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Issues involved: Appeal against order dated 22.12.2009 of learned CIT(A)-XXVII, Mumbai for Assessment Year 2005-2006.
Issue 1 - Non-occupancy charges: The Revenue challenged the deletion of addition of &8377; 8,36,400/- for non-occupancy charges collected from members who sub-let their flats, claiming exemption under the principle of mutuality. The CIT(A) deleted the addition following the decision of the Hon'ble Jurisdictional High Court in the case of M/s. Sind CHS. The High Court held that non-occupancy charges are not taxable as they are governed by the principle of mutuality, with no element of profiteering. The Tribunal's remand directed the Assessing Officer to treat non-occupancy charges received by the society as non-taxable, as they increase the society's funds for providing services to members. The 10% limit on maintenance charges does not apply to commercial societies. The Tribunal's decision was accepted by the Revenue. The appeal upheld the CIT(A)'s decision based on the High Court's ruling. Issue 2 - Transfer charges: The Revenue also contested the deletion of addition of &8377; 95,000/- for transfer charges, citing a High Court decision that amounts received on account of transfer charges are exempt under the principle of mutuality up to &8377; 25,000/- per case as per government notification. The AR argued that the transfer charges in this case were below the permissible limit. Consequently, the Tribunal directed the Assessing Officer to allow the claim if the transfer charges were up to &8377; 25,000/- per case. The appeal was disposed of accordingly. The judgment pronounced on 11th February 2011 by Appellate Tribunal ITAT Mumbai, involved the resolution of issues related to non-occupancy charges and transfer charges, with decisions based on the principle of mutuality and relevant High Court rulings.
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