Case Law Details
RELEVANT PARAGRAPH
7. We have the rival submissions and perused the records. During the year under consideration the assessee society had claimed as exempt a sum or Rs. 10.00 Lakhs received on account of damages for wrongful proceedings against the society taken up before the Deputy Registrar of Co-operative Housing Society. Mr. Manojkumar Goswami & Mrs. Shashi Goswami were allottees of plot Nos. 47 & 48 in the society.
The two lesses along with M/s. Oberoi Construction Ltd. tried to amalgamate the flat and redevelop the same. However, the same being outside the Rules of the society, the objections were filed before the Deputy Registrar of Co-operative Housing Society which in-turn decided the matter in favour of the assessee society. The complaint filed by Mr. Manojkumar Goswami was withdrawn and in-turn the assessee society also withdrew its proposed action to cancel the lease deed executed in favour of Mr. & Mrs. Goswami subject to payment of damages. The damages were fixed at Rs. 31-8-2001. The said damages were stated to be paid on behalf of Mr. & Mrs. Goswami who in-turn were Members of the assessee society and hence the principle of mutuality being applicable, the said receipts were claimed as exempt. Admittedly the payment has been made by M/s. Oberoi Construction Ltd., who was a party to the complaint filed before the Deputy Registrar of Co-operative Housing Society. Undoubtedly, Mr. and Mrs. Goswami are the members of the society, however the payment is made by M/s Oberoi Construction Ltd. into the fact that the said payment has been made by him on behalf of Mr. & Mrs. Goswami despite the point raised by the Assessing Officer and the Commissioner (Appeals). The assessee has only referred to a letter filed by Mr. Goswami before the Assessing Officer concerned of the assessee society wherein he claims that the payment has been made on his behalf, which is a self serving evidence.
8. The Special Bench of Mumbai Tribunal in Walkeshwar Triveni Co-operative Housing Society Ltd. v. ITO (88 ITD 159) (SB)(Mum.) had held as under:
“No one can make a profit out of himself. In short this is the principle of mutuality. The cardinal requirement for mutuality is that a contributor to the common fund must be entitled to participate in the surplus and that all the participators in the surplus must be contributors to the common fund. For this doctrine to apply, it is since qua non that there should be complete identity between the contributors and participators. This means identity as a class, so that at any given moment of time the persons who are contributing are identical with the persons entitled to participate. “
9. The principle of mutuality is applicable in cases where there is a complete identity between the contributors and the participators. The ratio laid down by the Special Bench of Mumbai Tribunal is `if all the participators to the common fund are also contributors and their identity is established, then test of mutuality is satisfied. The contributors to the common fund and the participators in the surplus must be an identical body’. In the facts of the case before us, the damages paid by M/s. Oberoi Construction Ltd., i.e., a third party are outside the purview of principle of mutuality as the contributors is not a member of the assessee society. In any case, if it is to be presumed that the said contribution is made by Mr. & MRs. Goswami who are the members of the assessee society then also the contribution received on account of damages settled by the Deputy Registrar of Co-operative Housing Society is a contribution by an individual in peculiar circumstances of the case. The said contribution cannot be said to have been made by a class but by an individual in the circumstances which may or may not have application to the whole class. The contribution made in the present case is not made a body of individuals but by an individual on account of the peculiar circumstances of the case. Hence, the same falls out side the principle of mutuality and is exigible to tax. The Commissioner (Appeals) has also taken note of the fact that Mr. and Mrs. Goswami in their letter addressed to the society dated 21-7-2001 and the application dated 27-7-2001 for the development of the aforesaid plots had stated that M/s Oberoi Construction Ltd. was engaged for developments of the plots, without any transfer being made to him. In the light of above said facts, we find no merit in the claim of the assessee and the same is dismissed. We confirm the order of Commissioner (Appeals) and dismiss the ground Nos. 1 & 2 raised by the assessee.
