TAHNEE HEIGHTS COOPERATIVE HOUSING SOCIETY LTD,MUMBAI vs. ASST CIT 16(2), MUMBAI

This appeal has been filed by assessee against the order of Commissioner of Income-Tax (Appeals)-27, Mumbai, dated 01.04.2014 for A.Y. 2010-11 on following grounds: “On the facts and in the circumstances of the case and in law the Learned Commissioner of Income Tax (Appeals)- 27, Mumbai erred in (a) Confirming the addition of Rs.22,00,000 (incorrectly stated as Rs.22,25,000 in the order of the Learned Commissioner of Income Tax (Appeals) in respect of Voluntary Contributions received from members.

(b) Not granting Credit for the taxes paid by Your Appellant and credit whereof has been claimed in the return of Income

The Appellant prays that (a) The addition of Rs.22,00,000/- made in respect of Voluntary contributions received from members be deleted.

(b) Credit be granted for the taxes paid by Your Appellant and Credit whereof has been claimed in the Return of Income.”

“6. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that the solitary issue raised in the assessee's appeal relating to taxability of transfer charges is squarely covered in favour of the assessee by the various decisions of the Tribunal as well as that of the Hon'ble Bombay ITA No.7136/Mum/14 A.Y. 10-11 [Tahnee Heights Cooperative Housing Society Ltd. vs. ACIT] Page 3 High Court. In one of such cases, namely, Sind Co- operative Housing Society vs. ITO 317 ITR 47, the Hon'ble Bombay High Court has decided a similar issue in favour of the assessee and the relevant observations recorded by their lordships in this context are extracted below : "whether the fee was voluntary or not would make no difference to the principle of mutuality. Payments were made under the bye-laws of the assessee which constituted a contract between the assessee and its members which was voluntarily entered into and voluntarily conducted as a matter of convenience and discipline for running of the assessee-society. If any amount was received more than was chargeable under the bye-laws or the Government notification, the assessee was bound to repay the amount and if it retained the amount it would be in the nature of profit making that specific amount exigible to tax. Under the bye-laws, charging of transfer fees had no element of trading or commerciality. Since there was no taint of commerciality the question of earning profits would not arise when the assessee from the funds received applied the moneys received towards the maintenance of the society and providing the members with usual privileges, advantages and conveniences. Thus, the principle of mutuality was applicable to the assessee which had as its predominant activity, the maintenance of the property of the society which included its building(s) and as long as there was no taint of commerciality, trade or business, the receipt of transfer fees was not liable to tax." Respectfully following the aforesaid decision of the Hon'ble jurisdictional High Court in the case of Sind Co-op. Housing Society (supra), we delete the addition made by the AO and sustained by the learned CIT(Appeals) on account of transfer fees and allow the appeal of the assessee.” Nothing contrary was brought to our knowledge on behalf of Revenue. Facts being similar, so following same reasoning, A.Y. 10-11 [Tahnee Heights Cooperative Housing Society Ltd. vs. ACIT] Page 4 we delete the addition made on account of voluntary contributions received from members by Assessing Officer and sustained by CIT(A)

Pronounced in the open Court on this the 30th day of June, 2016.