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Lands End Co-operative Housing Society Ltd Versus I.T.O. ward-16 (1) (3) , Mumbai

2016 (2) TMI 620 - ITAT MUMBAI

Addition on account of non-occupancy charges - Held that:- The charges are received at the prescribed rates as per the byelaws of the society and are spent for the common purposes of the society for the benefit of the members. In the case of Mittal Court Premises Co-operative Society Ltd. v/s Income Tax Officer [2009 (7) TMI 689 - BOMBAY HIGH COURT] held that the bye-laws themselves provided for non-occupation charges. The contribution, therefore, was by the members for the purpose of mutual ben .....

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n of the Juridictional High Court delete the addition - Decided in favour of assessee

Rejection of claim of the assessee u/s 80(P)(2)(d) - interest on deposits with other Coop. Societies being Coop. Banks. - Held that:- Honble Supreme Court in the case of Totagarís Co-operative Sale Society Ltd.(2010 (2) TMI 3 - SUPREME COURT ) held that a society has surplus funds which are invested in short term deposits where the society is engaged in the business of banking or providing credit fac .....

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y by way of interest or dividend from its investments with other coop society if such income is included in the gross total income of the such coop society. In view these facts and circumstances we are of the considered view that the assessee is entitled to the deduction of ₹ 14,88,107/- in respect of interest received/derived by it on deposits with coop. banks and therefore the appeal of the assessee is allowed by reversing the order of the CIT(A) - Decided in favour of assessee - I.T.A. .....

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ned CIT (Appeals) has erred in confirming the addition made by the assessing officer on account of Transfer Fees amounting to ₹ 11,00,000/- received by the Appellant. 2. The learned CIT (Appeals) has erred in considering ₹ 11,00,000/- received towards contribution from members of the society as income of the society in utter disregards to the principals of mutuality. 3. The learned CIT (Appeals) has erred in confirming the addition made by the assessing officer of ₹ 6,04,500/- .....

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ned from co-operative banks. The learned CIT (Appeals) thereby enhanced the assessment and made an addition of ₹ 14,88,107/- 6. Further the learned CIT (Appeals) has erroneously applied the judgment of Totagar Co-operative Sale Society Limited (322 ITR283) (SC) in respect of interest from Bank. 7. The learned CIT (Appeals) has erred in enhancing the assessment by making an addition of ₹ 2,06,400/- being amount recovered from members towards car parking charges, ₹ 37,290/- for t .....

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allowed to take the deduction u/s 80P(2)(d) on interest received from Co-operative banks amounting to ₹ 14,88,107/- 2. Ground No.01 and 02 are against the confirmation of addition on account of transfer fee of ₹ 11,00,000/- received by the appellant society. The brief facts are that the assessee was formed to look after the maintenance of the flats owned by its members. The society had its own byelaws providing for various types of charges and fees etc. During the year the assessee .....

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Government notification. 2.1. The ld. Authorized Representative brought to our notice that issue raised in the ground no. 1 & 2 qua transfer fee is covered in favour of assessee by its shown order in ITA No.6866/Mum/2007 Assessment Year 2004-05 vide order dated 27-09- 2013 and also by the decision of the Jurisdictional High Court in the case of CIT v/s Darbhanga Mansion CHS Ltd in ITA No.1474 OF 2012 dated 18-12-2014 and therefore the ground no.1 & 2 should be allowed. On the other hand .....

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cal issue has been considered and decided by this Tribunal in assessee s own case for the assessment year 2003-04 vide order dated 10.01.2011 in ITA No.6066/M/2006. Thus, the ld. AR has submitted that this issue is covered in favour of the assessee. The ld. DR has relied upon the orders of the authorities below. The AO made the addition with respect to the amount received by the assessee towards transfer fee of ₹ 500/- from outgoing members, entrance fee for ₹ 100/- from incoming mem .....

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e have carefully considered the rival submissions and perused the record. Case of the asessee is that though the amount was received in the form of contribution to common amenities fund it is essentially utilized for the benefit of common members and thus principles of mutuality are attracted. Facts not being in dispute, in the light of the decision of the ITAT (supra), we accept the plea of the assessee and hold that the impugned amount received in the form of contribution to common amenities f .....

