Nain Krupa Premises Co-operative Society Ltd. Vs AO Ward 22(1)(6) (ITAT Mumbai)
Mumbai ITAT Reiterates: Surplus from Members’ Contributions Not Taxable Under Doctrine of Mutuality
The Mumbai ITAT held that the surplus arising from maintenance charges, property tax recoveries and other contributions collected by a co-operative housing society from its members cannot be taxed, as such receipts are governed by the doctrine of mutuality. The Tribunal also deleted the fee levied under Section 234F for alleged delay in filing the return.
The society had collected ₹21.66 lakh from its members towards maintenance, property tax and other common expenses. After meeting the expenditure, a surplus remained, which the CPC treated as taxable while processing the return under Section 143(1). The CPC also levied fee under Section 234F on the assumption that the return had been filed beyond the due date.
The Tribunal found that the society had duly obtained audit under the Maharashtra Co-operative Societies Act and therefore the applicable due date for filing the return was 31.10.2018. Since the return was filed on the very same date, there was no delay, making the levy of Section 234F fee unsustainable.
On the issue of mutuality, the Tribunal relied extensively on the Supreme Court decision in ITO v. Venkatesh Premises Co-operative Society Ltd. (402 ITR 670) and observed that contributions received exclusively from members and utilised solely for their collective benefit do not constitute taxable income. The Tribunal emphasised that the crucial test is the identity between contributors and beneficiaries, and not whether a surplus arises at the end of the year.
