Interest on delay payment covered by principle of mutuality cannot be made addition by AO

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The facts which revealed from the record are as under. The assessee is Co-operative Housing Society. The return filed by the assessee was selected for scrutiny and assessment was completed u/s.143(3). It was also noticed by the A.O. that the assessee has collected Rs. 7,50,000/- towards voluntary contribution on transfer of flats received from the outgoing Members and the aid amount was credited to the general reserves in the Balance-sheet and claimed exemption relying on the principles of mutuality. The A.O. had noted that as per the agreement with Members and purchasers of the flats, the transfer fee is to be borne 50-50%. The A.O., therefore, made the addition of Rs. 3,75,000/- that was in respect of the contribution fee received from the purchasers of the flat i.e. transferee. The assessee challenged the said addition before the Ld. CIT (A). The Ld. CIT (A) was not convinced with the plea of the assessee that though the assessee was relied on the decision of the Hon’ble jurisdictional High Court in the case of Sindh CHS Ltd. 317 ITR 47(Bom). In view of the Ld. CIT (A) the decision in the case of Sindh CHS Ltd.(supra) is not applicable to the assessee’s case. The Ld. CIT (A) further observed that up to limit only, the transfer fee is exempt within the framework of the bye-laws. The Ld. CIT (A) further observes that the Hon’ble High Court has not considered the applicability of a Notification issued by the Govt. of Maharashtra as the assessment order in the said case was prior to the date of the Government notification dated 9.08.2001. He, therefore, held that upto the limit of Rs. 25,000/- received per transfer is deleted and any excess of Rs. 25,000/- the same is confirmed. Now, the assessee is in appeal before us.

Citation :
Twinstar Jupiter Co-op. Hsg. Soc. Ltd.,41, Cuffe Parade,Mumbai -400 005 ......…. Appellant Vs ITO -12(2)(4),123, Aayakar Bhavan,Marine Lines,Mumbai -400 002 .....…Respondent