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Commissioner of Income Tax Versus M/s. Samudra Mahal Premises Co-operative Housing Society Ltd.

2016 (6) TMI 1046 - BOMBAY HIGH COURT

Principle of mutuality - 'Transfer fee' received from outgoing member of co-operative society - whether is not taxable on the basis of concept of mutuality? - it was contended that, the amounts credited to the common amenity fund was payable prior to the transfer of the premium to the society, thus covered by the principle of mutuality - Held that:- Though the revenue seeks to contend that contribution to Common Amenity Fund is transfer fees and the Assessing Officer in his order added the amoun .....

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i For the Respondent : Mr. F.V. Irani with Mr. Atul Jasani ORDER P. C. 1. This Appeal under Section 260-A of the Income Tax Act, 1961 (the Act) challenges the order dated 22nd May, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order is in respect of Assessment Years 2001-02, 2002-03, 2004-05, 2005-06, 2006-07 and 2007-08. 2. We are disposing of all six appeals by this common order as it is admitted position between the parties that the issue which arise for our co .....

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ent - assessee submitted that the issue arising herein stands concluded in favour of the assessee - society and against the revenue in view of the decision of this Court in Commissioner of Income Tax Vs. Darbhanga Mansion Co-operative Housing Society Ltd. reported in 370 ITR 443. However, Mr.Malhotra, learned counsel appearing for the revenue disputes the same. Therefore, we proceeded to hear the parties for admission of the appeals. 5. As the facts are similar, for the sake of convenience, we s .....

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ondent society interalia pointed out that it is received from its members. On examination of the response, the Assessing Officer held that the above sum which was received as transfer fees had to be credited to the Income and Expenditure Account and offered to tax as the principle of mutuality will not apply to transfer fees. The Assessing Officer in the Assessment order while bringing to tax the contribution made to the Common Amenity Fund records as under : 17. Accordingly, the transfer fees r .....

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ot taxable (As per return) Rs.53,61,038/- Rs.53,61,038/- ========= Nil INCOME FROM OTHER SOURCES Int. from S.B. A/c ₹ 1,268/- Int. on Loan from Staff Members Rs.15,828/- Rs.17,096/- Less : Int. paid on overdraft Rs.26,606/- Common Amenities Fund Contribution From the members towards Common Amenities Fund (Taxable) (as discussed above) Rs.35,61,741/- Less : Transfer fees allowable ₹ 50,000/- Rs.35,11,741/- Rs.35,11,741/- Less : Deduction U/s.80-P ₹ 50,000/- Total Income Rs.34,61 .....

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r desiring to sell his/her flat shall contribute to the society for Common Amenity Fund such sum/sums as may be prescribed by the Managing Committee from time to time for a three bed room / duplex flat (approved by the District Deputy Registrar on 28.6.1979) . It held that the issue of transfer charges taken as contribution to common amenity fund stands concluded on principle of mutuality by various decisions of the Tribunal as well as decisions of this Court. (c) Being aggrieved, the revenue ca .....

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the ground of mutuality. Thus, the impugned order holds that the same as transfer fee would not be taxable being covered by the principle of mutuality. This by following the decision of this Court in Sind Cooperative Housing Society Ltd (supra). 7. Being aggrieved, the revenue is in appeal before us. Mr. Malhotra, learned counsel for the revenue in support of the appeal, submits that it was the respondent-assessee's case before the authority that the amounts credited to the common amenity fu .....

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above, was in fact a transfer fee and nothing else. This is so as a member could not sell his/her flat without making contribution to Common Amenity Fund. Thus, the facts of this case is not covered by the order of this Court in Darbhanga Mansion CHS Ltd. (supra). 8. We find that the Assessing Officer in the assessment year had added the amount shown in the Balance Sheet to the income of the society as being contribution by members to the Common Amenity Fund. Thus, the amount being brought to ta .....

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received by the respondent-assessee from its members to the common amenity fund. The submissions made on behalf of the revenue were also subject matter of consideration by this Court in Darbhanga Mansion CHS Ltd. (supra) wherein also it was contended that the amount received in General Amenity Fund and Repair Fund by Dharbhanga Mansion CHS Ltd. (supra) was only on account of transfer of flat and garage. In the facts of that case the Tribunal had held that the principle of mutuality will not app .....

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