2010 (10) TMI 1057 - AT - Income Tax

Summary

Issues involved: Taxability of transfer fee and TDR premium u/s Income Tax Act, 1961.

Transfer fee issue: The appellant, a Co-operative Housing Society, received transfer fee exceeding the stipulated limit of Rs. 25,000, claimed as exempt on the principle of mutuality. The Assessing Officer assessed the entire amount as income from other sources. The appellant contended that the limit of Rs. 25,000 is a recommendation, not mandatory, and transfer fee is charged as per bye-laws. The CIT(A) held the transfer fee not taxable based on the principle of mutuality and a judgment of the Jurisdictional High Court. The Tribunal upheld this decision citing the absence of commerciality and satisfaction of mutuality tests.

TDR premium issue: The appellant collected TDR premium from members, claiming it to be exempt based on mutuality. The Assessing Officer assessed the premium as income from other sources, considering it as commercial exploitation. The CIT(A) deleted this addition following the same judgment. The Tribunal, relying on the mutuality principle and the High Court's decision, upheld the deletion of the TDR premium amount from taxation.

Judgment: The Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s decision to delete both additions. Citing the absence of distinguishing features and following the High Court's decision, the Tribunal held that the transfer fee and TDR premium were not taxable under the principle of mutuality. The grounds raised by the revenue were rejected, and the appeal was dismissed.