ITO v. Damodar Bhuvan CHS Ltd.

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The Tax Publishers2012 TaxPub(DT) 1590 (Mum-Trib) : (2012) 045 (II) ITCL 0255 INCOME TAX ACT, 1961 --Income--Mutuality principleReceipt of transfer charges and non-occupancy charges--Assessee, a co-operative society, registered under the Maharashtra Co-operative Societies Act. It filed its return of income, declaring nil income. AO held that the transfer charges and non-self occupancy charges were not exempt from tax and consequently added them to the income of assessee. Commissioner (Appeals) relying on the decision of Bombay High Court in the case of Sindh Co-operative Housing Society v. ITO (2009) 317 ITR 47 (Bom) :2009 TaxPub(DT) 1904 (Bom-HC) and Shyam Co-operative Housing Society Ltd. v. CIT ITA No. 92 of 2008, 93 of 2008 & ITA No. 206 of 2008 and Suprabhat CHS (Infra) as well as the decision in the case of Mittal Court held that neither the transfer charges nor the non-occupancy charges received by assessee-society could be brought to tax as these receipts were exempt under the principle of mutuality. Held: Principle of mutuality would not cease to exist in respect of receipts from members by an Association beyond the quantum restricted by any law regulating the relationship between members and its Association. Therefore, order of Commissioner (Appeals) was upheld. Income Tax Act, 1961, Section 4 ITO v. Damodar Bhuvan CHS Ltd. IN THE ITAT, MUMBAI 'D' BENCH N.V. VASUDEVAN, J.M. & T.R. SOOD, A.M. ITA No. 1610/Mum/2010 A.Y. 2005-06 16 September, 2011 Decision: In assessees favour. Appellant by : M.R. Kubal, Respondent by : B.V. Jhaveri, ORDER This is an appeal by the revenue against the order dt. 8-12-2009 of Commissioner (Appeals)-27, Mumbai relating to assessment year 2005-06. The grounds of appeal of the revenue read as follows : '1. The learned Commissioner (Appeals) erred in deleting the addition on account of transfer charges of Rs. 15,00,000 following the decision of Hon'ble High Court of Bombay in the case of M/s. Shyam CHS and Suprabhat CHS wherein it has been held that all amounts received by the CHS on the grounds of transfer charges are exempt under the principle of mutuality. The decision has not been accepted by the department and the issue is subjudice. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 1590 (Mum-Trib) : (2012) 045 (II) ITCL 0255

INCOME TAX ACT, 1961

--Income--Mutuality principleReceipt of transfer charges and non-occupancy charges--Assessee, a co-operative society, registered under the Maharashtra Co-operative Societies Act. It filed its return of income, declaring nil income. AO held that the transfer charges and non-self occupancy charges were not exempt from tax and consequently added them to the income of assessee. Commissioner (Appeals) relying on the decision of Bombay High Court in the case of Sindh Co-operative Housing Society v. ITO (2009) 317 ITR 47 (Bom) :2009 TaxPub(DT) 1904 (Bom-HC) and Shyam Co-operative Housing Society Ltd. v. CIT ITA No. 92 of 2008, 93 of 2008 & ITA No. 206 of 2008 and Suprabhat CHS (Infra) as well as the decision in the case of Mittal Court held that neither the transfer charges nor the non-occupancy charges received by assessee-society could be brought to tax as these receipts were exempt under the principle of mutuality. Held: Principle of mutuality would not cease to exist in respect of receipts from members by an Association beyond the quantum restricted by any law regulating the relationship between members and its Association. Therefore, order of Commissioner (Appeals) was upheld.

Income Tax Act, 1961, Section 4

ITO v. Damodar Bhuvan CHS Ltd.

IN THE ITAT, MUMBAI 'D' BENCH

N.V. VASUDEVAN, J.M. & T.R. SOOD, A.M.

ITA No. 1610/Mum/2010

A.Y. 2005-06

16 September, 2011

Decision: In assessees favour.

Appellant by : M.R. Kubal,

Respondent by : B.V. Jhaveri,

ORDER

This is an appeal by the revenue against the order dt. 8-12-2009 of Commissioner (Appeals)-27, Mumbai relating to assessment year 2005-06. The grounds of appeal of the revenue read as follows :

'1. The learned Commissioner (Appeals) erred in deleting the addition on account of transfer charges of Rs. 15,00,000 following the decision of Hon'ble High Court of Bombay in the case of M/s. Shyam CHS and Suprabhat CHS wherein it has been held that all amounts received by the CHS on the grounds of transfer charges are exempt under the principle of mutuality. The decision has not been accepted by the department and the issue is subjudice.