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2.1. We have heard rival submissions and perused the materials available on record. The assessee is a society registered under Maharashtra Government Societies Act, 1960 on 17/02/1994. The assessee society is a conglomerate of private financial bodies such as M/s. Enam Financial and Consultants Pvt. Ltd, Tata Finance Ltd., Federal Bank Ltd., ICICI Bank Ltd, L & T Finance Ltd, Vijaya Bank Ltd, Eureka Finstock Pvt. Ltd, etc. The main object of the formation of society was to construct office premises to be utilised by its members with contribution of funds by Indian corporate bodies at equal rates for the purchase of flat of land from MMRDA either owned or on long term lease. Accordingly, assessee society constructed office premises for the commercial purpose on the land taken on lease for 99 years from MMRDA. The assessee received occupancy certificate on 02/11/2002, the building completion certificate on 05/06/2003 and BMC water connection on 08/05/2003. On completion of the project, it was left with 23,450 sq.ft of vacant premises with parking lots comprising of 6 offices. The entire cost of construction was met out from the contribution made by the approved members who had come together for this purposer. As far as the members are concerned, they are given the office premises at cost, no profit was derived, but with regard to surplus vacant office premises, it was sold to non-member i.e. the third party at market rate by execution of a sale deed. The ld. AO observed that with regard to transaction carried out with a non-member, profit motive was involved and the said profit motive cannot be covered by the "concept of mutuality" as claimed by the assessee society.

2.5. The ld. CIT(A) on examining the submissions of the assessee, remand report of the ld. AO and the rejoinder to the remand report submitted by the assessee, observed that the new member i.e. M/s. Khosla Investment Pvt. Ltd., was admitted as a member after the sale of office premises by the assessee society and hence, at the time of sale M/s. Khosla Investment Pvt Ltd, was an outsider. Accordingly, the concept of mutuality cannot be made applicable on the said transaction. Accordingly, he held that the profit arising from the sale transaction shall be chargeable to tax in the hands of the assessee society. The ld. CIT(A) directed the ld. AO to compute the capital gains at Rs.3,92,000/- as under:-

6.1. We have heard rival submissions and perused the materials available on record. During the year under consideration, the assessee collected a sum of Rs.5,25,060/- comprising of Rs.25,060/- for transfer fee and Rs.5 lakhs for other amenities from one of the members of the society i.e. Apple Finance Ltd., in respect of property admeasuring 5000 sq.ft. at office No.6, Tower-C, 4th Floor transferred by the member to Federal Bank. The ld. AO was of the view that the receipt of Rs.5 lakhs is taxable under the Act. The assessee submitted before the ld. AO that the transfer / entrance fee is collected equally from transferor and transferee and same is not taxable at all in the hands of the assessee society in view of the various decisions of the Tribunal and Hon‟ble High Courts listed in the assessment order as well as in the order of the ld. CIT(A). The Ld. AO ignored all the above decisions and added Rs.5 lakhs as income of the assessee. Before the ld. CIT(A), assessee submitted that Rs.5 lakhs is not taxable as per the „principle of mutuality‟ as the amount received thereon comes to the members contribution account of the society and the same is in turn utilized for the mutual benefits of all the members of the society. All the members are identified and they only participate in the affairs of the society and get benefit of the funds. Contributors and participants both are members of the society. Accordingly, it was pleaded that the benefit flowing from the receipts are available to all the members including the members who contributed Rs.5 Lakhs voluntarily for other amenities. The ld. CIT(A) sought for a remand report from the ld. AO. In the remand report dated 31/12/2013, the ld. AO referred to the State M/s. Laxmi Finance & Leasing Companies Commercial Premises Co-op Housing Society Government regulation vide notification dated 09/08/2001 issued u/s. 79A of the Maharashtra Housing Societies Act for Co-operative Housing societies. He observed that whatever consideration required for maintaining essential amenities are already paid by the members and there is no rationale for charging fresh fees from the incoming members. Accordingly, he stated that fees collected by the society as tainted by commercial motive and it should be treated as income. The assessee filed a rejoinder to the remand report vide letter dated 03/03/2014 before the ld. CIT(A) stating that the concept of mutuality as stated in the case of M/s. Sind Co-operative Housing Pvt. Ltd., vs. ITO by the Hon‟ble Jurisidictional High Court reported in 317 ITR 47 and the decision of the Hon‟ble Supreme Court in the case of Bangalore club vs. CIT reported in 350 ITR 509 had laid down four questions to be answered:-

Further, in relation to path breaking decision of Hon'ble Supreme Court in the case of flub vs. CIT, we would like to state that nowhere it is seen that the funds which was received from the transferor or transferee have been utilized for the .purpose other than the purpose of Society. In the case of Bangalore Club, the contribution from the Members were deposited with the Member Co- operative Banks. Therefore, it was seen that the fund was utilized for the purpose of the Society which is based on concept of mutuality. Since neither the funds of our Society was deployed somewhere else nor the assessee was in receipt of interest income that can be said to be utilized for the purpose other than the purpose as stated in the bye-laws. Therefore, the concept of mutuality was not breached in our case. Hence, we request your Honour that the view taken by the A.O. that the receipt of Rs.5,00,000/- should be taxed as it was tainted with commercial motive is baseless and unjustified."