SUBHASH SAGAR THROUGH LEGAL HEIR JYOTI SAGAR, MUMBAI V. ITO 11(1)(4), MUMBAI

ITA 4214/MUM/2010

• Counselvise Citation: 421419914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 17-08-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 24-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: AARTI SATHE
• Keywords: Gift
• Section: 56(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G : MUMBAI BEFORE SHRI R.S. SYAL (ACCOUNTANT MEMBER) AND SMT. ASHA VIJAYARAGHAVAN,(JUDICIAL MEMBER) ITA NOS. 4214 TO 4217/MUM/2010 ASSESSMENT YEARS 2002-03 TO 2005-06 MR. SUBHASH SAGAR (THROUGH LEGAL HEIR MR. JYOTI SAGAR) SAGAR VILLA, ROAD NO.12A JVPD SCHEME, VILE PARLE(W) MUMBAI-400 049. ..( APPELLANT ) P.A. NO. (ABEPS 4121 M) VS. INCOME TAX OFFICER WARD-11(1)(4) MUMBAI. ..( RESPONDENT ) APPELLANT BY : MS. AARTI SATHE RESPONDENT BY : SHRI A.K. NAYAK O R D E R PER ASHA VIJAYARAGHAVAN (JM). THESE FOUR APPEALS ARE DIRECTED AGAINST THE ORDERS DATED 23.2.2010 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YE ARS 2002-03 TO 2005-06. THESE APPEALS WERE HEARD TOGETHER AND AR E BEING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER FOR THE SAKE O F CONVENIENCE. 2. THE ASSESSEE IS THE CO-OWNER OF FLAT AT DELHI. THE SAM E WAS GIVEN ON YEARLY RENT OF RS. 1 LAC AND AS 1/5 TH OWNER OF THE SAID FLAT, THE ASSESSEE DECLARED INCOME OF RS. 20,000/- 3. THE ASSESSEE IS 1/5 TH OWNER OF FLAT AT DELHI. THE SAME HAS BEEN LEASED TO SAGAR GLOBAL VENTURE PVT. LTD. FOR YEARLY LEASE RENT OF RS. 1 LAC. NO FORMAL LEASE AGREEMENT HAS BEEN ENTERED WITH THE SAID ITA NOS .4214 TO 4217/M/2010 2 COMPANY BY ALL THE CO-OWNER SINCE IT IS A FAMILY FIRM OF SAGARS. THE SAID PROPERTY IS SITUATED AT B/7, 105A SAFDARJUNG ENCL AVE EXTENION. THE MUNICIPAL AUTHORITIES HAVE FOUND THE SAME TO BE OF ILLEGAL CONSTRUCTION AND HAVE DEMOLISHED 3 BEDROOMS AND THUS THE SAID PROPERTY IS NOT OF INHABITABLE CONDITION AND HENCE AT A TOKEN RENT OF 1 LAC PER YEAR WAS GIVEN TO THE SAID COMPANY. HOWEVER THE AO COMPUTED THE ALV OF THE SAID FLAT BY APPLYING 8% RETU RN ON THE COST OF THE FLAT OF RS. 18,93,966/- AND ACCORDINGLY ARRIVED AT ALV. HE FURTHER ALLOWED THE STATUTORY DEDUCTION FROM THE SAME AND COMPU TED THE PROPERTY INCOME FOR THE SAID FLAT. 4. THE LD. CIT(A) BY COMMON ORDER DT. 23.2.2010 FOR THE FOUR YEARS HELD AS FOLLOWS: FOR THE REASONS DISCUSSED IN DETAIL IN THE ORDER OF A.Y. 2006-07 REFERRED TO SUPRA, IN SO FAR AS THE DELHI PRO PERTY IS CONCERNED, FOR ALL THE 4 YEARS UNDER APPEAL, THE ALV IS TO BE CONSIDERED AT 5% OF THE COST I.E. RS. 18,93,966/- FOR CALCULATION OF INCOME FROM HOUSE PROPERTY. IN A.Y. 2006 - 07, MUNICIPAL TAXES WERE PAID BY TENANT, SO NO DEDUCTI ON ON THAT ACCOUNT WAS ALLOWED. THIS ISSUE MAY BE VERIFIED BY AO WHILE GIVING EFFECT TO THIS ORDER BEFORE ALLOWI NG DEDUCTION UNDER INCOME FROM HOUSE PROPERTY. 5. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US AND IN ALL THE FOUR YEARS HAS RAISED A COMMON GROUND WHICH IS AS FOLLOWS: THE LD. CIT(A) ERRED IN COMPUTING THE ANNUAL LETTIN G VALUE (ALV) OF THE PROPERTY AT DELHI AT RS. 94,698/- AND COMPUTING THE INCOME FROM HOUSE PROPERTY FOR THE SAID PROPERTY ACCORDINGLY. 6. WE FIND THAT IN THE ASSESSMENT YEAR 2006-07 THE ISSUE HAS BEEN DECIDED IN ITA NO. 1189/M/2010 BY MUMBAI D BENCH IN ASSESSES OWN CASE WHEREIN IT HAS BEEN HELD AS FOLLOWS: ITA NOS .4214 TO 4217/M/2010 3 THE FIRST DISPUTE IS REGARDING ADDITION ON ACCOUNT OF HOUSE PROPERTY INCOME. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE OWNED A FLAT AT DELHI IN RESPECT OF WHICH RENTAL INCOME SHOWN WAS ONLY RS.20,000/- WHEREAS THE MUNICIPAL TAX WAS TO THE TUNE OF RS .22,109/-. THE ASSESSING OFFICER THEREFORE ASKED THE ASSESSEE TO EXPLAIN AS TO WHY MARKET VALUE SHOULD NOT BE ADOPTED IN RESPE CT OF RENT FROM THE PROPERTY. AS PER ASSESSING OFFICER, THE ASSESSEE DID NOT GIVE ANY REPLY AND THEREFORE, HE PROCEEDED TO ESTIMATE THE ANNUAL VALUE OF THE PROPERT Y. THE ASSESSING OFFICER NOTED THAT INVESTMENT IN THE PROPERTY AS ON 31.3.2006 OF RS.18,93,966/-. HE COMPUTE D THE ANNUAL VALUE OF THE PROPERTY ON THE BASIS OF RETU RN OF 8% ON THE INVESTMENT WHICH CAME TO RS.1,51,517/-. AFTER DEDUCTING MUNICIPAL TAXES AND AFTER MAKING ALLOWANCE O F 30% FOR REPAIRS, THE INCOME FROM THE HOUSE PROPERTY WA S COMPUTED AT RS.90,586/- WHICH WAS DISPUTED BY THE ASSESSEE. IN APPEAL THE ASSESSEE SUBMITTED THAT THE PROPERTY HAD BEEN LET OUT FOR THE LAST 9-10 YEARS. I T WAS ALSO SUBMITTED THAT THE MUNICIPAL AUTHORITIES HAD FOUN D PART OF THE CONSTRUCTION AS ILLEGAL AND THEREFORE, DEMOLISHED THREE BEDROOMS OUT OF FIVE BEDROOMS. THE PROPERTY WAS NOT IN HABITABLE CONDITION, AND THEREFOR E, RENT OF ONLY RS.1.00 LACS WAS CHARGED IN WHICH SHARE O F THE ASSESSEE WAS RS.20,000/-. THE CIT(A) HOWEVER, DID NOT ACCEPT THE EXPLANATION AND OBSERVED THAT ANNUAL VALUE SHOWN WAS INADEQUATE CONSIDERING THE PROPERTY WAS LOCATED AT SAFDARJUNG ENCLAVE EXTENSION, NEW DELHI. CONSIDERING THAT THE PROPERTY HAD BEEN PARTIALLY DAM AGED, CIT(A) ESTIMATED THE ALV @ 5% OF THE INVESTMENT WHICH CAME TO RS .94,698/-. THE MUNICIPAL TAX AND OTHER EXPENSES WERE FOUND TO BE PAYABLE BY THE TENANT. THE CIT(A) HELD THAT THESE EXPENSES WERE THEREFORE, NOT ALLOWABLE AND INCOME FROM PROPERTY WAS COMPUTED ACCORDINGLY AGGRIEVED BY WHICH ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . 