TMI Blog2017 (12) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal filed by the Revenue against the order of CIT(A) for the assessment year 2007-08. 2. The grievance of Revenue relates to deleting addition of ₹ 7,64,271/- made by AO on account of transfer fees and addition made on account of premium received by assessee from its members on utilization of Transfer of Development Rights. 3. The rival contentions have been heard and records perused. 4. Facts in brief are that the assessee society is a Cooperative Housing Society. During the year under review the assessee society has received an aggregate amount of ₹ 7,64,271/- incidental to the transfer of the plots in the society as contribution from its members. Further the assessee society has also received an aggregate amount of ₹ 26,80,203/- as contribution from its members pursuant to the construction on Plots using Transfer of Development Rights (TDR). The said TDR rights he been acquired by the members directly and the Society has merely received contribution from its members. The assessee Society had offered the aforesaid receipt as income and filed the return of income on 31st Ocother, 2007. However during the course of the assessment proceedings the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see during the year has disclosed the above receipts as exempt from tax on the basis of Principle of Mutuality. During the appellate proceedings, appellant has stated that the appellant received contribution from its members on the transfer of lease of the plots by such members to other new members. Such amounts received belong absolutely to the society and the benefit thereof was receivable only by the members of the society. Since the contributors to the fund and the participants thereof are both members of the society the test of mutuality being the complete identity of the contributors with the participants is clearly established and the principle of mutuality is applicable to the society. 5.5 The cardinal requirement for application of the doctrine of mutuality is that all the contributors to the common fund must be entitled to participate in the surplus and that all the participators in the surplus must be contributors to the common fund. For the comparison of the contributors and the participators to the common fund such comparison should be as 'a class' and not of an individual contributor or participator. This reasoning is supported by the following observati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal holding that voluntary contribution received by the assessee society from its members as transfer charges is not liable to tax on the basis of principle of mutuality was upheld by the Hon ble Bombay High Court in IT Appeal 3345 of 2010 (dated 6th July, 2011) following its earlier decision rendered in the case of Sind Co-operative Housing Society vs. ITO reported in 317 ITR 47. Respectfully following the said decision of the Hon ble Bombay High Court in assessee 's own case on similar issue, we uphold the impugned order of the ld. CIT(A) deleting the addition made by the A.0. on account of transfer charges received from its members and dismiss ground No.1 of Revenue s appeal. 6. Further, the appellant society has received an aggregate amount of ₹ 26,80,203/- as the said Contribution pursuant to use of TDR. The assessee has claimed that the aforesaid contribution is not chargeable to tax. The Contribution from members is exempt from the tax under the Principle of Mutuality. The aforesaid contributions have been received from the members of the Society incidental to the use of the T.D.R. on their respective plots. The contributing members continue to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... associate members. The participants and contributors are the members. The members from those who contributed may participate in the surplus, as held by the Supreme Court, is irrelevant as long as the class is identifiable. This test is also satisfied in the case of a housing co-operative society, ( 4) Do the members have the right to share in the surplus and do they have a right to deal with its surpluses. In terms of the by laws it is only the members who have a right to share in the surplus. Under the Maharashtra Co-operative Societies Act, no part of the funds, as provided in section 64 can be paid by way of bonus of dividend or otherwise distributed among its members except as provided therein. Under section 67, there is a limit on the dividend to be paid on liquidation Under section 110 of the Maharashtra Co-operative Societies Act, the surplus can only be dealt with in the manner provided therein which includes any member or devoted to objects provided by the bye-laws or be transferred to another society with similar object. Rule 90 of the Rules provide how the surplus is to be divided. The surplus thus can be distributed in terms of the bye-laws to members and/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of the appellant the impugned receipts arising on account of premium on TDR i purely a capital receipt and therefore, outside the purview of tax charge. ( c) That it cannot be taxed u/s.45 as no Capital Gains could be levier on this right having no cost of acquisition. Therefore, not liable to tax under Capital Gains. This view is supported by two recent decisions of the Mumbai ITAT. ( i) ITO Vs. Lotia Court CHS Ltd. (2008) 12 ITR Mumbai Trib) 290 ( ii) M/s. New Shailaja CHS Ltd. Vs. ITO ITA No.512/Mum/2017, A.Y. 2003-04 Date of Order : 02.12.2008 Before me, the authorised representative of the appellant has place the recent judgement of High Court of Bombay in case of Sing Co. Op. Hsg. Society Limited (317 ITR 47) in which the principle of mutuality has been dealt with in detail. I have considered the arguments of the appellant and have carefully gone through the judgment cited above. Respectfully following the judgment of Singh Co. Op. Hsg. Society Limited (317 ITR 47), it is held that the amount received by the appellant of ₹ 50,40,775/- as premium towards usage of transferable development rights is not taxable in the hands of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
