TMI Blog2012 (7) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - ITA Nos.4465/Del/2007 to 4470 & 4601 to 4606/Del/2007 - - - Dated:- 28-6-2012 - SHRI R.P.TOLANI, AND SHRI T.S.KAPOOR, JJ. Assessee by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability of principle of mutuality as laid down by various judicial authorities. On this basis, the income declared in the returns was further added by the amounts of credit in the profit loss account as well as debited in profit loss account as mentioned in the respective orders. (iv) The assessments were framed accordingly raising the demand for all these years. 2.1. Aggrieved, assessee preferred first appeals where learned CIT(A) upheld the Assessing Officer s contention 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 of bye laws and record, it was not possible to ascertain the claim about ingredients of principle of mutuality. This ground of the assessee was rejected in all these years. However, coming to the quantum addition, learned CIT(A) held that Assessing Officer has erred in adding both credits and debits in the profit loss account as income of the assessee along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e set of bye laws, rules etc. have not been produced either before the lower authorities or before us. 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. Thus the assessee has failed to discharge the burden cast on it to prove the existence of mutuality in all these assessments. In view thereof, we uphold the order of learned CIT(A) refusing to apply principle of mutuality in all these assessments and reject relevant grounds raised by the assessee in these appeals. 6. Coming to the quantum part, the learned counsel for the assessee drew our attention to the profit loss accounts for all these years and it was contended that learned CIT(A) held that Assessing Officer has failed to prove that any expenditure was undisclosed or bogus. Therefore, only the surplus after allowing all the expenditure should have been allowed and not the entire credit side of the P L A/cs. Therefore, the additions should be reduced to this extent. 6.1. The learned DR, on the other hand, argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the record is seized. Since a fair and reasonable estimate of income has to be made, in our view, the reasonable expenditure is to be allowed to the assessee in all these years. Looking at the quantum of other receipts, the expenditure incurred clearly outweighs the receipts in P L A/c, therefore, in our considered view the other income of the society shall be estimated at nil. In consideration of all the facts, we decide the issues about quantum in these years as under:- (i) The benefit of mutuality cannot be allowed to the assessee. (ii) The interest income in the assessee s profit loss account shall be taxed as income from other sources in all the years. Assessing Officer will adopt the same from P L A/cs of respective years. (iii) We may mention that there are some debit of interest which is not related to FDRs or earning of interest as admitted by the assessee, therefore, the same will not be allowed. (iv) The remaining income will be treated as nil. 8. Coming to the last year i.e. AY 2004-05, there is an issue about long term capital gains received by the assessee on acquisition of land at Rs. 1,65,35,891/- from GDA. The assessee has claimed the gains to be exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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