2016 (6) TMI 1073 - HC - Income Tax

Appeal is admitted on the following substantial question of law Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in upholding the order of CIT(A) Mumbai in deleting the following addition (i) Transfer fees; (ii) Rent received from Telecom Companies; and (iii) Advertisement charges on the ground that they are covered by the concept of mutuality under the Act?

Summary

Issues:
- Challenge to the order of the Income Tax Appellate Tribunal for Assessment Year 2008-09.
- Justification of upholding the order of CIT(A) in deleting various additions under the concept of mutuality.
- Interpretation of the concept of mutuality in relation to specific charges like car parking, specific facilities for members, nonoccupation charges, transfer fees, rent from Telecom Companies, and advertisement charges.

Analysis:

1. The appeal challenges the Income Tax Appellate Tribunal's order for Assessment Year 2008-09. The Revenue raises questions regarding the deletion of certain additions by the CIT(A) under the concept of mutuality.

2. The Tribunal examined various charges like car parking, specific facilities for members, nonoccupation charges, transfer fees, rent from Telecom Companies, and advertisement charges. It found that car parking charges and specific facilities for members fall under the concept of mutuality as they are restricted to society members only.

3. The Tribunal referenced the Bangalore Club case, emphasizing that for charges to fall under mutuality, there must be complete identity between contributors and participators, actions must further the association's objectives, and no profiteering should occur. The Tribunal concluded that car parking charges and specific member facilities satisfied these conditions.

4. Regarding nonoccupation charges, the Tribunal noted that a previous court decision had already settled the matter, precluding further questioning on this issue.

5. The Tribunal differentiated the issue of transfer fees from the Darbhanga Mansion case, indicating that the transfer fees received may not be covered by the mutuality concept as per the specific circumstances of the case.

6. The Tribunal admitted the appeal on the question of whether the deletion of transfer fees, rent from Telecom Companies, and advertisement charges under the concept of mutuality was justified. The Registry was instructed to provide a copy of the order to the Tribunal for reference in the ongoing proceedings.