2.2 BEFORE US THE LD. AR FOR THE ASSESSEE SUBMITTED THAT PROPERTY WAS IN A BAD CONDITION AND PART OF WHICH HAD ALREADY BEEN DEMOLISHED. THE PROPERTY HAD ALREADY B EEN LAID OUT. THE MUNICIPAL RATABLE VALUE WAS RS.77,000/- AGAINST WHICH RENT CHARGED BY THE ASSESSEE WAS RS.1.00 LACS. THERE WAS NO MATERIAL SHOWING THAT THE MARKET RA TE WAS HIGHER. IT WAS ACCORDINGLY URGED THAT ALV DECLARED B Y ITA NOS .4214 TO 4217/M/2010 4 THE ASSESSEE SHOULD BE ACCEPTED. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF CIT(A). 2.3 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTE R CAREFULLY. THE DISPUTE IS REGARDING COMPUTATION OF AN NUAL VALUE OF THE PROPERTY. THE ANNUAL VALUE HAS BEEN DEFINED AS THE SUM FOR WHICH THE PROPERTY CAN BE LET OUT FROM Y EAR TO YEAR AND IN CASE PROPERTY IS LET OUT AND RENT RECEIV ED IS MORE, THEN THE ACTUAL RENT RECEIVED. IN THIS CASE THE RE NT CHARGED FOR THE PROPERTY WAS RS.1.00 LACS. THE PROPERTY WAS ALREADY TENANTED. THE MUNICIPAL RATABLE VALUE IS RS.77,000/-. THE PROPERTY HAD BEEN FOUND TO BE ILLE GALLY CONSTRUCTED BY THE MUNICIPAL AUTHORITIES WHO HAVE ALREA DY DEMOLISHED PART OF THE PROPERTY. THERE IS NO MATERIA L PLACED ON RECORD BY THE REVENUE TO SHOW THAT FAIR REN T OF THE PROPERTY IN THE AREA WILL BE MORE THAN THE RENT CHARGED BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES, THE ORDER OF THE CIT(A), SUSTAINING THE ALV AT A HIGHER RATE CANNO T BE UPHELD. WE, THEREFORE, SET ASIDE THE ORDER OF THE CI T(A) AND DIRECT THE ASSESSING OFFICER TO ASSESS THE PROPERTY INCOME ON THE BASIS OF ALV DECLARED BY THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION IN ASSESSEES OWN CASE F OR THE A.Y. 2006-07 WE SET ASIDE THE ORDER OF THE LD. CIT(A ) AND DIRECT THE ASSESSING OFFICER TO ASSESS THE PROPERTY INCOME ON THE BASIS OF ALV DECLARED BY THE ASSESSEE. 7. THE 2 ND GROUND RAISED BY THE ASSESSEE FOR THE A.Y. 2003-04 & 2004-05 IS AS FOLLOWS: THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1 LAC MADE BY THE AO U/S. 56(2)(VI) AS PROVISIONALLY RETAINED. 8. THE LD. CIT(A) HELD AS FOLLOWS: IN SO FAR AS THE ISSUE OF REIMBURSEMENT OF EXPENSES BY NEW INDIA COOPERATIVE HSG. SOC. LTD. IS CONCERNED WHICH I S ITA NOS .4214 TO 4217/M/2010 5 RS. 2 LAKHS IN A.Y. 2002-03 AND RS. 1 LAKH EACH IN A.YR S 2003-04, 04-05 & 05-06, THE ORDER OF CIT(A)-XXI DT. 12.8.09 PERTAINING TO THE SAID SOCIETY IS RELEVANT. T HIS ORDER WHICH COVERS A.YRS 01-02, 02-03 AND 05-06 IN SOCIETYS CASE HAS BEEN DISCUSSED IN ORDER FOR A.Y. 06-07 IN APPELLANTS CASE IN DETAIL. AS HELD BY THAT CIT(A) ORDER OF 12.8.09, THE QUESTION OF ALLOWABILITY OF EXPENSES IN THAT SOCIETYS HANDS WOULD ARISE ONLY IF THE SOCIETY HAS TAXABLE INCOME. ONCE THE ENTIRE FEE RECEIVED BY SOCIETY IS HELD NON TAXABLE ON THE