M/s Beverly Park-1 Condominium, Delhi V. ACIT, Gurgaon

ITA 1775/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6579 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 26-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR MATTA
• Assessee Lawyers: S L ANURAGI

Judgement Text

\IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA : JUDICIAL MEMBER ITA NO. 1775/DEL/2013 ASSTT. YRS: 2008-09 BEVERLLY PARK-1, CONDOMINIUM, VS. ACIT, CIRCLE 1(1 ), C/O MATTA & ASSOCIATES, NEW DELHI. JD-21-C, PITAMPURA, DELHI-110088. PAN: AAAAB 1082 C ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI AJAY KUMAR MATTA CA ASSESSEE BY : SHRI S.L. ANURAGI DR DATE OF HEARING : 18/02/2016. DATE OF ORDER : 01/03/2016. O R D E R PER S.V. MEHROTRA, A.M: THIS IS ASSESSEES APPEAL AGAINST THE ORDER DATED 31.12.2012, PASSED BY THE LD. CIT(A), FARIDABAD, RELATING TO A.Y. 200 8-09. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE, A RES IDENT WELFARE ASSOCIATION, FILED ITS RETURN OF INCOME, DECLARING TAXABLE INCOM E OF RS. 9,57,190/-. THE AO HAS NOTICED IN THE ASSESSMENT ORDER THAT ASSESSE E IS A CONDOMINIUM, A RESIDENT WELFARE ASSOCIATION, FORMED FOR ITS MEMBER S AND BEING GOVERNED BY ITS BYE-LAWS ACCORDINGLY MANAGED BY ONE GROUP OF PE RSONS TO HANDLE DAY TO 2 ITA 1775/DEL/2013 DAY ACTIVITIES OF THE CONDOMINIUM. THE ACTIVITIES O F THE ASSOCIATION INCLUDED PROVIDING REPAIR AND MAINTENANCE, SECURITY, HOUSEKE EPING, 24 HOURS POWER SUPPLY ON THE REIMBURSEMENT BASIS TO ITS MEMBERS. F OR THESE SERVICES, THE APARTMENT OWNER WAS BEING CHARGED ON QUARTERLY BASI S. THE AO NOTICED THAT THE SOCIETY WAS RECEIVING MAINTENANCE CHARGES FROM RESIDENT MEMBERS AS WELL FROM THE COMPANIES WHO HAD TAKEN THE HOUSE IN THE SOCIETY ON RENT FROM THE MEMBER OWNERS. HE CONCLUDED THAT SINCE THE MEMBERS HAD PROFIT MOTIVE BY GIVING THE HOUSE ON RENT INSTEAD OF USING FOR THEIR OWN RESIDENTIAL PURPOSES, THEREFORE, THE CONCEPT OF MUTUALITY WAS N OT APPLICABLE TO THE AMOUNTS RECEIVED AS MAINTENANCE CHARGES BY SOCIETY. HE, ACCORDINGLY, TAXED THE RECEIPTS OF MAINTENANCE CHARGES IN THE HANDS OF THE ASSESSEE SOCIETY AGGREGATING TO RS. 17,54,369/-. 3. LD. CIT(A) DELETED THE ADDITION TO THE EXTENT OF RS. 15,06,981/-, WHICH WAS IN RESPECT OF SURPLUS GENERATED OUT OF CO NTRIBUTIONS FROM MEMBERS, BUT TAXED THE AMOUNTS RECEIVED FROM TENANT S CONSIDERING THEM AS NON-MEMBERS. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US A ND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LEARNED CIT(APPEALS)-I HAS GROSSLY ERR ED BY NOT DELETING THE ENTIRE ADDITIONS MADE BY THE ASSESSING AUTHORITY. 3 ITA 1775/DEL/2013 2. THAT THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED BY CONFIRMING THE ADDITION OF RS. 247388/- TO THE INCO ME OF THE APPELLANT. 3. THAT THE LEARNED CIT(APPEALS)-I HAS GROSSLY ERRE D BY NOT ACCEPTING THE CONCEPT OF MUTUALITY. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORD OF THE CASE. THE SHORT POINT FOR CONSIDERATION IS WHETHER THE CONTRIBUTIONS RECEIVED FROM TENANTS WOULD COME WITHIN THE AMBIT OF CONCEPT MUTUALITY OR NOT. THE TENANTS OCCUPY THE PR EMISES AND, THEREFORE, FOR ALL PRACTICAL PURPOSES ENTERED INTO THE SHOES OF TH E OWNER/ MEMBER OF SOCIETY. THE TOTAL NUMBER OF MEMBERS IN THE SOCIETY WERE 58 OUT OF WHICH ONLY 7 MEMBERS HAD LET OUT THEIR FLATS. THE CONCEPT OF MUTUALITY REQUIRED THAT THE CONTRIBUTOR AND BENEFICIARY SHOULD BE IDEN TIFIED. IN THE PRESENT CASE THE BENEFICIARY IS IDENTIFIED AS THE FLAT OCCUPANTS / OWNERS AS LONG AS IT WILL OCCUPY THE FLAT IN THE CONDOMINIUM. AS LONG AS THE TENANT OCCUPY THE FLAT IN THE CONDOMINIUM, HE IS THE BENEFICIARY OF THE COMMO N MAINTENANCE CHARGES. IN THIS REGARD LD. COUNSEL HAS REFERRED TO FOLLOWIN G BYE-LAWS: (B) THE PROVISIONS OF THESE BYE-LAWS APPLY TO THE BEVERLY PARK-1 CONDOMINIUM INCLUDING ALL PRESENT OR FUTURE OWNERS, TENANTS, FUTURE TENANTS OR THEIR EMPLOYEES AND/ OR ANY OTHER PERSONS THAT MIGHT USE THE FACILITIES OF THE BUILDI NG IN ANY MANNER ARE SUBJECT TO THE REGULATIONS SET FORTH IN THESE BYELAWS. THE MERE ACQUISITION OR RENTAL OR TAKING LICENSE OF ANY OF THE FAMILY UNITS (HEREINAFTER REFERRED TO AS UNITS) O F THE BUILDING 4 ITA 1775/DEL/2013 OR OCCUPANCY OF ANY OF THE SAID UNITS WILL SIGNIFY THAT THESE BYE- LAWS ARE ACCEPTED, RATIFIED AND WILL BE COMPLIED WI TH . 5. THIS CLEARLY SHOWS THAT THESE BYE-LAWS OF THE CO NDOMINIUM WERE APPLICABLE TO TENANTS ALSO. IN VIEW OF ABOVE DISCUS SION, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE ADDITION OF RS. 247388/ - UPHELD BY THE CIT(A) IS DELETED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCEMENT IN OPEN COURT ON 01/03/2016. SD/- SD/- (SUDHANSHU SRIVASTAVA) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 01/03/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.