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2016 (3) TMI 209 - ITAT MUMBAI

2016 (3) TMI 209 - ITAT MUMBAI - TMI - Principals of mutuality - Contribution by the members of a Group Housing Society - voluntary contribution by one of its member in lieu of transferring right to the exclusive use of the facilities by the society - Held that:- As decided in assessee's own case for previous years the society has incurred expenditure in expanding the facilities and in carrying out eh repair works. There was shortage of funds that shortage was made good by the member. So that is .....

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co-operative society. A member of a housing society cannot incur any expenditure directly even though the expenditure was incurred for this personal benefit. The work has to be carried out through the office of the society. The society alone can undertake such work. Therefore, in fact even in a case where a personal benefit is given to amber by doing some work. The same work is done by the society for and on behalf of that member. Therefore, on this ground also there is no question of any income .....

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cts and in the circumstances of the case, and in law the Ld. CIT(A) is justified in law on holding that the voluntary contribution of ₹ 70,00,000/- by one of its member in lieu of transferring right to the exclusive use of the valuable assets/facilities by the society during the A.Y.2007-08 is covered within the principals of mutuality. 2. The issue raised in ground no.1 whether the CIT(A) is justified in holding that the voluntary contribution of ₹ 70,00,000/- by one of its member i .....

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he same was processed under section 143(1) of the Act. Thereafter a notice u/s 148 of the Act was issued on 30.03.2012 and properly served on the assessee society and the assessment u/s 143(3) r.w.s. 147 of the Act was framed vide order dated 28.03.2013 at ₹ 70,06,000/- by adding ₹ 70,00,000/- received as voluntary donation besides making some other additions. The ld. AO added the same to the income of the assessee on the ground that society could not prove the intention of concept o .....

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ut any material on record on the concept of non mutuality. The ld. CIT(A) also observed that a similar issue has been decided in the case of the assessee in ITA No. 467/Mum/2008 assessment year 2004-05 in its favour and therefore the issue is directly covered in favour of the assesse by its own order and the AO was wrong in holding that the voluntary donation was received out of non-mutuality. 4. The ld. DR on the other hand relied on the order of the AO by arguing vehemently that the donation w .....

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all in the expenditure incurred by the Society for undertaking the major repairs and renovation of the building and therefore the appeal of the department be dismissed and the order of the CIT(A) which was rightly passed by following the decision in the above ITA deserved to be upheld. 5. We have heard the rival submissions and perused the material on record. We find that the issue involved in the appeal is covered directly by its own case in earlier year in ITA No. 467/Mum/2008 assessment year .....

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new members were admitted in the society; substantial amounts were collected from them. Those amounts were utilized not only for construction of accommodation fur the new member but also for renovating and extending facilities to the existing members. Even though there was surplus in hands of the asessee which was utilized for the benefit of the other members by way of renovation and extension of facilities. The Tribunal held that the surplus would not be in the nature of income as the entire a .....

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ke substantial maintaining and repairing work of the existing building. The repairs and maintenance and uplift of the existing building as a whole are beneficial to all the members of the society. Therefore, in the activities carried out by the assessee-society in spending the contribution received from the member, the principle of mutuality has been strictly observed. The application of funds is the crucial test. Here the fund of ₹ 1,75,00,000 was contributed by one of the members. How th .....

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er is involved. Whether the contribution has come from all the members from some of the members or only of the members, it has basically come from the in house of the society. There is no transaction between the assessee-society and nonmember outsider. The receipt of contribution and application of the funds both are confined inside the frame of the society and its members. Therefore on the question of receiving the contribution from one of the members of the society there is no valuation of the .....

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assesee-society has given the right of additional parking space and right to use one of the lifts to the donor member. But it has to be seen that the entire amount has been spent for the members. There is no surplus in that account. Where there is no surplus in that account there is no question of income. Therefore, one has to see that as a matter of fact, even before applying the principle of mutuality there is no question of income arising at all. 13. If we examine the case from another angle, .....

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