PRINCIPLE OF MUTUALITY, THERE IS NO OT HER INCOME IN RESPECT OF WHICH EXPENDITURE IS REQUIRED TO B E SET OFF AND THE ISSUE OF ALLOWABILITY OF EXPENDITURE IS IRRELEVANT. AS THE APPELLANT IS A MEMBER OF THE SOCIET Y HELD TO BE WORKING AS PER PRINCIPLE OF MUTUALITY, THE QUESTION OF TREATING AS GIFTS, THE MONEY REIMBURSED BY SUCH SOCIETY TO APPELLANT DOES NOT ARISE. THE ADDITION MADE IN THE APPELLANTS HANDS ON THIS COUNT IS THEREF ORE DELETED FOR A.Y. 2002-03 AND A.Y. 2005-06. IN SO FA R AS A.Y. 03-04 AND 04-05 ARE CONCERNED, THE SAID ORDER OF CIT(A)-XXI MUMBAI DOES NOT COVER THESE TWO YEARS. THEREFORE, AS HELD IN RESPECT OF A.Y. 06-07 THE ADDIT ION ON ACCOUNT OF REIMBURSEMENT OF EXPENSES FOR THESE TWO YEARS IS RETAINED SUBJECT TO THE TREATMENT OF INCOME AND EXPENDITURE INCLUDING TREATMENT OF MONIES REIMBURSED T O MEMBERS IN THE SAID SOCIETYS CASE FOR A.YT. 03-04 AND A.Y. 04-05. 9. WE FIND THAT IN THE ASSESSMENT YEAR 2006-07 THE ISSUE HAS BEEN DECIDED IN ITA NO. 1189/M/2010 BY MUMBAI D BENCH IN ASSESSES OWN CASE WHEREIN IT HAS BEEN HELD AS FOLLOWS: THE SECOND DISPUTE ON WHICH THE REVENUE HAS ALSO FILED APPEAL IS REGARDING ADDITION OF RS.15.00 LACS TO THE TO TAL INCOME OF THE ASSESSEE BY THE ASSESSING OFFICER UNDER SECTION 56(2)(V I). THE ASSESSEE IS A MEMBER OF NEW INDIA CO-OPERATIVE HOUSING SOCIETY LTD. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE DURING THE YEAR HAD RECEIVED A SUM OF RS.15.00 LACS FROM THE SOCIETY AS PER DETAILS BELOW:- DATE ASSESSMENT YEAR AMOUNT GIFTED (RS.) 1.10.05 2006-07 10,00,000/- ITA NOS .4214 TO 4217/M/2010 6 24.05.05 2006-07 5,00,000/- 3.1 THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNT RECEIVED FROM SOCIETY SHOULD NOT B E ASSESSED AS INCOME. THE ASSESSEE EXPLAINED THAT HE ALONG WITH OTHER MEMBERS HAD BEEN ALLOWED REIMBURSEMENT OF INSECTICIDE SERVICES FOR TERMITES, RODENTS ETC. REQUIRED IN THEIR HOUSES AND ADJOINING AREAS/GARDEN, FOR REPAIRS O F SEWAGE LINES/RENOVATION AND REPAIRS OF SEWAGE LINES, A ND THE BUILDING FRONTAGE AND COMPOUND WALLS. THE ASSESSEE HAD SPENT THE AMOUNT FOR SPECIFIC PURPOSES AND HAD DECLARED THE SAME AS DRAWINGS IN THE RETURN AND NOTHING REMAINED UNSPENT. IT WAS ARGUED THAT THE AMOUNTS RECEIVED BY THE ASSESSEE AS REIMBURSEMENT OF SPECIFIED EXPENSES WERE NOT TAXABLE. THE ASSESSING OFFICER HOWEVER, WAS NOT SATISFIED BY THE EXPLANATION GIVEN. IT WAS OBSERVED BY HIM THAT THE EXPENSES WERE PURELY PERSONAL EXPENSES OF THE ASSESSEE. IT WAS ALSO OBSERVED BY HIM THAT THE DAMAGES WERE NOT EXCLUSIVELY TO ASSESSEES PROPERTY BUT THAT OF THE SOCIETY AS A WHOLE AND , THEREFORE, IT WAS THE SOCIETY WHO WAS TO SPEND MONEY F OR REPAIRS AND RENOVATIONS UNDER ITS SUPERVISION. THE ASSESSEE