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TMI Blog2007 (8) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... on, at the time of transfer of flats from the transferors as well as the transferees. These amounts were not offered for taxation on the ground that concept of mutuality applied in the assessee's case. However, the Assessing Officer was of the view that concept of mutuality did not apply to the case of the assessee for the reasons - (1) the amounts received were not voluntary contributions, (2) element of commerciality was attached to such receipts, (3) the amounts were collected with the clear intention to earn profit, and (4) the receipts in question were like windfall profit. Reliance was also placed by the Assessing Officer on the decision of the Tribunal, viz., Oval Shiv-Shanti Bhuvan Co-op. Housing Society Ltd. v. ITO [2001] 78 ITD 403 (Mum.) and Regent Chambers Premises Co.-op. Society Ltd. v. ITO [2002] 82 ITD 13 (Mum.), respectively, wherein it has been held that transfer fees received by the co-operative society from the incoming and outgoing members would be treated as revenue receipt chargeable to tax in the hands of the society. Further reliance was placed on another decision of the Tribunal in the case of Sea Face Park Housing Society, wherein it was held by the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Government of Maharashtra under section 79(A) of the Maharashtra State Co-operative Societies Act, wherein it has been directed that the rate of premium payable on transferring of member's interest in the building of co-operative housing society shall be decided in the regular general meetings of the members but the rates of premium to be fixed by the general meetings shall not exceed the sum of Rs. 25,000 where societies situated in Municipal Corporation of Mumbai. The contention of the learned counsel for the assessee is that such order is applicable only to those societies which have adopted the model bye-laws and, therefore, would not be applicable to other societies. He has also referred to opinion of an advocate to substantiate his arguments. He then referred to the Supreme Court decision in the case of State of Maharashtra v. Karvanagar Sahakari Griha Rachana Sanstha Maryadit [2000] (Suppl.) Bom. C.R. 864, wherein it has been held that the directions issued under section 79(A) of the Maharashtra State Co-operative Societies Act, should be in the interest of society. What is in the interest of society is for the society to decide and not for outside agency to say. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i)That considering the concept behind the formation of co-operative societies, it is to be presumed that the co-operative society is a voluntary association; (ii)The concept of mutuality is applicable to such societies provided the contributors and participators to the fund are the same; (iii)The concept of mutuality would apply in respect of transfer fees received from the transferor of the flat inasmuch as he is the member of the society on the date when the transfer fee is paid; (iv)The concept of mutuality is not applicable in respect to transfer fee received from the transferees since at that time transferee is not the member of the society; (v)Clause 40(d)(vii ) of the bye-laws of the society provided that maximum amount of premium chargeable on the transfer of flat from the transferor could not exceed Rs. 25,000 which was as per the norms set out by the Government. Therefore, so long as the society was charging the premium within the framework of law, no profit motive could be attributed to the society, if it is found that the society charged more than what was prescribed under the law, then it would be taxable as revenue receipt. 9. The contention of the learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the power given to the State Government under Maharashtra State Co-operative Societies, Act 1960, section 79(A), the State Government passes the following order in public interest. (1) The Government Resolution in respect of Housing Development/Transfer of Gala/Fee/89/dated 27-11-1989 passed by Co-operative Commissioner and Registrar, Co-operative Societies, Maharashtra State, Pune is hereby cancelled. (2) The rate of premium payable on transferring member's interest in Building, Gala, etc., of Co-operative Housing Societies or in the Society's Share Capital part of properties rights shall be decided in regular general meetings of the members. The rates of premium to be fixed by the general meetings of Co-operative Societies shall not exceed the following rates : (1)Municipal Corporation, Cidco, etc. 25,000 (2)"A" Class Municipalities 20,000 (3)"B" Class Municipalities 15,000 (4)"C" Class Municipalities 10,000 (5)Gram Panchayat (backward area) 5,000 This order would come in force immediately. As per the order and name of Government of Maharashtra (Vasant Poreddiwar) Secretary, Govt. of Maharashtra Textile & Cooperation Deptt." 11. A perusal of the above shows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m that judgment before the Hon'ble Supreme Court. It is in this context that the Apex Court held "Registrar has powers to issue directions for amendment of the bye-laws of the society, so also the State Government has the power to give the directions in the public interest, but the paramount consideration is the interest of the society. What is in the interest of the society is for the society to decide and not for the outside agency to say. The proposed amendment cannot be said to be in the interest of society, hence cannot be forced." In view of the above judgment, one can contend that the directions to amend the byelaws is bad in law if it is not in the interest of society. However, that does not mean that order issued under section 79A of the said Act has no statutory force, in our humble opinion, so long as such order is in existence, it has a statutory force, unless set aside or quashed by the Court. If the contention of the learned counsel for the assessee is accepted, then each order issued under section 79A of the said Act would become redundant. Such construction, in our opinion, is impermissible. Therefore, the learned counsel for the assessee is not correct in contendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to double addition, inasmuch as this amount is already included in the P & L Account and the computation of income made by the assessee. He drew our attention to the P&L Account and the computation of income in this regard. However, there is no discussion in the order of the Assessing Officer as well as in the order of the CIT(A) in this regard. Therefore, in the interest of justice the order of the CIT(A) is set aside on this aspect of the issue, and the matter is restored to the file of Assessing Officer for fresh adjudication after verifying the fact that whether it amounts to double addition or not. If it is found that it is a case of double addition, then the Assessing Officer is directed not to make separate addition on this account. 17. Ground No. 6, in both the appeals, relating to set off of losses has not been argued before us and, therefore, the same is dismissed as not pressed. 18. The last ground relates to deduction under section 80P(2)(c)( ii). It has been submitted by the learned counsel for the assessee that the assessee is entitled to deduction of Rs. 50,000 in view of the above provisions. On the other hand, the learned DR has submitted that no deduction is all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point out that the return of income was filed on 27-9-2001, while the notice under section 143(2) was issued on 22-11-2002, which is after the expiry of 12 months from the end of the month in which the return is filed. Hence the entire assessment is without jurisdiction. On the other hand, it is pointed out by the learned DR that the notice was under section 143(2)(i) which does not specify any period of limitation. 22. After hearing both the parties, we admit the additional ground raised by the assessee, since it does not involve investigation into the facts and the issue is purely legal one. There is no dispute to the facts narrated by the learned counsel for the assessee and is also apparent from the assessment order. Since the return was filed on 27-9-2001, the notice under section 143(2)(ii) could be issued by 30-9-2002. Since the notice under section 143(2) was issued on 22-11-2002, the same was beyond the prescribed period and, therefore, the assessment made in pursuance to such notice was without jurisdiction. No doubt, in the assessment order it is mentioned that notice was issued under section 143(2)(i), but the same cannot be considered as notice under section 143(2)(i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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