2020 (5) TMI 138 - AT - Income Tax

Tribunal rules against double taxation for share income from society, citing finality of tax assessment.

The Tribunal allowed the appeal of the assessee, holding that the share income received from a society should not be taxed again in the hands of ... Share income received from the Society - Society has claimed deduction u/s 80IAB, hence not suffered any tax - whether the share income received by the assessee as member of the society is required to be taxed separately or not? - HELD THAT:- In the instant case, what was received by the assessee was only share of income from the society. The income of the society was taxed separately in the hands of the society. CIT(A) also has given a finding that the income should be taxed in the hands of the society only but not in the hands of individual members. CIT(A) confirmed the addition, because of the reason that the assessee as well as the society have not filed the returns of income, thereby held that the assessee has relinquished the claim for deduction u/s 80IAB which was disallowed by the AO. Since the income of the society was taxed separately as rightly observed by the Ld.CIT(A), individual members of the society are not liable to be tax the same income. Taxing the income again in the hands of the assessee would amount double taxation of the same income which is not permissible. Since, the claim of deduction u/s 80IAB has reached finality in the hands of the society, we hold that both the lower authorities have erred in taxing the share income received by the assessee, accordingly, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO and allow the appeal of the assessee. Issues involved:1. Taxation of share income received by the assessee from a society.2. Claim of deduction u/s 80IAB in relation to the share income.Analysis:1. The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) concerning the share income received from a society for the Assessment Year 2012-13. The assessee, an individual deriving income from various sources, including share income from the society, claimed a deduction of a specific amount under Chapter VIA related to the share income received, which was claimed as exemption u/s 80IAB of the Income Tax Act, 1961. The Assessing Officer found the assessee not entitled to the deduction u/s 80IAB and called for information. The assessee explained the development agreements and the formation of societies to obtain co-developer status, leading to the share income received. The AO disallowed the deduction claimed by the assessee, leading to the appeal (Para 2).2. The main issue was whether the share income received by the assessee as a member of the society should be taxed separately. The CIT(A) observed that the income should be assessed in the hands of the society, not individual members, but noted that neither the society nor the assessee filed returns of income, leading to the conclusion that the claim of deduction u/s 80IAB was relinquished. The appeal before the Tribunal argued that the share income was already taxed in the hands of the society and should not be taxed again in the hands of the individual members. The Tribunal, after hearing both parties, held that since the income of the society was taxed separately, individual members should not be taxed on the same income to avoid double taxation (Para 2, 3, 5).3. The Tribunal found that the income of the society was already taxed separately, as confirmed by the CIT(A), and that individual members should not be taxed on the same income. Referring to the CIT(A)'s order, the Tribunal highlighted that the claim of deduction u/s 80IAB had reached finality in the hands of the society. Therefore, the Tribunal held that the lower authorities erred in taxing the share income received by the assessee and decided to set aside the order of the CIT(A), delete the addition made by the AO, and allow the appeal of the assessee (Para 5, 5.1).4. In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that since the income of the society was already taxed separately, taxing the share income again in the hands of the individual member would result in double taxation, which is impermissible. Therefore, the Tribunal set aside the CIT(A)'s order and deleted the addition made by the AO (Para 6).