January 2012
ITO v. Damodar Bhuvan CHS Ltd. ITAT ‘D’ Bench, Mumbai Before N. V. Vasudevan (JM) and T. R. Sood (AM) ITA No. 1610/Mum./2010 A.Y.: 2005-06. Decided on: 16-9-2011 Counsel for revenue/assessee : M. R. Kubal/ B. V. Jhaveri
By Jagdish D. Shah, Jagdish T. Punjabi
Chartered Accountants
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Section 2(24) — Income — Taxability of receipt of transfer fees and non-occupancy charges from its members by the housing society — Amount received in excess of the limits prescribed under the law — Held that the sum received is exempt from tax on the principle of mutuality.
Facts: The assessee was a co-operative housing society. During the year under appeal, its claim to treat the receipt of the sum of Rs.15 lac towards transfer charges (described as contribution to heavy repair fund) and Rs.1.31 lac towards non-occupancy charges as exempt was negatived by the AO. On appeal, the CIT(A) held that these receipts are exempt under the principle of mutuality.
Held:
As regards the receipt of Rs.15 lacs towards transfer charges, relying on the Bombay High Court decision in the case of the Sind Co-operative Housing Society v. Income-tax Officer, (317 ITR 47), which was also followed in the cases of Suprabhat Co-operative Housing Society Ltd. v. ITO, (ITA No. 1972 of 2009 dated 1-10-2009) as well as Shyam Co-operative Housing Society Ltd. v. CIT, (ITA Nos. 92, 93 and 206 of 2008, dated 17-7-2009), the Tribunal held that the principle of mutuality applies to the receipt of transfer fees. Similarly, in respect of the receipt of Rs.1.31 lac towards non-occupancy charges, the Tribunal relied on the decision of the Bombay High Court in the case of Mittal Court Premises Co-op Society v. ITO, (320 ITR 414) and held that the principle of mutuality equally applies to such receipt. It further held that the restriction on the quantum of receipt by an association from its members prescribed by any other law regulating the relationship between members and its association will not be relevant while taxing the receipts under the Act. Thus, according to it, the principle of mutuality will not cease to exist in respect of receipts from members by an association beyond the quantum restricted by any law regulating the relationship between members and its association.
