Whether transfer fees received by Cooperative Housing Society from incoming & outgoing members (even in excess of limits) is exempt on ground of mutuality?

Last updated: 24 December 2014

Court :
Bombay High Court

Brief :
Assessee, a Co-operative Housing Society received a sum of Rs.39,68,000/- on account of transfer of flat and garage and credited it to 'general amenities fund' as well as 'repair fund'. This receipt of Rs.39,68,000/- has been claimed as exempted from tax by the Assessee. The Assessing Officer disallowed the exemption by holding that the principle of mutuality will not apply. Aggrieved by AO’s order, the society approached the Commissioner. CIT and Tribunal decided in favour of assessee by relyng on judgment in case of Sind Co-operative Housing Society vs. Income Tax Officer. Revenue thereby approached the High Court. High Court dismissed the appeal, held that repeatedly the Revenue has failed in convincing the Tribunal that Sind Co-operative Housing Society (supra) will not cover the Society's case. The contribution is made to the repair fund or to the general fund and credited as such. Though it isoccasioned by transfer of a flat and garage, merely because there was cap or restriction placed on the transferfees or the quantum thereof, in this case the principle of mutuality cannot be applied. The underlying principle and of a co-operative movement has been completely overlooked by the Counsel for the Revenue.

Citation :
CIT – Appellant – Versus - Darbhanga Mansion CHS Ltd. – Respondent