ITO 21(2)(5), MUMBAI vs. POONAM CHAMBERS B WING COMMERICAL PREMISES COPERATIVE SOCIETY LTD, MUMBAI

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ITA 6899/MUM/2017Status: DisposedITAT Mumbai22 February 2018AY 2010-113 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the CIT(A) was correct in following the jurisdictional High Court's decision, which held that such contributions and charges are exempt under the principle of mutuality. Therefore, the additions made by the AO were deleted.

What were the facts?

The assessee, a co-operative housing society, received a voluntary contribution of Rs. 47.25 lakhs for a new building fund and non-occupancy charges of Rs. 36,136/-. The assessee claimed these receipts as exempt under the principle of mutuality.

What were the issues?

Whether contributions to a new building fund and non-occupancy charges collected by a co-operative housing society are exempt from tax under the principle of mutuality.

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai

Before: Shri B.R. Baskaran (AM)

For Appellant: Shri Rituraj Gurjar
For Respondent: Ms. Arju Goradia
Hearing: 22.2.2018Pronounced: 22.2.2018

The revenue has filed this appeal challenging the order dated 08-09- 2017 passed by Ld CIT(A)-33, Mumbai and it relates to the assessment year 2010-11. The revenue is aggrieved by the decision of Ld CIT(A) in holding that the contribution of Rs.47.25 lakhs given by a member to the new building fund and the non-occupancy charges of Rs.36,136/- collected from one of the members of the society is exempt under the principles of mutuality.

2.

I heard the parties and perused the record. The assessee is a co-operative housing society deriving income from members and interest on deposits. During the year under consideration, the assessee received voluntary contribution of Rs.47.25 lakhs from one of the members towards new building fund. The assessee also received non-occupancy charges of Rs.36,136/- from another member. The assessee claimed both the receipts as exempt under the principles of mutuality. In this regard, the assessee placed reliance on the decision rendered by Hon’ble Bombay High Court in the case of Mittal Court

2 M/s. Poonam Chambers ‘B’ Wing Commercial Premises Cooperative Society Limited Premises Co-operative Society (2010)(320 ITR 414). The AO did not follow the decision of jurisdictional high court on the reasoning that the revenue has not accepted the said decision and filed SLP in Supreme Court. Accordingly he assessed both the amounts in the hands of the assessee. The Ld CIT(A), however, deleted both the additions by following the decision rendered by jurisdictional High Court in the case of Mittal Court Premises co-operative society (supra). The revenue is aggrieved by the said decision of Ld CIT(A).

3.

There should not be any dispute that the decision rendered by the High Court is binding on all the authorities falling within the jurisdiction of that High Court. Since the Ld CIT(A) has followed the decision rendered by jurisdictional High Court, I do not find any reason to interfere with the same. Accordingly I uphold the order passed by Ld CIT(A) on this issue.

4.

In the result, the appeal filed by the revenue is dismissed. Order has been pronounced in the Court on 22.2.2018.

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