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nce fee from incoming members if the said amount is received for the prupose of utilizing for the common amenities of the society then the same falls under the category of the contribution of common amenities fund and the conept of mutuality will be applicable. Accordingly, the AO to verify the same and then decide as per our observation. We also find that Jurisdictional High Court in the case of CIT v/s Darbhanga Mansion CHS Ltd in ITA NO. 1474/Mum/2012 vide order dated 18-12-2014 has decided a .....

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s who do not occupy their flats and let out the same to non-members. As per byelaws of the society, a very nominal fee is received which is described as nonoccupancy charges and spent on the building maintenance. 4.1. The ld. Assessing Officer added the same to the income of the assessee on the plea that same was not charged as prescribed and as per Government notification and such charges were collected with profit motive and therefore was not covered by principle of mutuality by not following .....

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ple of mutuality. The Ld. Counsel placed reliance on Mittal Court Premises Co-operative Society Ltd. v/s Income Tax Officer (supra) and prayed that the addition of ₹ 6,04,500/-made by the Assessing officer be deleted by reversing the order of CIT(A) on this issue. On the other hand the ld. AR relied on the order of the authorities below. 4.2. We have heard the rival submissions and perused the material on record and find that the assessee received non-occupancy charges from those members w .....

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s the purpose of increasing the society s funds, which could be used for fulfilling the objects of the society. The object of the society was to provide service, amenities and facilities to its members. In these circumstances, the principle of mutuality would apply and therefore non-occupancy charges were not taxable. In our opinion the case of the assessee case is squarely covered by the aforesaid decision. We, therefore, respectfully following the decision of the Juridictional High Court delet .....

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its with Coop. Banks. The AO allowed the said deduction as claimed by the assessee however the CIT(A) enhanced the assessment by rejecting the claim of the assessee by following the decision of the coordinate Mumbai bench in the case of Shiv Samrudhi Co-operative Housing Society in ITA No 1073/Mum/2012. 8.2. The Ld AR submitted before us that if the gross total income of Co-operative Society income includes any income by way interest and dividend on deposits eoyh other Coop. Societies including .....

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1073/Mum/2012 relied upon by the CIT(A) by submitting that the Tribunal while passing the said order relied on the decision of Hon ble Supreme Court in the case of Totagar s Co-operative Sale Society Ltd Vs ITO 322 ITR 283 and held that the interest income from the short term deposits and securities not immediately required in the business of the assessee is assessable under the head Income from Other Sources and no deduction U/S 80P(2)(a)(i) of the Act is allowable. Thus the said decision was d .....

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e assessee further submitted that the Hon ble Supreme Court had specifically mentioned that the decision in the present case confined to the facts of the said case. Whereas ,on the other hand, in order to claim deduction u/s 80(P)(2)(d) of the Act the only condition is that the assesee should be co-operative society and it has interest income accrued from the investment with other cooperative society including co-operative bank which is included in or part of the gross total income. It was argue .....

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ssable are immaterial for the purpose of claiming the deduction under this section. The ld AR submitted that, therefore, the principle laid down by the Hon ble Supreme Court in the above decision is not applicable to the assessee s case as the said decision was on different provisions and therefore, the said judgement is distinguishable on facts and not applicable to the assessee. The ld. Counsel strongly relied on the decision of the Hon ble High Court of Himachal Pradesh in the case of CIT Vs. .....

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material on record. We find that the CIT(A) enhanced the income of the assessee by rejecting the deduction u/s 80P(2)(d) of the Act of ₹ 14,88,107/- being interest on investment with other Coop. banks by following the decision in the case of Bandra Samruddihi Co-operative Housing Society Ltd.(Supra) which was passed on the basis of the decision passed by the Hon ble Supreme Court in the case of Totagar s Co-operative Sale Society Ltd. In the case of Totagar s Co-operative Sale Society Ltd .....

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whether a co-operative society which has derived income on investment with cooperative banks is entitled to deduction u/s 80P(2)(d). The provisions of Section 80P(2)(d) of the Act provide deduction in respect of income by way of interest or dividend on investments made with other Cooperative society. For the purposes of better proper understanding of these two provisions the relevant extract of the section are reproduced below: 80P: Deduction in respect of income of co-operative Societies. 1. W .....

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credit facilities to its members. The whole of the amount of profits and gains of business attributable to any one or more of much attributes. (d)In respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income. From the close perusal of the provisions of u/s 80P(2)(a)(i) and 80P(2)(d) it is clear that the former deals with deduction in respect of profits and gain of business in case of .....

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