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TMI Blog2008 (12) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of damages for wrongful proceedings against the assessee taken by him before the Dy. Registrar of Co-operative Housing Society. The claim of the assessee before the AO was that Shri Manojkumar Goswami and his wife Mrs. Shashi Goswami were lessees of plot Nos. 47 and 48 in the society i.e., in Juhu Vile Parle Development Scheme. They tried to amalgamate their respective plots, for which they entered into an agreement with M/s Oberoi Constructions Ltd. The society rules did not permit the amalgamation and the matter was taken up before the Dy. Registrar of Co-operative Housing Society, who decided the issue in favour of the society. Shri Manojkumar Goswami withdrew the complaint against the society, in-turn the society also withdrew the proposed action to cancel the lease deed executed in favour of both the parties subject to payment of Rs. 10 lakhs by way of damages to the society. The said damages were paid on 31st Aug., 2001 and the same were claimed to have been given by the members of the society and hence outside the purview of the tax following the principle of mutuality. The AO rejected the claim of the assessee as the claim of exemption of Rs 10 lakhs along with anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative in reply submitted that M/s Oberoi Construction Ltd. was also made a party in the suit filed before the Dy. Registrar of Co-operative Housing Society and the payment has admittedly been made by it. The learned Authorised Representative further submitted that no evidence has been brought on record to suggest that the payment made by M/s Oberoi Construction Ltd. is on behalf of Mr. and Mrs. Goswami. The compromise was between the parties. the builder and the assessee society and the question of principle of mutuality will not apply to a payment received from non-members. With regard to the letter written by Mr. and Mrs. Goswami. the learned Departmental Representative submitted that it was a self-serving evidence. This substantiates the stand of the Revenue that the said payment has not been received from the members of the society and hence the principle of mutuality is not applicable. 7. We have heard the rival submissions and perused the records. During the year under consideration the assessee society had claimed as exempt a sum of Rs. 10 lakhs received on account of damages for wrongful proceedings against the society taken up before the Dy. Registrar of Co-operative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given moment of time the persons who are contributing are identical with the persons entitled to participate." 9. The principle of mutuality is applicable in cases where there is a complete identity between the contributors and the participators. The ratio laid down by the Special Bench of Mumbai Tribunal is 'if all the participators to the common fund are also contributors and their identity is established, then test of mutuality is satisfied. The contributors to the common fund and the participators in the surplus must be an identical body'. In the facts of the case before us, the damages paid by M/s Oberoi Construction Ltd., i.e., a third party are outside the purview of principle of mutuality as the contributor is not a member of the assessee society. In any case, if it is to be presumed that the said contribution is made by Mr. and Mrs. Goswami who are the members of the assessee society then also the contribution received on account of damages settled by the Dy. Registrar of Co-operative Housing Society is a contribution by an individual in peculiar circumstances of the case. The said contribution cannot be said to have been made by a class but by an individual in the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee that the premium paid is in the form of a Salami and is a capital receipt, the CIT(A) observed that the issue had been considered by the Special Bench of Mumbai Tribunal in Walkeshwar Triveni Co-operative Housing Society Ltd. vs. ITO in para No. 8 it was held that the amounts received from the transferees was a revenue receipt and the same is exigible to tax. The learned Authorised Representative for the assessee stressed on the same claim raised before the CIT(A). The learned Departmental Representative placed reliance on the order of CIT(A). 13. We have heard the rival submissions and perused the records. We find no infirmity in the findings of CIT(A) that the transfer fee received from the transferee is in the nature of revenue receipt and the same is exigible to tax. The Special Bench of Mumbai Tribunal in Walkeshwar Triveni Co-operative Housing Society Ltd. vs. ITO have laid down the ratio that the principle of mutuality is applicable vis-a-vis the existing members of the assessee society and is not applicable to a transferee who is the incoming member of the society but is not a member on the date when the transfer fee is paid by him/her/it. The Special Bench has furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure which has been incurred for the purpose of maintaining the status of the assessee. The learned Authorised Representative further submitted that part of the expenditure which are relatable for maintaining the status of the assessee society may be allowed as expenditure. The learned Departmental Representative for the Revenue submitted that similar issue arose before the Tribunal and the issue was decided against the assessee. The learned Departmental Representative further stated that the assessee had failed to establish the said expenditure as having been spent even before the CIT(A) and as such there was no merit in the claim of the assessee. The learned Authorised Representative in rejoinder submitted that the ground of appeal against allowance of expenditure was not seriously pressed by the assessee society as in the preceding year there were losses incurred by the society. 17. We have heard the rival submissions and perused the records. The income received by the assessee during the year under consideration as is evident from the nature of income assessed on account of TDR premium receipts, transfer fee receipts and interest received from co-operative bank. All s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any member of the society is desirous of developing its flat by utilizing extra FSI, TDR premium was payable to the society. This option of availing additional FSI was available to each member of the society, and only such members who were desirous of availing the same could utilize the same by paying the TDR premium to the assessee society. The said facility was available only to the existing members of the society and during the year under consideration a sum of Rs. 13 lakhs was received by the assessee society from Shri Rameshwar Goenka. Similar payments were received from members of the assessee society in asst. yr. 1999-2000 to 2001-02 and the Tribunal in ITA Nos. 150 and 151/Mum/2004 relating to asst. yrs. 1999-2000 and 2000-01 in the assessee's own case and in ITA No. 6894/Mum/2002 relating to asst. yr. 2000-01 in the case of ITO vs. Ashok Nagar C.H.S. Ltd., had allowed the claim of the assessee and held that the receipts from the existing members of the society are governed by the principle of mutuality and are not exigible to tax. In line with the ratio laid down by the Co-ordinate Benches of the Tribunal in the cases cited supra, we are of the view that the said receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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