Exemption under section 54 is devoid on the basis that constructed houses and properties of members cannot be deemed to be purchased or constructed

Last updated: 28 July 2012

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
Brief facts are that the assessee is a cooperative society engaged in the construction of about 476 flats. It has claimed that due to dispute between different groups of members, complaints were made for violation of cooperative group housing society laws and bye laws. Consequently, a survey u/s 133A was carried out in the office premises of the society on 14.12.2005. it was found that books of account and other documents were already impounded by CB-CID, Meerut in connection with certain criminal investigations about the alleged irregularities. The remaining papers were seized during the course of survey. 148 notices were issued accordingly. Assessee filed its returns of income based on copies of audited accounts. In view of various complaints, IT authorities appointed Special Auditor M/s Pary & Co. to conduct of special audit which was carried out. The Special Auditor reported that various documents were in the custody of the CB-CID for which a report was prepared. It was reported that copies of balance sheets, profit & loss accounts, receipt and payments for various financial years from 1998-99 to 2003-04 were not prepared by normally accepted methods, therefore, they could not be examined. The report was accordingly submitted which is reproduced in the assessment orders. The assessee claimed exemption from tax relying on the principle of mutuality on the ground that the society has existence based on the collective strength of the Members. The surplus, if any, was to be distributed among the Members only and in the case of dissolution of the society also the remainder was to be distributed amongst the Members.

Citation :
M/s Asha Pushp Vihar Sahkari Awas Samiti Limited, Sector-14, Kaushambi, Ghaziabad. PAN: AAAAA7060K. (Appellant) Vs. (i) Additional Commissioner of Income Tax, Range-1, Ghaziabad. (ii) Commissioner of Income Tax (Appeals), Ghaziabad. (Respondent)