GALLERIA CONDOMINIUM ASSOCIATION,GURGAON vs. INCOME TAX OFFICER, WARD-1(5), GURGAON, GURUGRAM

At the outset, it is noticed that all the three appeals filed by the assessee are barred by limitation. Appeal for the assessment year 2009-10 is delayed by 965 days. Appeal for assessment year 2010-11 is delayed by 791 days and appeal for assessment year 2011-12 is delayed by 792 days. From the record is seen that the assessee has filed the following petitions for condonation of delay for all the three years:- “ MOST REPECTFULLY SUBMITTED: 1. That the appellant is a mutual concern (Resident Welfare Organization). 2. That the appellant has preferred an appeal against the order u/s 250 of CIT(A)-1, Gurgaon dated 18.10.2017. 3. That the appellant have stated the facts of the case and the grounds arising there from in the accompanying appeal Form 36 and the same may be treated as part and parcel of this application. 4. That the assessee could not prefer the appeal before the honorable Bench of the Income Tax Tribunal, New Delhi, within stipulated time period due to unavoidable circumstances which are stated as below. (i) That one of the main reason for delay in filing of appeal before the tribunal, Gurgaon, is fixation of responsibility amongst the management of the appellant due to frequent change of governing body of Galleria Condominium Association. (ii) That our association landed into severe trouble when the managing body of that time failed to hand over the records and documents related to the affairs of the association. Despite all the efforts and correspondences by association, the members did not respond. Finally, on 28.05.2019 a complaint with Economic Offence Wing was also filed to resolve the matter Page 2 of 10

After considering the aforesaid petitions which were duly supported by sworn affidavit and appended documents, we find that the delay in the filing of appeals was due to various disputes between the erstwhile management and the appellant Association and the orders passed by the ld. CIT (Appeals) were not made available so as to file the appeals and accordingly fresh application was made on 9.10.2020 for getting the certified copies of the orders passed by the ld. CIT (Appeals) and thereafter the appeals have been filed before the Tribunal. In these circumstances as detailed above, we find that there was sufficient cause in filing the appeals belatedly and there was no intention not to pursue legal remedy. Accordingly, the delay in filing the appeals in all the three years is condoned.

The facts and issue raised in all the three appeals are arising out of identical set of facts, therefore, common order is passed in all the three appeals.

None appeared on behalf of the assessee. Accordingly, the appeals are decided ex-parte after hearing the ld. Departmental Representative and considering the material available on record. In all the three years the common grounds have been raised (except for the variation in the figures of estimation) and, therefore, for the sake of ready reference the grounds for assessment year 2009-10 are reproduced hereunder: 1. That the assessment order passed is illegal, invalid and void. 2. That the reasons recorded u/s 147 of the I.T. Act,1961 by the Ld. A.O. were merely based on the suspicion and without any tangible material so as to suggest any escapement of income. Hence the reassessment proceedings are liable to be quashed. 3. Whether the Ld. AO justified in disallowing the claim of Interest income on the basis of concept of mutuality of Rs. 2,91,155/- under section 80P(2)(d) of the Income Tax Act, 1961. As interest income is disbursed to members who had contributed to it. 4. Further as per verdict of Bangalore Club Vs. Commissioner of Income Tax, Interest income is not taxable as concept of mutuality has been extended to define groups of people who contribute to a common fund, controlled by the group, for a common benefit. Any amount surplus to that needed to pursue the common purpose is said to be simply an increase of the common fund and as such neither considered income nor taxable. 5. That the Ld. Assessing Officer is not justified in computing the additional income of Rs. 7,56,370/- as house property, as amount received by AOP is for maintenance charges and common charges which is further paid by AOP for common expenses and is not chargeable on the basis of concept of mutuality.

From the perusal of the assessment order, it is seen that no return was filed by the assessee in any of the years and proceedings under Section 147/148 of the Act have been issued on 29.03.2016 though the reasons have not been incorporated in the assessment order. However, summary of such reasons are as under:- “ It has come to notice from 26AS that:  The assessee has earned interest income of Rs.2,91,155/- from Axis Bank Limited during the year under consideration.  The assessee has earned rental income from the following parties:- (i) DLF Cable Network Rs. 44,944 (ii) DEN Digital Cable Network Pvt. Ltd.: Rs.4,94,384 (iii) Out of Home Media (India) Pvt. Ltd. Rs.1,71,600 (iv) Out of Home India Pvt. Ltd. Rs.3,69,600 Rs.10,80,528

The ld. Assessing Officer noted that assessee had shown interest income of Rs.2,91,155/- in the assessment year 2009-10; Rs1,10,476/- in assessment year 2010-11 and Rs.2,92,089/- in assessment year 2011-12. Similarly, income from house property has been earned of Rs.7,56,370/- in assessment year 2009-10; Rs.5,92,715/- in assessment year 2010-11 and Rs.6,70,010/- in assessment year 2011-12. Similarly, there was marginal professional fee earned by the assessee of Rs.5,727/- in assessment year 2009-10; and Rs.33,633/- in assessment year 2010-11 and Rs.49,411/- in assessment year 2011-12, received from M/s. Access Mobile India Pvt. Ltd. and Cimigo India Pvt Ltd. and also brokerage and commission of Rs.5,000/- in all the three years. It appears that before the Assessing Officer, assessee had agreed that it is not covered by Section 80P(2)(d) of the Act. However, it has claimed the principal of mutuality as assessee is a resident welfare association. The ld. Assessing Officer has taxed the interest income from the deposit from the bank and stated that it is not covered under principal of mutuality following the judgement of the Hon’ble Supreme Court in the case of Bangalore Club Vs. Commissioner Page 7 of 10

From the perusal of both the orders, we are unable to appreciate the facts of the case nor there is any proper explanation or reply filed by the assessee. Before the Ld. CIT(A) it appears that substantive grounds were not pressed but now in the grounds of appeal assessee has challenged not only the validity of re-opening, but also contending that principle of mutuality is applicable in the case of the assessee and deduction of common expenses incurred from the rental income received from house property has not been provided and also the fact that tax deducted at source has not been given due credit of. It appears that due to non-cooperation by the erstwhile management of the association and internal disputes the

In the result, all the appeals filed by the assessee are remanded back to the file of the Assessing Officer for fresh assessment. Consequently, the appeals are allowed, for statistical purposes.