2015 (2) TMI 769 - HC - Income Tax

Transfer fees and non-occupancy charges of Housing Society not taxable under mutuality principle

Commissioner of Income Tax-16 Versus Shyam Co-Op. Housing Society Ltd.

The High Court of Bombay upheld the Income Tax Appellate Tribunal's decision that transfer fees and non-occupancy charges received by a Cooperative ... Transfer fees and non occupancy charges - whether covered by the principle of mutuality and is not chargeable to tax? - Held that:- Nothing has been brought on record to indicate that the respondent had received more amounts than allowed/permitted in the State Government Circular dated 9th August 2001. Further in the respondent-assessee's own case [2009 (7) TMI 1208 - BOMBAY HIGH COURT], this Court has decided the issue in it's favour and in the absence of any distinguishing feature, the Tribunal was obliged to follow the same accepting the assessee's plea that the contribution towards the transfer fees and non occupancy charges are covered by the principle of mutuality and is not chargeable to tax. This is precisely what the impugned order has done. - Decided in favour of assessee. Issues:1. Whether the amount received for transfer fees and non-occupancy charges by a Cooperative Housing Society is chargeable to tax under the principle of mutuality for Assessment Year 2003-04Rs.Analysis:The High Court of Bombay heard the Revenue's appeal challenging the Income Tax Appellate Tribunal's order, which held that the transfer fees and non-occupancy charges received by the respondent-assessee, a Cooperative Housing Society, are not taxable under the principle of mutuality. The Tribunal's decision was based on a previous ruling by the High Court in the respondent's case for Assessment Years 1999-00, 2000-01, and 2001-02. The Revenue contended that the respondent had received amounts exceeding the limits set by State Government Circulars, making them taxable. However, the respondent argued that no excess amounts were charged, citing previous court decisions supporting their position.Regarding non-occupancy charges, the Court noted that the issue had not been admitted in a previous case. However, the Court acknowledged appeals related to transfer fees, where the Revenue raised similar concerns. In a past judgment, the Court emphasized the principle of mutuality and the need for concrete evidence to deem amounts received as taxable. The Court highlighted that in the absence of proof that the respondent received more than permitted under the Circular, the Tribunal correctly followed the earlier ruling in the respondent's favor. Therefore, no significant legal question arose in this case, leading to the dismissal of the appeal without costs.