SHREE KRISHNA CO OP HSG SOC LTD,MUMBAI vs. ITO 33(3)(4), MUMBAI

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ITA 2742/MUM/2017Status: DisposedITAT Mumbai01 January 2018AY 2012-134 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the submission that the sum of Rs. 4,68,500/- is actually members' contribution needs factual examination. The issue was remitted to the Assessing Officer for factual verification and consideration in light of the assessee's submissions and case laws.

What were the facts?

The assessee, a cooperative society, showed Rs. 4,68,500/- as other income but did not offer it to tax. The Assessing Officer added this amount to the assessee's income, and the CIT(A) confirmed the addition.

What were the issues?

Whether member contributions to a cooperative society are taxable as income from other sources, or if they are exempt under the principle of mutuality.

Which sections of the Income-tax Act were involved?

Section 2(24),Section 56

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: SHRI SHAMIM YAHYA

For Appellant: Shri Sanwala Ram Suthar, Ms. N. Hemalatha
For Respondent: Ms. N. Hemalatha

O R D E R Per Shamim Yahya, A. M.: This appeal by the assessee is directed against order of the ld. Commissioner of Income Tax (Appeals)-45, Mumbai dated 09.01.2017 and pertains to assessment year 2012-13.

2.

The grounds of appeal read as under: 1) In the facts and circumstances of the case and in law, the Assessing Officer erred in adding Rs 4,68,500/- as alleged Other Income .

1.

(A.Y. 2012-13) M/s. Shree Krishna Co-op. Housing Society Ltd. vs. ITO 2) The learned assessing officer erred in treating Rs.4,68,500/- being member contribution as income from Other Sources and learned Commissioner of Income Tax appeal erred in confirming the same. 3) The Appellant was relied upon decision of A Landmark Judgment passed by Supreme Court on 14-January-2013, gives great clarity on "Principles of Mutuality", under which the Tax Exemption of Societies is also justified.

The Case M/s Bangalore Club vs. Commissioner of Income Tax (CIT)

THREE conditions must be satisfied, for an Income to be Exempt on the Principle of Mutuality a) There must be a complete identity between the contributors and participators. b) The actions of the participators and contributors must be in furtherance of the mandate of the association. c) There must be no scope of profiteering by the contributors from a fund made by them which could only be expended or returned to themselves.

Therefore above three condition are satisfied by the co-operative Housing Society & the assesse contention is that Contribution from members Rs 4,68,500 is entitled to exempt under the principle of mutuality Income Tax Act, 1961.

3.

Assessee in this case is a corporative society. In the assessment order, the Assessing Officer noted that the assessee has shown the sum of Rs.4,68,500/- as other income, but the same was not offered to tax. In the absence of any explanation, the same was added to the income of the assessee.

4.

Upon assessee's appeal, the ld. Commissioner of Income Tax (Appeals) confirmed the order of the assessing officer.

5.

Against this order, the assessee is in appeal before the ITAT.

(A.Y. 2012-13) M/s. Shree Krishna Co-op. Housing Society Ltd. vs. ITO 6. The ld. Counsel of the assessee reiterated the submissions as referred in the grounds of appeal above. It was submitted that the said amount is the contribution by members and the same cannot be added as other income. It was submitted that this explanation was submitted to the ld. Commissioner of Income Tax (Appeals), but he did not consider the same.

7.

Upon hearing both the counsel and perusing the records, I am of the considered opinion that the submission of the assessee that the said sum of Rs.4,68,500/- is actually members contribution needs factual examination. Accordingly, I remit this issue the file of the assessing officer. The assessing officer is directed to consider the issue in light of the submissions and case laws submitted by the assessee in this regard as mentioned above after factually verifying the same from the records as per law. Needless to add, the assessee should be granted adequate opportunity of being heard.

8.

In the result, this appeal by the assessee stands allowed for statistical purposes.

Order pronounced in the open court on 01.01.2018

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