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TMI Blog2015 (9) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... surplus funds are placed. Since the income received is from third party, we are of the opinion that ‘Principles of mutuality’ does not apply to the present facts. There is no merit in assessee’s grounds. Accordingly, they are rejected - Decided against assessee. - ITA No. 1956/Hyd/2014, 1957/Hyd/2014, 80/Hyd/2015, 81/Hyd/2015 - - - Dated:- 26-8-2015 - SHRI B. RAMAKOTAIAH AND SHRI SAKTIJIT DEY, JJ. For The Assessee : Shri B. Shanthi Kumar, AR For The Revenue : Shri Rajat Mitra, DR ORDER PER B. RAMAKOTAIAH, A.M. : These four appeals by assessee and Revenue pertain to AYs. 2007- 08 and 2008-09 against the common order of the Commissioner of Income Tax(Appeals)-VI, Hyderabad dated 29-09-2014. Assessee filed appeals wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer fee paid would be exempt from tax on the Principle of mutuality . Revenue was aggrieved and is contesting that the Principles of mutuality does not apply to the transfer fee received. 2.2 After considering the rival submissions and perusal of the order of CIT(A), we do not see any reason to interfere with the same. Ld. CIT(A) has in fact considered not only the facts of the case but also the judgment of Hon ble Bombay High Court which is squarely applicable. His order is as under: 5.3 Perused the submissions of the appellant and the observations of the Assessing Officer. As could be seen from the facts of the case, the appellant society was collecting the transfer fee from the outgoing members on transferring the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as such there is no principle of mutuality. However, this issue was addressed by High Court of Bombay in the case of Sind Co-op. Housing Societies Vs. ITO (317 ITR 047), wherein it was held by the Hon'ble High Court as under: We may now deal with some other submissions advanced on behalf of the revenue. It was contended that the class of members means, members such as permanent, temporary, honorary, etc. This is based on the assumption that there can be different classes of members. In a co-operative housing society there can be members and associate members. We have already quoted from the judgments where reference is to members as a class and that class may be diminished by members going out or increased by the' members comi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly dismissed. 4. The AO while completing the assessment has also noticed that the appellant-society has earned interest from deposits made with the banks and interest on bank balances as exemption from tax on the Principles of mutuality . Such amounts were quantified at ₹ 19,02,097/- for AY. 2007-08 and ₹ 19,85,909/- for AY. 2008-09. AO relying on the decision of jurisdictional High Court in the case of Secunderabad Club [340 ITR 121] did not allow assessee s claim. Assessee tried to distinguish the status and activities of the said club from that of a housing society and argued that the decision of Secunderabad Club [340 ITR 121] (supra) does not apply to assessee s facts. Ld. CIT(A) however, based on the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision on the facts of the case, and instead relied on the decisions of Delhi High Court in the case of Telangana Co-op Group Housing Society 37 ITCL 119 (2011) and DIT(E) Vs. All India Oriental Bank of Commerce Welfare Society 184 CTR 274 (2013). In this regard, it is relevant to refer to the fact that on the said issue of principle of mutuality in the case of CIT Vs. Secunderabad Club, the Hon'ble High Court of Andhra Pradesh distinguished the decisions of Delhi High Court in the case of Delhi Gymkhana Club (339 ITR 525) and concurred with the decision of Karnataka High Court in the case of Bangalore Club (257 ITR 263) and the decision of Karnataka High Court held to be final with the SLP filed by Bangalore Club on similar issue re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons lending money only to its members. Further, as held by the Supreme Court in Bankipur Club Ltd. (1997) 226 ITR 97 (sc), A host of factors need to be considered to arrive at a conclusion as to at what point does the relationship of mutuality end, and that of trading begin . Furthermore, the nature of the transaction between the assessee and the bank/banks would disqualify application of the principle of mutuality. We are, therefore, of the considered opinion that the impugned orders of the Income Tax Appellate Tribunal are liable to be set aside. Based on the ratio of the decision of Hon'ble High Court in the case of Secunderabad Club (supra), and applying the same to the facts of the case, I am of the opinion that the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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