HAD RECEIVED THE AMOUNT BY VIRTUE OF HIS SPECIAL RELATIONSHIP WITH THE SOCIETY AS MEMBER AND THEREFORE, THE SAME PARTOOK THE CHARACTER OF INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER ALSO OBSERVED THAT THE SOCIETY HAD NOT MADE PAYMENTS FROM CONTRIBUTIONS RAISED FROM THE MEMBERS. HE REFERRED TO T HE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF P. KRISHNA MENON VS. CIT (1959)( 35 ITR 48) IN WHICH IT WAS HELD THAT GIFT RECEIVED BY A PERSON BY VIRTUE OF HIS O FFICE IS INCOME IRRESPECTIVE OF THE FACT WHETHER THE SAME WAS VOLUNTARY OR COMPULSORY. ALTERNATIVELY THE ASSESSING OFFICER ALSO OBSERVED THAT THE AMOUNT RECEIVED COULD BE CONSIDERED AS GIFT WHICH HAD TO BE TAKEN AS INCOME UNDER SECTION 56(2)(VI) AS SOCIETY WAS NOT A RELATIVE OF THE ASSESSEE. THE PAYMENT, ASSESSING OFFICER FURTHER OBSERVED COULD ALSO BE CONSIDERED AS DIVIDEND AND SINCE THE SOCIETY HAD NOT PAID THE DIVIDEND DISTRIBUTION TA X THE SAME COULD NOT BE EXEMPT UNDER SECTION 10(34). THE ASSESSING OFFICER FINALLY ASSESSED INCOME AS INCOME FROM OTHER SOURCES. ITA NOS .4214 TO 4217/M/2010 7 3.2 THE ASSESSEE DISPUTED THE DECISION OF THE ASSESSING OFFICER AND SUBMITTED BEFORE CIT(A) THAT THE SOURCE OF PAYMENT BY THE SOCIETY WAS THE MONEY RECEIVED FROM MEMBERS AS TRANSFER FEE, ETC. THE PRE-DOMINANT ACTIVIT Y OF THE ASSESSEE WAS MAINTENANCE OF THE PROPERTY AND THEREFORE, THE PRINCIPLE OF MUTUALITY WOULD APPLY UN LESS IT WAS PROVED THAT THE TRANSACTION WAS TAINTED WITH COMMERCIALITY, TRADE OR BUSINESS. IN THIS CASE THE AMOUNT HAD BEEN UTILIZED FOR THE MAINTENANCE OF PROPERTY DAMAGED DUE TO NATURAL CALAMITIES AND, THEREFORE, THE RE WAS NO TRADE/COMMERCIAL ANGLE. HE REFERRED TO THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CI T VS. SIND CO-OPERATIVE HOUSING SOCIETY LTD. (317 ITR 47) . THE CIT(A) OBSERVED THAT THE ASSESSING OFFICER HAD NOT MADE ANY FURTHER INVESTIGATION NOR QUERIED SOCIETY ABO UT NATURE OF MONEY GIVEN AND AS TO WHETHER ASSESSEE WAS TREATED EXCEPTIONALLY OR AT PAR WITH OTHER MEMBERS I N RESPECT OF MAINTENANCE AND REPAIRS EXPENSES REIMBURSEMENT. THERE WAS NO MATERIAL TO SUPPORT THE ORDER OF THE ASSESSING OFFICER. THE CIT(A) THEREFORE, H ELD THAT THE ADDITION MADE BY ASSESSING OFFICER UNDER SECTION 56(2) (VI) COULD NOT BE SUSTAINED. CIT(A) HOWEVER CONFIRMED THE ADDITION PROVISIONALLY SUBJECT TO VERIFICA TION OF TREATMENT OF INCOME AND EXPENDITURE INCLUDING TREATMENT OF MONEYS REIMBURSEMENT TO MEMBERS IN THE ACCOUNT OF ASSESSEE FOR THE ASSESSMENT YEAR 2006-07. AGGRIEVED BY SAID DECISION BOTH PARTIES ARE IN APPEAL. 