2010 (5) TMI 174

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....008, in respect of the same assessee for two different assessment years, namely, 2002-03 and 2001-02 respectively, by filing the instant appeals under Section 260A of the Income-tax Act, 1961 (for brevity, 'the Act'). The revenue has claimed that the following substantial question of law would arise for determination of this Court:-"Whether on the facts and in the circumstances of the case, the ITAT was rightly holding the donation of Rs. 20,50,000/- being donation and Rs. 1,46,200/- being TDS debited to P&L Account, as capital receipts not liable for tax?" 2. The assessee-Ludhiana Aggarwal Cooperative House Building Society is engaged in providing housing facilities and other allied services such as maintenance, repair of roads, common ....

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.... an appeal before the Tribunal against the order of the CIT(A), Ludhiana. The Tribunal has upheld the view of the CIT(A) in respect of donation of Rs. 20,50,000/- and also deletion of Rs. 1,46,200/-, made by the Assessing Officer on account of donation and TDS debited to profit and loss account. A direction has been issued to the Assessing Officer to treat these amounts as capital receipts exempt from tax. The CIT(A) has recorded a categorical finding that a sum of Rs. 9,51,500/- out of the total amount of Rs. 30,01,500/- is considered as transfer fee. The aforesaid amount has been regarded as income of the assessee-respondent by the Assessing Officer but the same has also been considered as exempt on the basis of principle of mutuality. In....

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....hich is determined by referring to various factors. The doctrine of mutuality has been applied to the assessee Society on the ground that no one can make a profit out of himself. It has been found as a fact that when a number of persons combine together and contribute to a common fund for an object and in that regard they do not have any dealings or relations with anybody outside the body then any surplus remaining to such a body is not to be regarded as a profit. Accordingly, if the participators to the fund are also the contributors and such an identity is established then the test of mutuality is fulfilled. Admittedly, the assessee Society is not engaged in any commercial activity and derives its income from providing facilities to its m....