2017 (8) TMI 181 - AT - Income Tax

Principles of mutuality - Denying the exemption claimed by the assessee with respect to an representing Transfer fee from incoming members - Co-operative Housing Society - Held that - Income by way of Transfer fee received from the members was exempt - see Sind Co-op Housing Society (2009 (7) TMI 15 - BOMBAY HIGH COURT) - Direct the Assessing Officer to allow relief to the assessee with regard to the income received by way of Transfer fee from the incoming members.

Summary

Issues:
Taxability of transfer fee received from members - Exemption on principle of mutuality - Denial of exemption under sections 80P(2)(c) and 80P(2)(d) of the Income Tax Act, 1961.

Analysis:
The appellant, a co-operative housing society, disputed the denial of exemption on a transfer fee of ?47,65,000 received from incoming members. The Assessing Officer rejected the claim, citing a pending challenge by the Department against a relevant High Court decision. The CIT(A) upheld the assessment, referencing a different Tribunal decision. The appellant argued based on a prior Tribunal ruling in their favor. The Revenue relied on lower authorities' decisions.

The Tribunal noted that a previous decision in the appellant's favor, based on the principle of mutuality, remained valid and unaltered. The CIT(A) disregarded this and followed a conflicting Tribunal decision. The High Court emphasized the importance of judicial discipline in following precedent unless justified by specific exceptions. The High Court set aside the Tribunal's order and remanded the case for fresh consideration.

Ultimately, the Tribunal set aside the CIT(A)'s decision, directing the Assessing Officer to grant the exemption based on the appellant's previous favorable Tribunal ruling. The appeal was allowed in favor of the appellant.

This comprehensive analysis highlights the legal battle over the taxability of transfer fees and the application of the principle of mutuality, culminating in the Tribunal's decision in favor of the appellant based on established precedent and judicial discipline.