3.3 BEFORE US THE LD. AR FOR THE ASSESSEE SUBMITTED THA T THE SOCIETY HAS REIMBURSED THE MONEY TO THE MEMBERS FOR CERTAIN ACTIVITIES WHICH WERE AS PER OBJECT OF THE SOCIETY I.E. MAINTENANCE OF BUILDING. THE AMOUNT WERE RECEI VED FROM CONTRIBUTION RECEIVED FROM MEMBERS ONLY. ALL MEMBERS HAD BEEN GIVEN AMOUNTS FOR MAINTENANCE OF THE BUILDINGS WHICH WERE DAMAGED BY NATURAL CALAMITIES. TH E AMOUNT WAS THEREFORE NOT TAXABLE. THE LD. DEPARTME NTAL REPRESENTATIVE ON THE OTHER HAND SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 3.4 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS. THE DISPUTE IS REGARDING ASSESSABILITY OF AMOUNT OF RS.15.00 LACS RECEIVED BY THE ASSESSEE FROM NEW INDIA CO-OPERATIVE HOUSING SOCIETY OF WHICH THE ASSESSEE IS A MEMBER. IT APPEARS FROM THE RECORDS THAT ITA NOS .4214 TO 4217/M/2010 8 THE ASSESSEE ALONG WITH OTHER MEMBERS WERE REIMBURSED A SUM OF RS.15 LACS FOR CARRYING OUT REPAIRS ON ACCOUNT OF DAMAGES TO BUILDINGS DUE TO HEAVY RAINS AND RENOVATION OF BUILDING FRONTAGE AND REPAIRING OF COMPOUND WALL. T HE ISSUE IS TAXABILITY OF SUCH AMOUNT IN THE HANDS OF THE MEMBERS. THE ASSESSING OFFICER HAS HELD THAT THE AMOUNT HAS BEEN PAID BY THE SOCIETY TO MEET PERSONAL OBLIGATIO N OF THE ASSESSEE AND THEREFORE, THE SAME HAS TO BE ASSESSED AS INCOME OF THE ASSESSEE OR ALTERNATIVELY INCOME CAN BE ASSESSED AS GIFT UNDER SECTION 56(2)(VI) OR AS DIVIDEND AS NO DIVIDEND DISTRIBUTION TAX HAD BEEN PAID BY THE SO CIETY. THE CASE OF THE ASSESSEE IS THAT THE AMOUNT HAD BEEN RECEIVED ONLY OUT OF CONTRIBUTIONS MADE BY MEMBER TOWARDS THE SOCIETY AND THE SAME HAD BEEN SPENT ON THE MAINTENANCE OF THE BUILDINGS WHICH WAS THE PREDOMINANT OBJECT OF THE SOCIETY AND THEREFORE, THE SAME COULD NOT BE TAXED IN THE HANDS OF THE MEMBERS IN VIEW OF PRINCIPLE OF MUTUALITY. 3.5 WE FIND SUBSTANCE IN THE ARGUMENTS ADVANCED BY THE ASSESSEE. THE MAINTENANCE OF THE BUILDINGS IS THE OBJECT OF THE SOCIETY. THE SOCIETY HAD BEEN MEETING SUCH REPAIR AND MAINTENANCE EXPENSES SINCE EARLIER YEARS AS IS CLEAR FROM THE ORDER OF THE CIT(A). IT APPEARS THERE HAVE BEEN DAMAGES TO THE BUILDINGS DUE TO HEAVY RAINS AND SOCIETY BY RESOLUTION PASSED HAD SANCTIONED MONEY TO THE MEMBERS TO BE SPENT FOR SPECIFIED PURPOSES RELATING TO THE MAINTENANCE OF THE BUILDING. NORMALLY, SOCIETY ITSELF COULD HAVE INCURRED THE EXPENDITURE OUT OF THE FUNDS RECEIV ED FROM THE MEMBERS WHICH WOULD HAVE BEEN APPLICATION OF INCOME IN CASE OF THE SOCIETY. IN THIS CASE, SOCIETY INSTEAD OF ITSELF CARRYING OUT THE ACTIVITIES, HAD AUTHORIZED THE MEMBERS TO DO THE SAME FOR WHICH CERTAIN AMOUNTS HAD BEEN PAID. THE AMOUNT HAD BEEN PAID NOT ONLY TO TH E ASSESSEE BUT TO ALL MEMBERS FOR CARRYING OUT WORK FOR THE BENEFIT OF THE MEMBERS. THE AMOUNT HAD BEEN PAID FOR SPECIFIC PURPOSE, AS PER OBJECT OF THE