taxability of Rs. 10 lakhs received from Mr. Parmeshwar Mittal.
2. Taxability of non-occupancy charges, transfer fees, and premium on transfer.

Detailed Analysis:

1. Taxability of Rs. 10 lakhs received from Mr. Parmeshwar Mittal:

Background:
The assessee, a co-operative housing society, received Rs. 10 lakhs from Mr. Parmeshwar Mittal for allowing an increase in the height of his building. The Assessing Officer taxed this amount as casual and non-recurring income under section 10(3) of the Income-tax Act, 1961.

Arguments:
- Assessee's Argument: The receipt was a capital receipt and not taxable.
- Assessing Officer's Argument: As there was no capital asset in existence, the receipt was a revenue receipt, casual and non-recurring in nature, and taxable under section 10(3) except for Rs. 5,000.

CIT (Appeals) Decision:
The CIT (Appeals) upheld the Assessing Officer's decision, stating that the onus of proving exclusion from taxation was on the assessee, citing the Supreme Court decision in CWT v. Abdul Hussain Mulla Muhammad Ali.

Tribunal's Analysis:
- Definition of Income: The Tribunal referred to section 2(24) of the Act and judicial pronouncements to determine whether the receipt could be considered income.
- Tests for Income: The Tribunal applied tests from the cases of Maharajkumar Gopal Saran Narain Singh v. CIT and Rani Amrit Kunwar v. CIT. It concluded that the payment was voluntary and not income in the ordinary sense.
- Nature of Payment: The payment was made as a gesture of goodwill for waiving a restrictive covenant, not as income.
- Source of Income: The receipt lacked a source from which regular income could be expected.
- Casual Income: The receipt was not accidental or fortuitous but resulted from a stipulation, making it non-taxable as casual income.
- Capital Gains: As there was no transfer of a capital asset, the amount was not chargeable under "Income from capital gains."

Conclusion:
The Tribunal directed that the receipt of Rs. 10 lakhs be deleted from the total income of the assessee, as it was not income.

2. Taxability of Non-occupancy Charges, Transfer Fees, and Premium on Transfer:

Background:
The second ground of appeal involved the taxability of non-occupancy charges, transfer fees, and premium on transfer paid by members to the Society.

Tribunal's Analysis:
- Principle of Mutuality: The Tribunal noted that these charges were paid by members and utilized for their benefit, making the Society a mutual concern.
- Judicial Precedent: The Tribunal cited the Calcutta High Court decision in CIT v. Apsara Co-operative Housing Society Ltd., which affirmed that such receipts are not liable to tax under the principle of mutuality.

Conclusion:
The Tribunal directed that receipts on account of non-occupancy charges, transfer fees, and premium on transfer be deleted from the total income on the principle of mutuality.

Final Decision:
The appeal was allowed, and both the Rs. 10 lakhs received from Mr. Parmeshwar Mittal and the non-occupancy charges, transfer fees, and premium on transfer were directed to be deleted from the total income of the assessee.