2010 (11) TMI 968

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..... f 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 matter is subjudiced. 2. The assessee is a housing co-operative housing society. The assessee received a sum of ₹ 11.00 lacs as voluntary contribution from members who had sold their flats and car parking space and also members from who purchased the same. The assessee also received a sum of ₹ 50,000/- as transfer fees from the outgoing members and incoming members. The assessee claimed that the aforesaid receipts are not in the nature of income on the principle of mutuality. No one can make .....

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..... nsfer 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 the incoming or the outgoing member had to contribute to the common fund of the assessee. The amount paid was to be exclusively used for the benefit of the members as a class. The amount could only be appropriated on the transferee being admitted as a member. If the transferee was not admitted as a member, the amount received would have to be refunded, as the amount was payable only on a transfer of rights of the transferor in the tr .....

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..... 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 society which included its building(s) and as long as there was no taint of commerciality, trade or business, the receipt of transfer fees was not liable to tax. (ii) That a co-operative housing society has no similarity whatsoever with a professional association. Section 28(3) of the Income-tax Act, 1961, had no application to the case of the assessee as it deals with the income derived by the professional or similar association from the specific ser .....

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