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of <h1>Excess transfer fees not taxable as income. Principle of mutuality applies.</h1> The Tribunal dismissed the Revenue's appeal, affirming the CIT (A)'s decision to delete the addition of excess transfer fees as income from other sources. ... Addition of income from other sources - Transfer Fees in excess of limit prescribed by the Notification of Govt. of Maharashtra i.e. ₹ 25,0001- per flat - concept of Mutuality - taxability of the receipts of the society on account of Repairs & Maintenance Fund Members Lift fund and transfer fee - Held that:- We find that a categorical finding has been recorded by the CIT (A) to the effect that amount received as transfer fee on sale of flat was only ₹ 25,000/-, and the balance contribution was received towards repairs and maintenance funds, Members Lift Funds etc. CIT (A) also observed that funds so received was used for betterment of society for common benefits. Department could not controvert these finding of the CIT (A) by bringing any positive material on record. Thus, while granting relief to the assessee, CIT (A) discussed the issue i.e. taxability of the receipts of the society on account of Repairs & Maintenance Fund Members Lift fund and transfer fee, at length and relied on the precedents and decided the issue in favour of the assessee. Therefore, we are of the considered view that the decision of the CIT (A) is fair and reasonable and it does not call for any interference. - Decided against revenue Issues:1. Taxability of excess transfer fees collected by a cooperative housing society.2. Application of the principle of mutuality in determining the taxability of funds received by the society.3. Interpretation of relevant legal notifications and previous judicial decisions in the context of the case.Analysis:Issue 1: Taxability of Excess Transfer FeesThe Revenue contended that the cooperative housing society collected transfer fees exceeding the prescribed limit per flat, making it taxable as income from other sources. The AO argued that any amount exceeding the specified limit is subject to tax, citing a High Court decision and notifications. However, the CIT (A) disagreed, emphasizing that the society had not charged excess transfer fees beyond the permissible limit and that the contributions were voluntary for the society's maintenance, not for profit. The CIT (A) referred to precedents and held that the additional amount collected was not taxable as transfer fees but as voluntary contributions, thus deleting the addition made by the AO.Issue 2: Application of Principle of MutualityThe AR of the appellant argued that the funds received were voluntary contributions from members for the common benefit of the society, falling under the principle of mutuality. The CIT (A) supported this argument, stating that the contributions were used for the society's betterment and were not a precondition for flat transfers. The CIT (A) referred to a previous order for the same appellant, where the issue was decided in favor of the appellant, reinforcing the application of the principle of mutuality in this case as well.Issue 3: Interpretation of Legal Notifications and PrecedentsThe AO relied on legal notifications and a High Court decision to assert the taxability of the excess transfer fees. However, the CIT (A) distinguished the case at hand from the cited precedents, highlighting that the contributions were within permissible limits and used for common benefits. The CIT (A) also referred to another High Court decision supporting the principle of mutuality in similar cases. The Tribunal upheld the CIT (A)'s decision, noting the absence of contrary evidence from the Revenue and affirming the application of the principle of mutuality in determining the taxability of the funds received by the society.In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the CIT (A)'s decision to delete the addition of the excess transfer fees as income from other sources. The judgment emphasized the voluntary nature of the contributions and the application of the principle of mutuality in determining the taxability of the funds received by the cooperative housing society.
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