2012 (10) TMI 527 - HC - Income Tax

Whether assessee is covered by principles of mutuality and hence, TDR premium received by the Society is not taxable alleged that TDR premium payment is made by only those members availing the additional FSI Held that - consideration has flowed from the members of the Society to the Society which is a Co-operative Housing Society as consideration for allowing the use of extra FSI. The principles of mutuality would apply TDR premium received by the Society is not taxable

Summary

Issues:
- Taxability of Transferable Development Rights (TDR) premium received by a Co-operative Housing Society from its members.
- Applicability of the principle of mutuality in determining the tax liability of TDR premium.
- Comparison with previous judgments on similar cases.

Analysis:

Issue 1: Taxability of TDR premium
The appeal in question pertains to the tax treatment of Transferable Development Rights (TDR) premium received by a Co-operative Housing Society from its members for allowing additional construction on their plots. The Revenue argued that the TDR premium was a form of profit-sharing arrangement rather than a mutual transaction. However, the Commissioner of Income Tax (Appeals) had deleted the addition made by the Assessing Officer, citing previous judgments in favor of the Society for different assessment years.

Issue 2: Principle of mutuality
The Tribunal, in line with its previous decisions for various assessment years, held that the principle of mutuality applied in this case. It emphasized that the TDR premium was payable only by members desiring to utilize additional Floor Space Index (FSI) and was a consideration for the Society allowing such utilization. The Court further compared this scenario to the payment of non-occupancy charges by members of a Co-operative Housing Society, where the principle of mutuality was upheld in a previous case.

Issue 3: Comparison with previous judgments
The Court referenced a previous case where the Tribunal had held that the TDR premium was not taxable based on the principles of mutuality. It discussed a specific judgment related to the reassessment of TDR premium taxability, emphasizing that the income assessed on reassessment could not be less than the original assessment. The Division Bench clarified that the reassessment proceedings could not be used as a means for the assessee to challenge the taxability of voluntarily offered amounts.

In conclusion, the Court dismissed the appeal, stating that the consideration received by the Society from its members for utilizing extra FSI was covered by the principle of mutuality. Therefore, no substantial question of law arose in this case, and the tax treatment of the TDR premium was deemed non-taxable based on mutual principles.