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TMI Blog2022 (7) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... ates the principles of natural justice. 2. On the facts and circumstances of the case as well as in law the learned CIT(A)-37, Mumbai erred in confirming the addition of development charges and TDR deposits of Rs. 16,50,584/-, violating the principles of mutuality. 3. On the facts and circumstances of the case as well as in law the learned CIT(A)-37. Mumbai erred in confirming the disallowance of revenue expenses of Rs. 11,788- being 20% of the expenses on adhoc basis which is bad in law. 4. Your appellant craves your leave to add, amend, alter and modify any ground grounds before the final disposal of the appeal. 2. Brief facts of the case are that the assessee has filed return of income on 06.06.2011 declaring total income at Rs. 1,05,740/-. The case was re-opened under section 148 of the Income Tax Act, 1961 (for short 'the Act') and notice was issued on 31.03.2016. Reasons were supplied for re-opening and assessee had not filed any objection to re-opening of the case. The case was taken up for scrutiny and accordingly the statutory notices under section 143(2) of the Act were issued and duly served on the assessee. In assessment order, Assessing Officer (AO) stated as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is just a mode of payment where instead of developer paying member and member ultimately paying society, developer has directly paid to society. However these amounts remain to be paid by member only and society is in no way concerned for their arrangements between member and developers. In books of accounts also society has received these payments on behalf of members. Copy of letter dated 10/10/2008 issued by society to one of the member Shri Gulshanji Bahl is enclosed. From the letter it is clear that payment is to be made by member only. However on behalf of member anyone can make payment still it will be construed as amount received from member only. It is important to note, question is whether member was liable to make payment or not to society. Rest everything falls in place. Copy of letter goes beyond doubt that member needs to pay to society. 7. Copy of another letter dated 20-10-2010 from member Shri Vishwas Ghaskadbi is enclosed. In this letter member Shri Vishwas Ghaskadbi clearly states that II please note that we have entrusted the responsibility of Redevelopment to M/s shree Sankalp Builders and the above mentioned charges are being paid by them." So it is just mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng evidences. Therefore, vide order sheet noting dated 12.08.2016, the assessee was asked to justify its claim of non-disallowance of expenses. 13. In response to the above, the assessee has made its submissions as under: "Society is operating on Principles of Mutuality and hence surplus/deficit collected from its members is not taxable. Assessee has not claimed any expenses against its income and hence there is no question of disallowing expenses on estimation basis. Assessee has offered interest income only under head Income from other sources and has not claimed any expense against such income. It goes without saying that addition can't be made." 14. On ground no.1, we have gone through the order of AO and thereafter the appeal order passed by the Ld. CIT(A). It is apparent vide para-2 of the AO's order that assessee nowhere challenged the re-opening of the case under section 148 of the Act and rather filed return in response to notice under section 148 and unconditionally participated in re-assessment proceedings. Allegation of violation of the principle of natural justice against the office of Ld. CIT(A) is also not established. It is apparent from the order of Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated from the facilities extended by a club to its members and its exemption from tax on principles of mutuality, it was observed : "20........In all these cases, the appellate tribunal as also the High Court have found that the amounts received by the clubs were for supply of drinks, refreshments or other goods as also the letting out of building for rent or the amounts received by way of admission fees, periodical subscription etc. from the members of the clubs were only for/towards charges for the privileges, conveniences and amenities provided to the members, which they were entitled to as per the rules and regulations of the respective clubs. It has also been found that different clubs realised various sums on the above counts only to afford to their members the usual privileges, advantages, conveniences and accommodation. In other words, the services offered on the above counts were not done with any profit motive and were not tainted with commerciality. The facilities were offered only as a matter of convenience for the use of the members (and their friends, if any, availing of the facilities occasionally). 21. In the light of the above findings, it necessarily follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by draw of lots, the ownership remaining with the society, the receipts cannot be bifurcated into two segments of receipt and costs, so as to hold the former to be outside the purview of mutuality classifying it as income of the society with commerciality. 21. In the present case, the facts are not in dispute the assessee is a Cooperative Housing Society formed of plot owners who had obtained a lease of land from the Maharashtra Housing Board. The society looks after the maintenance and infrastructure. If any members desire to avail of the benefit of transferable development rights for carrying out construction or additional construction on his plot, the member has to pay certain premium to the society. The AO is of the view that TDS premium is charged by the society from its member but paid by the developer on members behalf to permit them to commercially exploit the potential for the development of the plot; whereas in reality it was a profit sharing arrangement of the commercial nature. 22. The admitted facts would indicate that the TDR premium is liable to be paid by a member of the Society who desires to utilize additional FSI in the form of Transferable Development Rights. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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