TaxTMI 
TaxTMI 
2015 (11) TMI 1301
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....m de novo. The AO made the assessment u/s.143(3) and determined the total income of the assessee society at Rs. 21,71,920/-. The AO added the amounts received from members of the society on issuing NOC to members for development of plot, use of TDR etc., and treated the same as income from other sources. The fact of the case that this amount is received from members, is accepted by the AO in his assessment orders for the respective assessment years being the orders presently appealed against. However, the AO treated contribution towards special development funds for giving NOC as income from other sources liable to tax. By the impugned order the CIT(A) confirmed the action of AO treating such receipt as income from other sources. 4. Ld. AR placed on record various decisions of the Tribunal wherein contribution towards special development funds was held to be received from participators, who has contributed to the common fund when there is complete identity between the body of contributors and body of participators. If all the participators of the common funds are also contributor and their identities are established, the test of mutuality is satisfied, therefore, not liable to t....
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....e housing society formed of plot owners, who had obtained a lease of land from the Maharashtra Housing Board. The assessee had entered into sub-lease agreements with its members. The assessee passed a resolution by which it resolved that if any member desired to avail of the benefit of transferable development rights for carrying out construction or additional construction on his/her plot, the member should apply for a no objection certificate which could be granted on the payment of a premium calculated at the rate of Rs. 250 per sq.ft.. The assessee received a premium of Rs. 18.75 lakhs from four members in the previous year relevant to the assessment year 2005-06. The Assessing Officer was of the view that the transferable development rights premium was charged by the society from its members to permit them to commercially exploit the potential for the development of the plot. He added the amount to the income of the assessee. On appeal to the High Court :- Held, dismissing the appeal, that the transferrable development rights premium was a payment made by a member of the assessee, as a consideration for being permitted to make an additional utilization of the FSI on the plot....
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.... sharing or privileges, advantages and conveniences. In the case of a co-operative housing society, the only activities which it can carry out in terms of its bye-laws are basically maintenance of its property which includes building or buildings. The subscription and/or contributions received by the members can only be expended for the purposes of maintenance and providing other privileges, advantages and conveniences to its members in terms of its bye-laws. Another test of mutuality is thus satisfied. (3) Are the participants and contributors identifiable and belong to the same class in the case of co-operative housing society. The class of members are clearly identifiable. Members are ordinary members or associate members. The participants and contributors are the members. The members may come in or go out. The fact that only some members from those who contributed may participate in the surplus, as held by the Supreme Court, is irrelevant as long as the class is identifiable. This test is also satisfied in the case of a housing co-operative society. (4) Do the members have the right to share in the surplus and do they have a right to deal with its surpluses. I....
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....jointly with the other co-operative institutions; and to organise social, cultural or recreational activities. It received transfer fee and non-occupancy charges from existing/new members and contended that same was not taxable on principle of mutuality. The Tribunal noted that the transferees were, admittedly, not the members of the assessee-society on the date on which the payments were made to the assessee-society and they were admitted as members of the society and flats were entered in their names only after the impugned payments were made to the assessee-society. It was also found that the amounts were paid in excess of the Government notification. The Tribunal, therefore, held that amounts received by the assessee as transfer fees were exigible to tax. As regards non-occupancy charges, the Tribunal referred to the Government notification, dated 1-8-2001, which set out that the society should not collect non-occupancy charges at the rate exceeding 10 per cent of the service charges (excluding Municipal Corporation/Nagar Palika Taxes). The Tribunal found that the non-occupancy charges collected by the assessee-society were in excess of the limits laid down by the aforesaid not....
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....emanded by the Tribunal. The Tribunal had directed the Assessing Officer to treat non-occupancy charges received by the assessee-society, which was a premises society, over and above the 10 per cent of the maintenance charges as non-taxable in its hands as the same was governed by the principles of mutuality. [Para 8] Apart from that, even assuming that the Government notifications were applicable, if the society could not have charged excess amount, it would have to be refunded to the members. A member is not prohibited from gifting any amount to the society for the objects of the society. The principle of mutuality would not cease on account of those aspects. At the highest, authorities under the Co-operative Societies Act and Rules, if any action is taken, may direct an additional amount to be refunded. Therefore, in respect of contribution by way of non-occupancy charges, principle of mutuality would apply. [Para 9]" 12. After considering rival contentions and facts and circumstances of the case, we found that this issue is also covered by the decision of Hon'ble Bombay High Court in the case of Sind Cooperative Housing Society, 317 ITR 47, wherein the Hon'ble High Court ....
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....attract the principle of mutuality: Held, allowing the appeal, (i) that whether the fee was voluntary or not would make no difference to the principle of mutuality. Payments were made under the bye-laws of the assessee which constituted a contract between the assessee and its members which was voluntarily entered into and voluntarily conducted as a matter of convenience and discipline for running of the assessee-society. If any amount was received more than was chargeable under the bye-laws or the Government notification, the assessee was bound to repay the amount and if it retained the amount it would be in the nature of profit making that specific amount exigible to tax. Under the bye-laws, charging of transfer fees had no element of trading or commerciality. Since there was no taint of commerciality the question of earning profits would not arise when the assessee from the funds received applied the moneys received towards maintenance of the society and providing the members with usual privileges, advantages and conveniences. Thus, the principle of mutuality was applicable to the assessee which had as its predominant activity, the maintenance of the property of the society wh....