TaxTMI 
TaxTMI 
2011 (9) TMI 1002
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....on'ble High Court of Bombay in the case of M/s. Shyam CHS and Suprabhat CHS wherein it has been held that all amounts received by the CHS on the grounds of transfer charges are exempt under the principle of mutuality. The decision has not been accepted by the department and the issue is subjudice. 2. The ld. CIT(A) erred in deleting the addition on account of non- occupancy charges of Rs. 1,30,764/- following the various decision of the Hon'ble Mumbai ITAT and Hon'ble High Court of Bombay in the case of Mittal Court CHS wherein it has been held that non-occupancy charges taken from members who have let out their flats is exempt under principle of mutuality." 2. The assessee is a co-operative housing society (hereinaf....
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....f the CIT(A) the revenue has preferred the present appeal before the Tribunal. 5. We have heard the rival submissions. In the case of Sind Co-operative Housing Sciety Vs. Income-tax Officer 317 ITR 47 (bom), the facts were that the assessee, a co-operative housing society, was registered with the object principally of looking after the property including building(s) thereon. The bye-laws of the assessee permitted it to charge a transfer fee in terms of the notification issued by the Government of Maharashtra. Bye-law 38(3)(ix) provided that the assessee can charge transfer fee and the members by adopting the bye-laws agreed, amongst themselves, that a fee for transfer of flat/-tenement when it was sold would be paid to the assessee. Both....
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....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 so....
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....ohibited from gifting any amount to the society for the objects of the society. The principle of mutuality would not cease on account of these aspect. 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. In our opinion, therefore, contribution by way of non occupancy charges, principle of mutuality would apply and consequently," It is thus clear from the above judicial pronouncements that taxability of the receipts under the Income Tax Act, 1961(Act) will have to be tested on the applicability of the principle of mutuality. Once it is found that principle of mutuality applies then the receipt in question cannot be brought to tax as one cannot mak....