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Vraj Giriraj Co-Operative Housing Society Limited Versus ITO, 16 (1) (2) , Mumbai

Voluntary contributions received from Members - whether be treated as transfer fees ignoring the principle of mutuality as held by CIT(A) - Held that:- The assessee society has received contribution from incoming members who have purchased the flats in the society after they have become the members of the society and the said fund is credited to the common amenity fund which is stated by the society to be used for the purpose of heavy repairs and maintenance of the society as well for use of com .....

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iety whereby the members contribute the funds which are used by the society for the maintenance and development of society which ultimately benefit the society and its members. It is for the Revenue to being on record concrete and cogent evidence on record to prove that these amounts have been received under any compulsion or coercion or involuntary so as to violate the notification of Government of Maharashtra. The Revenue has not brought on record any document or any cogent material to prove t .....

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erial brought on record by the Revenue to prove that these contributions are received under coercion and involuntary in nature so as to be in violation of the notification of Government of Maharashtra, the impugned addition made on the basis of surmises, conjectures and assumptions is not sustainable. Hence, delete the addition made by the Assessing Officer and as confirmed by the CIT(A). - Decided in favour of assessee. - ITA No. 4000/Mum/2014 - Dated:- 30-9-2015 - G S Pannu, AM For the Petitio .....

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aised the following Grounds of appeal:- "(i) The Ld. CIT(A) has grossly erred in treating voluntary contributions received from Members as transfer fees ignoring the principle of mutuality. (ii) The Ld. CIT(A) has grossly erred in confirming the treatment of transfer fees as income of the assessee amounting to ₹ 5,85,075/- ignoring the principle of mutuality. (iii) The Ld. CIT(A) has erred in relying on the decision of Honorable ITAT, Mumbai in the case of Hatkesh Co-operative Housing .....

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assessee society was show-caused as to why this income should not be brought to tax. The assessee society submitted as under:- (i) On 18th April, 2009, ₹ 2,00,000/- received from Shri Hiten Jaysukhlal Doshi & Smt. Kalpana H. Doshi as voluntary contribution towards common amenity fund of the society. As on date they are the members of the society in respect of outhouse as principle of mutuality applies and income is not liable to tax. In support or our claim copy of "I" regis .....

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towards common amenity fund of the society. As on the date, she is the member of the society in respect of flat no. 15 as principle of mutuality applies and income is not liable to tax. In support of our claim copy of the "I" register enclosed. (iv) On 26th November, 2009, ₹ 71,425/- received from Shri Dhiren C. Shah of flat no. 16 for the use of common passage outside his flat. As on date he is member of the society as principle of mutuality applies and income is not liable to t .....

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he copies of Form 'I' Register of Members submitted that the following are the new members admitted to the society on the dates mentioned against their names. Sr. No Name Date of Admission (i.) Shri Hiten Jaysukhlal Doshi and Smt. Kalpana H. Doshi Bunglow 2.4.2009 (ii) Shri Dhirendra Chimanlal Shah Flat No. 16 3.8.2009 (iii) Smt. Kailash Dhirendra Shah Flat No. 15. 25.10.2009 b) From letter dated 30.07.2009 addressed to the Secretary by Shri Dhirendra C. Shah, it is seen that said Shri D .....

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e of NOC for admission / approval as member. The said letter also speaks of payment of ₹ 1,22,800/- towards common amenity Fund in addition to ₹ 25,000/ - of transfer fees. d) Copies of Society's letter enclosed states about payment of ₹ 71,425/- by Shri Dhirendra Shah and ₹ 81,350/- by Smt. Kailsh D Shah for using common passage before their flats. e) From the documents submitted by assessee and analysis thereof at (a), (b), (c) & (d) above clearly show all the m .....

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a uniform basis and all these collections have a direct nexus to the expenditure of the society on different heads and are borne equally by all members. However, the above receipts are on account of amount collected in guise of voluntary contribution towards common amenity fund of the society on their admission as members of the society and therefore cannot be termed as receipts governed by principle of mutuality." h) There is an element of income attached to these amounts collected in guis .....

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as income of the society. 6. Aggrieved , the assessee society carried the matter in appeal before the CIT(A) and contended that the assessee society has received ₹ 5,85,075/- as common amenity fund from the incoming members, which is meant for the 'heavy repairs fund' or are received for maintenance of common passage and under the concept of mutuality these receipts cannot be brought to tax as there is a complete identity of contributor with the recipients and the common amenity f .....

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housing society by the very design and concept is not a mutual concern. The CIT(A) held that since the impugned sums are taken by the society under the compulsion to effect the transfer and it is not a voluntary and legal payment and hence there is an element of profit to effect the transfer and is taxable amount. Hence, the CIT(A) dismissed the appeal of the assessee. Aggrieved by the order of the CIT(A), the assessee society is in appeal before the Tribunal. 8. The assessee society stated tha .....

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to the financial statements and also contended that the money has been received only after the incoming members have become members of the society. He contended that the concept of mutuality is duly applied on these payments as they are voluntary contribution towards common amenity fund and are as per the by laws of the society, to be used for the purpose of fulfillment of objective of society and there is not profit element involved. He also stated that there is a complete identity of contribut .....

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sing Society Ltd. in ITA No.494 to 500/Mum/2011 . 10. I have considered the rival submissions, perused the material on record and case laws relied upon by the rival parties. It is observed that the assessee society has received contribution from incoming members who have purchased the flats in the society after they have become the members of the society and the said fund is credited to the common amenity fund which is stated by the society to be used for the purpose of heavy repairs and mainten .....

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benefit and development of housing society whereby the members contribute the funds which are used by the society for the maintenance and development of society which ultimately benefit the society and its members. It is for the Revenue to being on record concrete and cogent evidence on record to prove that these amounts have been received under any compulsion or coercion or involuntary so as to violate the notification of Government of Maharashtra. The Revenue has not brought on record any docu .....

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in the facts and circumstances of the case, I find that in the absence of any cogent adverse material brought on record by the Revenue to prove that these contributions are received under coercion and involuntary in nature so as to be in violation of the notification of Government of Maharashtra, the impugned addition made on the basis of surmises, conjectures and assumptions is not sustainable. Hence, I delete the addition of ₹ 5,85,075/- made by the Assessing Officer and as confirmed by .....

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