SOCIETY AND THEREFORE, COULD NOT BE CONSIDERED AS GIFT OR DIVIDEND. THE ASSESSEE HAD CLEARLY STATED BEFORE AUTHORITIES BELOW THAT THE AMOUNT HAD BEEN FULLY REIMBURSED FOR THE PURPOSE IT HAD BEEN PROVIDED AND NOTHING REMAINED UNSPENT AND THERE IS NO MATERIAL PLACED ON RECORD BY THE AUTHORIT IES BELOW TO CONTROVERT THE SAID CLAIM. THE ASSESSEE HAD ALSO CLAIMED THAT THE MONEY HAD BEEN RECEIVED OUT OF THE F UNDS ITA NOS .4214 TO 4217/M/2010 9 OF SOCIETY GENERATED FROM THE CONTRIBUTION RECEIVED FRO M MEMBERS AS TRANSFER FEE, ETC. THIS CLAIM ALSO REMAINS UNCONTROVERTED BY AUTHORITIES BELOW. THOUGH ASSESSING OFFICER MENTIONED THAT SOCIETY DID NOT MAKE PAYMENT F ROM CONTRIBUTIONS RAISED FROM MEMBERS BUT THERE IS NO MATERI AL PLACED ON RECORD TO SUPPORT THIS FINDING. IT CAN THEREF ORE, BE REASONABLY CONCLUDED THAT THE SOCIETY HAD INCURRED CERTAIN EXPENDITURE FOR THE REPAIR AND MAINTENANCE OF THE BUILDING THROUGH THE MEMBERS FOR THE BENEFIT OF THE MEMBERS, OUT OF THE FUNDS RECEIVED FROM THE CONTRIBUTI ON BY THE MEMBERS. THE AMOUNT HAD BEEN FULLY SPENT BY THE ASSESSEE AND THERE IS NO INCOME. THE ADDITIONS, THEREFOR E, CANNOT BE UPHELD. THE CIT(A) HAS ALSO HELD THAT THE ADDITION IS NOT SUSTAINABLE. HE HAS HOWEVER PROVISIONAL LY CONFIRMED THE ADDITION WHICH IS NOT CORRECT. THE SOCIETY HAD MADE THE PAYMENT FOR CARRYING OUT REPAIR AND MAINTENANCE WORK AND THEREFORE, IT COULD BE EXPECTED T O SHOW DIFFERENTLY IN THE ACCOUNTS. NO CONTRARY MATERIAL HAS BEEN PLACED BY THE REVENUE BEFORE US. THE ORDER OF T HE CIT(A) IS THEREFORE, SET ASIDE AND THE ADDITION MADE I S DELETED. 10. FOR THE A.Y. 2004-05 THE FIRST GROUND RAISED BY T HE ASSESSEE READS AS FOLLOWS: THE LD. CIT(A) ERRED IN HOLDING ORDER OF AO U/S. 14 3(3) R.W. 147 AS VALID AND WITHIN PROVISIONS OF LAW. 11. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS G ROUND SHOULD BE TREATED AS NOT PRESSED. HENCE WE DISMISSED AS NOT PRESSED. 12. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 26 TH DAY OF AUGUST, 2011 SD/- SD/- (R.S. SYAL) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 26.8.2011. RJ ITA NOS .4214 TO 4217/M/2010 10 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR G BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NOS .4214 TO 4217/M/2010 11 DATE INITIALS 1. DRAFT DICTATED ON: 17.8 .2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 17 0..08.2011 SR. PS/PS 3. DRAFT PROPOSED & P LACED BEFORE THE SECOND MEMBER: JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/PS 6. ORDER PRONOUNCED ON: SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: 8. DATE ON WHICH FILE GOES TO T HE HEAD CLERK: SR. PS/PS 9. DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER: