Corpus fund from flat purchasers treated as trust money, not developer income under housing flat law

Corpus fund collected from flat purchasers for housing projects was treated as a separate amount to be held for transfer to the society to be formed, not as the developer's trading receipt. The developer acted only as a trustee until the society came into existence, and the statutory obligation under section 13 of the Maharashtra Ownership of Flats Act, 1963 supported exclusion of the fund from taxable income. Following the earlier Tribunal view on the same issue, the addition was deleted and the corpus fund was held not to be the assessee's income.

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Issues: Whether the corpus fund collected from flat purchasers was assessable as business income of the developer or was not includible in its income in view of the Maharashtra Ownership of Flats Act, 1963.

Analysis: The amount was collected as corpus fund for the housing projects and was to be kept separately and handed over to the society to be formed. The assessee, in relation to that amount, acted only as a trustee until the society came into existence. In the absence of any distinguishing feature, the earlier Tribunal view on the identical issue was followed. The statutory obligation under section 13 of the Maharashtra Ownership of Flats Act, 1963 supported the conclusion that the corpus fund could not be treated as the developer's income.

Conclusion: The corpus fund of Rs. 6,17,050/- was not the income of the assessee, and the deletion of the addition was upheld in favour of the assessee.

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