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TMI Blog2014 (6) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... n the nature of 'transfer fees' received from some members (transferors) on transfer of their plots, in all the three years and they were credited to "Welfare and Amenities Fund". The AO, by referring to the decision of jurisdictional High Court in the case of Sind Co-operative Society (317 ITR 47), took the view that the transfer fee cited above is taxable if the assessee receives the transfer fee in excess of the limits prescribed by the State Government for transferring rights, shares in share capital and flats/gala in a cooperative society etc. The AO noticed that the assessee has collected transfer fees in excess of the limits prescribed by the State Government. Accordingly the AO took the view that transfer fee received by the assessee is taxable under the head income from other sources, since the assessee has collected fees in excess of the limits prescribed by the State Government. Accordingly, he reopened the assessments relating to the assessment years 2002-03 & 2003-04 and assessed the transfer fees as income in the hands of the assessee. In assessment year 2004-05, the Tribunal had set aside the issue to the file of the A.O, vide its order dated 26-11-2009. In the set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferring rights, shares in share capital and flats/gala in a cooperative society etc. Therefore, the expression "rights & shares in share capital" would include any asset held by virtue of holding the rights/shares. A plain reading would therefore suggest that it is applicable for transfer of not only the flats/galas in a cooperative society but also to transfer of rights or shares in the society, meaning that the intention of the notification is to include in all transfer of all kinds of assets / rights / shares in a cooperative housing society. Hence it 'is clear that the notification will apply to a plot owner societies also even if the word 'plot' has not been specifically mentioned in the notification restricting the transfer fee applicable for transfer of such share, irrespective of the fact that the underline asset in such shares was a flat or a plot. Rather absence of a separate notification for a plot society supports the contention of this notification as applicable to transfer of all kinds of assets/rights/shares in a Co-op Hsg. Soc. Irrespective whether the assets held by virtue of shares is a plot or a flat. If such interpretation is not given, then it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p Hsg Society (supra) is not applicable to the facts of the instant case. He further submitted that the decision of Hon'ble Bombay High Court rendered in the case of Mittal Court Premises CHS Ltd (supra) has been followed by co-ordinate benches of Mumbai Tribunal in various cases. He submitted that the Ld CIT(A) has followed the decision rendered by the Mumbai High Court in the case of Mittal Court Premises CHS Ltd (supra) and also the decisions rendered by the Mumbai Tribunal in various cases to come to the conclusion that the principle of mutuality shall apply to the entire amount of transfer fees received by the assessee society. 7. We have heard rival contentions and carefully perused the record. We notice that the AO has assessed the transfer fees as the income of the assessee, only on the ground that the amount collected by the assessee was more than the limit prescribed by the State Government under the Cooperatives Act. However, according to the assessee that it has collected the transfer fee at the rates prescribed under its bye laws. A careful perusal of the decision rendered in the case of Sind Co-operative society (supra) would show that the High Court is expressing it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully considered the fact of the case and arguments advanced by Ld. A.R. Hon. Tribunal had set aside the matter to the file of the Assessing Officer with specific directions to examine the following issues : 1) is it mandatory for the Housing Society to amend its rules in line with the Maharashtra Co-operative Housing Society Act read with Notification given therein?, 2) whether the bye-laws of the assessee Society place any restriction on the quantum of transfer fee receivable? 3) is the outer limit of Rs 25,000/- transfer fee specified in the notification of the State Government mandatorily applicable irrespective of whether amendment to the bye-laws is mandatory or not? It is noted that in the assessment order u/s 143(3) r/w 254 the AO has not at all examined the above questions raised by [TAT and he has made addition on grounds that the Limit of Rs 25,000 was applicable to all kinds of societies and hence the principles of mutuality was lost when the appellant received transfer fees or contributions more than prescribed limit of Govt. of Maharashtra in notification dated 9/8/2001. Though, I agree that the notification would apply to plot owner's society also but to fulfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2: Vide this Office notification dated 2.07.2001 all the societies were informed to accept/ take cognizance of the New Model Bye laws. Revisions have been made from time to time and the revised Byelaws have been implemented w.e.f. 13.03.2009 and it is binding on all coop Societies to implement and make the necessary changes in their bye laws. Pt No 3 The terms mentioned in the Government Decision dated 09/08/2001 is applicable towards the Flat Type Co-operative Housing Societies as well as applicable in case of all types of cooperative Housing societies. Pt no 4: Since it is applicable to all the Coop Societies hence the question does not arise Pt no 5: It is binding to apply the revised Bye laws. Further the notification dated 9/8/2001 is applicable to Societies registered prior to 02.07.2001 also. Hence, no question arises for giving any concession at all Sd/- (commissioner for co-operation & Registrar) Govt. of Maharashtra, Pune The perusal of the above clarifications suggest that the model bye laws after being revised from time to time are mandatory to be adopted after 13/3/2009 even by the coop societies which were formed prior to 2/7/2001 and that the notification date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Co-operative Society Ltd 320 ITR 414(Bom) also supports this view wherein the court had decided that "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. The similar view is taken by Mumbai ITAT in the case of ITO v. Abhilasha CHS Ltd (ITA No.683/Mum/20 10) and in the case of ITO vs. Grand Paradi CHS Ltd. (ITA-521/Mum/2010). Recently in the decision dated 16/9/2011 in case of Damodar Bhuwan CBS Ltd in ITA No 1610/Mum/2010,the ITAT Mumbai after considering the Bombay High court decision in case of Mittal court premises CHS Ltd has observed that "the restriction on the quantum of receipt by an association form its member prescribed by any other law regulating the relationship between members and its association will not be relevant while taxi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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