- (1.) This appeal arises from the decision of the Income Tax Appellate Tribunal, dated 6 August 2009. The appeal relates to Assessment Year 2005-06. The Revenue has raised the following question of law: Whether on the facts and circumstances of the case and in law, the ITAT is right in upholding the CIT(A) order that the case of the assessee is covered by principles of mutuality and hence, TDR premium received by the Society is not taxable, without appreciating that the TDR premium payment is made by only those members availing the additional FSI In the present case, the facts are not in dispute. The assessee is a Co-operative Housing Society formed of plot owners, who had obtained a lease of land from the Maharashtra Housing Board. The Society in turn entered into sub lease agreements with its members. The Society looks after the maintenance and infrastructure. The Society passed a resolution by which it resolved that if any member desires to avail of the benefit of Transferable Development Rights (TDR) for carrying out construction or additional construction on his/her plot, the member should apply for a No Objection Certificate which could be granted on the payment of a premium calculated at the rate of Rs. 250/- per sq. ft. This has been noted in the submissions which were recorded in the order of the Assessing Officer. The Society received a premium of Rs. 18.75 lakhs from four members of the Society in the previous year relevant to Assessment Year 2005-06. The Assessing Officer was of the view that TDR premium is charged by the Society from its members to permit them to commercially exploit the potential for the development of the plot; Whereas in reality it was a profit sharing arrangement of the commercial nature. In appeal, the Commissioner of Income Tax (Appeals) deleted the addition made by the Assessing Officer on the ground that the issue was covered by the judgment of the Tribunal in the case of the assessee for Assessment Years 1999-2000 and 2000-01. Moreover, it was noted that the Commissioner of Income Tax (A) had granted relief for Assessment Year 2003-04.
(2.) The Tribunal relied upon its decision in the case of the assessee for Assessment Year 2002-03 in which it was held that the principle of mutuality would apply. The Tribunal held there that the Society is constituted of individual members and in the event that any member is desirous of developing his plot by utilizing extra F.S.I., TDR premium was payable to the Society. This option of availing additional FSI was available to each member of the Society and the payment is required to be made by only those members who are desirous of availing of additional FSI. In the order for Assessment Year 2002-03, the Tribunal also relied upon its decision in the case of the Society for Assessment Years 1999-2000 to 2001-02.
(3.) The admitted facts would indicate that the TDR premium is liable to be paid by a member of the Society who desires to utilize additional FSI in the form of Transferable Development Rights. The principle of mutuality would clearly apply to a situation as to the present. In the context of the payment of non-occupancy charges by a member of a Co-operative Housing Society to the Society, a Division Bench of this Court held in Mittal Court Premises Cooperative Society Ltd. v. ITO,2009 184 Taxman 292, that the principle of mutuality would apply. The Division Bench noted that the object of the Society is to provide service, amenities and facilities to its members. Non-occupancy charges are payable by a member on account of the fact that the member is not in occupation of the premises. In our view, the same principle would apply to the present case. The TDR premium is a payment made by a member to the Society of which he is a member, as a consideration for being permitted to make an additional utilization of FSI on the plot allotted by the Co-operative Housing Society. The Society which looks after the infrastructure, requires the payment of the premium in order to defray the additional burden that may be cast as a result of the utilization of the FSI. The point however, is that there is a complete mutuality between the Co-operative Housing Society and its members.;