TaxTMI 
TaxTMI 
2017 (12) TMI 657
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....,80,203/- as contribution from its members pursuant to the construction on Plots using Transfer of Development Rights (TDR). The said TDR rights he been acquired by the members directly and the Society has merely received contribution from its members. The assessee Society had offered the aforesaid receipt as income and filed the return of income on 31st Ocother, 2007. However during the course of the assessment proceedings the assessee society filed a revised computation before the Assessing Officer vide letter dated 02nd December, 2009 and claimed the aforesaid receipt as exempt based on Principal of Mutuality. However the Assessing Officer did not accept the revised claim filed by the assessing society and assessed the income as per the original return filed. 5. The Ld. CIT(A) confirmed the action of the AO against which assessee approached to the Tribunal and the Tribunal vide its order dated 16.05.14 restored the matter back to the file of the Ld. CIT(A) for deciding in terms of the directions given in its order. 6. In the second round of litigation the Ld. CIT(A) allowed assessee's claim on both the counts after observing as under: "5.2 The appellant Society is....
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....doctrine of mutuality is that all the contributors 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 the comparison of the contributors and the participators to the common fund such comparison should be as 'a class' and not of an individual contributor or participator. This reasoning is supported by the following observation of the Andhra Pradesh High Court in the case of CIT v Merchant Navy Club (supra). The relevant part of observation are as under:- The contributors to the common fund and the participators in the surplus must be an identical body. That does not mean that each member should contribute to the common fund or that each member should participate in the surplus or get back from the surplus precisely what he has paid. What is required is that the members as a class should contribute to the common fund and participators as a class must be able to participate in the surplus. 5.6 The Hon'ble Bombay High Court in the case of Sindh Co-operative Housing Society vs. ITO 317 ITR 47 (Born) is held that the class of members are clearly identifi....
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....as received an aggregate amount of Rs. 26,80,203/- as the said Contribution pursuant to use of TDR. The assessee has claimed that the aforesaid contribution is not chargeable to tax. The Contribution from members is exempt from the tax under the Principle of Mutuality. The aforesaid contributions have been received from the members of the Society incidental to the use of the T.D.R. on their respective plots. The contributing members continue to be the members of the Society even after such contribution. The persons entitled to the benefit of the aforesaid contribution are also all the members of the Society, in their capacity as members. Therefore, the aforesaid receipts would be completely covered by the principle of mutuality. This contention of the assessee has been upheld by the Hon'ble ITAT Bench 'B' in the case of The Nutan Laxmi Co-op Housing Society Ltd for AY 2004-05 and 2005-2006. 6.1 The contention of the appellant society is upheld by the Hon'ble ITAT Bench' H' in the case of Navyug CHS Ltd. The contribution of TDR are exempt from tax following the decisions of the Bombay High Court in the case of New Sindh Cooperative Housing Society Li....
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.... section 67, there is a limit on the dividend to be paid on liquidation Under section 110 of the Maharashtra Co-operative Societies Act, the surplus can only be dealt with in the manner provided therein which includes any member or devoted to objects provided by the bye-laws or be transferred to another society with similar object. Rule 90 of the Rules provide how the surplus is to be divided. The surplus thus can be distributed in terms of the bye-laws to members and/or by operation of law to another society having the same objective. In other words, yet another test of mutuality is satisfied. Once these tests are satisfied, in our opinion, there can be no doubt that the principle of mutuality will apply to co-operative housing society which has as its predominant activity, the maintenance of the property of the society which includes its buildings or buildings and as long as there is no taint of commerciality, trade or business. For all the aforesaid reasons, the questions as framed will have to be answered in favour of the assessee and against the Revenue." In the absence of any distinguishing feature brought on record by the Ld.DR we respectfully foll....