ITO 19 (3)(5), MUMBAI vs. TAHNEE HEIGHTS C.H.S. LTD, MUMBAI

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ITA 6712/MUM/2016Status: DisposedITAT Mumbai03 November 2017AY 2012-136 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 upheld the CIT(A)'s decision, finding that all three disputed income streams were exempt on the principle of mutuality. The Tribunal relied on previous decisions in the assessee's own case and other precedents that had not been overturned by higher authorities.

What were the facts?

The Revenue appealed against the CIT(A)'s deletion of additions made by the AO on account of non-occupancy charges, voluntary contributions, and sale of scraps. The assessee, a co-operative housing society, claimed these incomes as exempt based on the principle of mutuality.

What were the issues?

Whether non-occupancy charges, voluntary contributions, and income from sale of scraps are exempt from tax on the principle of mutuality for a co-operative housing society.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI

Before: SHRI G.S. PANNU & SHRI AMARJIT SINGH

For Appellant: Shri Rajesh Kumar Yadav
For Respondent: Shri Samir Saraiya
Hearing: 16/08/2017Pronounced: 03/11/2017

O R D E R PER G.S. PANNU, AM :

The captioned appeal by the Revenue is directed against the order of CIT(A)-30, Mumbai dated 19/08/2016 pertaining to the Assessment Year 2012-13, which in turn has arisen from the order passed by the Assessing Officer dated 10/03/2015 under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’). 2. In its appeal, Revenue has raised the following Grounds of appeal:-

1. On the facts and in the circumstance of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the A.O. amounting to Rs. 28.57,094/- on account of ' Non occupancy Charges' without considering the fact that the assessee has not passed the test of mutuality concept. On the same issue, in the case of M/s. The pancharatna CHS Ltd. the Department has filed 260A before the High Court". 2. "On the facts and in the circumstance of the case and in law, the Ld.CIT(A) was erred in directing the AO to delete the addition amounting to Rs. 2,88,84,000/- made towards ‘Voluntary Contribution' from members credited under the head of maintenance charges without considering that the same issue had been confirmed by CIT(A) in assessee's own case for A.Y. 2010-11 following the decision of Hon'ble IT AT, Mumbai bench in the case of Hatkesh CHS.Ltd. in ITA No, 494 to 500/mum/2011 dtd 04.09.2013. Moreover, in assessee own case for A.Y. 2005-06 the appeals are admitted on same issue before Hon'ble High Court Bombay." "Further, on both the issues in respect of principle of mutuality in the case of M/s. Mittal Court Premises Co-op, Society Ltd.(320 ITR 414) the Department has not accepted the decision of Hon 'ble Bombay High Court and preferred an appeal before the Hon'ble Supreme Court." 3. "On the facts and in the circumstance of the case and in law, the Ld.CIT(A) was erred in directing the AO to delete the addition amounting to Rs. 10,21,000/- made towards/Sales of Scraps' without appreciating that income derived from sale of scrap is a miscellaneous income of the society which is not covered by the principle of mutuality"

4. The appellant prays that the order of the Learned CIT(A) on the above grounds be set side and that of the AO be restored.\ 5. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.

3.

As the aforestated Grounds of appeal reveal three issues have been raised by the Revenue. At the time of hearing, it was a common point between the parties that all the three issues are covered in favour of the assessee by way of precedents in assessee’s own case for earlier assessment years.

4. Pertinently, the CIT(A) has also decided the issues on the basis of precedents and it is also not disputed that the precedents relied upon by the CIT(A) continue to hold the field and have not been altered by any higher authority. So however, in order to impart completeness to the order, the following discussion is relevant.

5. The respondent-assessee before us is a Co-operative Housing Society and in the course of assessment proceedings, the Assessing Officer noted that assessee has earned incomes by way of Non-Occupancy charges - Rs.28,57,094/-; Voluntary Contribution from Members created under the head ‘Maintenance Charges’ – Rs.2,88,84,000/-; On Sale of Scrap – Rs.10,21,000/- ; which were claimed as exempt on the principles of mutuality. The Assessing Officer disagreed with the stand of the assessee and brought to tax the aforesaid incomes, which have since been deleted by the CIT(A).

6.

In so far as the Non-Occupancy charges of Rs.28,57,094/- are concerned, the same are earned by the assessee from such members who rent out their premises. Such income has been found to be exempt on the principle of mutuality in A.Y 2005-06 even by the Hon’ble Bombay High Court in assessee’s own case in dated 21/03/2013. In view of the said judgment of the Hon’ble Bombay High Court, we find no reasons to interfere with the decision of the CIT(A) which in consonance with the judgment of the Hon’ble Bombay High Court. Thus, in so far as Ground of appeal No.1 is concerned, Revenue fails.

7.

With regard to the Voluntary Contribution received from the members of Rs.2,88,84,000/- which have been credited under the head ‘Maintenance Charges’, assessee explained that the same have been received from the members towards building repairs and maintenance. The Assessing Officer noted that such amounts have been received from those of the members who either sale or purchase the premises in the building of the assessee- society. Secondly, the Assessing Officer observed that such amounts being in the nature of transfer of fee was being received by the assessee in excess of the maximum amount prescribed and thus, it could not be said to be Voluntary Contribution so as to be exempt on the principles of mutuality. On this aspect also we find that the Tribunal in assessee’s own case for the A.Y.2005-06 vide its order dated 15/07/2011 in and ITA No.2728/Mum/2009 has held that such income is also exempt on the principles of mutuality. Similarly in the A.Y. 2006-07 also the Tribunal vide its order dated 13/05/2011 in ITA No.5275/Mum/2009 and ITA No.5948/Mum/2009 has upheld the stand of the assessee. Following the aforesaid precedents which continue to hold the field, we find that CIT(A) has made no mistake in setting aside the action of the Assessing Officer on this aspect. Thus, on the issue of voluntary contributions from the members which is credited under the head ‘Maintenance Charges, the stand of the CIT(A) is affirmed and accordingly, Revenue fails in Ground of appeal No.2 also.

8. The last ground is with regard to the income earned of Rs.10,21,000/- on Sale of Scraps. The exemption claimed by the assessee on such income was also denied by the Assessing Officer. In this context, the CIT(A) noticed that in A.Y.2004-05, identical issue came up and the Tribunal vide its order No.4035/Mum/2009 dated 24/09/2010 held that such income was also to be excluded from the total income of the assessee on the principles of mutuality. The decision of the Tribunal dated 24/09/2010 (supra) continues to hold the field and therefore, we find no reasons to interfere with the decision of the CIT(A) on this aspect also. Thus, Revenue fails on this ground too.

9.

In the result appeal of the Revenue is dismissed.

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