2010 (11) TMI 989 - AT - Income Tax

Summary

Issues involved: Appeal against order of CIT(A) regarding addition on account of contribution towards common amenities fund, addition on account of non-occupancy charges, and addition to taxable income as reimbursement of expenses.

Issue 1 - Contribution towards common amenities fund:
- Facts: Assessee credited Rs. 33 lacs as contribution under "common Amenities Fund" on transfer of flat, claimed as exempt under principle of mutuality.
- AO's Decision: Held amount not exempt from tax.
- CIT(A)'s Decision: Deleted addition based on Bombay High Court decision exempting transfer charges under mutuality principle.
- Tribunal's Decision: Upheld CIT(A)'s decision, citing consistent view that mutuality principle applies to transfer fees by housing society.

Issue 2 - Non-occupancy charges:
- Facts: Society received Rs. 31,864 as non-occupancy charges, claimed as exempt under mutuality principle.
- AO's Decision: Held amount not exempt under mutuality principle.
- CIT(A)'s Decision: Deleted addition based on Tribunal decisions and jurisdictional High Court ruling.
- Tribunal's Decision: Upheld CIT(A)'s decision citing jurisdictional High Court ruling supporting exemption under mutuality principle.

Issue 3 - Reimbursement of expenses:
- Facts: Society credited Rs. 91,850 as miscellaneous income, claimed as reimbursement of expenses.
- AO's Decision: Held receipts not covered by mutuality concept, brought amount to tax.
- CIT(A)'s Decision: Upheld AO's decision due to lack of evidence supporting exemption under mutuality principle.
- Tribunal's Decision: Directed AO to allow opportunity for society to substantiate expenses incurred and prove voluntary payment by members, for fresh decision.

Cross Objection:
- Grounds 1 & 2: Challenge addition of Rs. 91,850 as income from other sources, seek allowance of expenses before taxing.
- Tribunal's Decision: Directed AO to provide opportunity for society to submit evidence of expenses incurred, to decide afresh.
- Ground 3: Seek allowance of expenses against exempt receipts.
- Tribunal's Decision: Dismissed as alternate ground after dismissing revenue's appeal.

Conclusion: Revenue's appeal dismissed, Cross Objection allowed for statistical purpose. Tribunal directed fresh assessment on reimbursement of expenses issue.