Law:

Section:

Section 4 of the Income-tax Act, 1961 - Mutual concern - Assessable as - Assessee was a co-operative commercial housing society - Its objects were to manage, maintain and administer property of society; to undertake and provide amenities and facilities for benefit of its members or for public benefit on its own account or jointly with other co-operative institutions; and to organise social, cultural or recreational activities - It received transfer fee and non-occupancy charges from incoming/existing members and claimed that same was not taxable on principle of mutuality - From bye-laws of society, it appeared that even if receipt was issued in name of transferee, it was in nature of admission fee which could be appropriated only on transferee being admitted and surplus could be disposed of in favour of members only for objects which they would specify - Whether transfer fee received by assessee would be governed by principle of mutuality and, therefore, would not be exigible to tax - Held, yes - Whether, similarly, since object of contribution in form of non-occupation charges was for purpose of increasing society's funds, which could be used for objects of society, non-occupancy charges were also not taxable in hands of assessee being governed by principle of mutuality - Held, yes FACTS The assessee was a co-operative commercial housing society. Its objects were to manage, maintain and administer the property of the society; to undertake and provide amenities and facilities for the benefit of its members or for public benefit on its own account or jointly with the other co-operative institutions; and to organise social, cultural or recreational activities. It received transfer fee and non-occupancy charges from existing/new members and contended that same was not taxable on principle of mutuality. The Tribunal noted that the transferees were, admittedly, not the members of the assessee-society on the date on which the payments were made to the assessee-society and they were admitted as members of the society and flats were entered in their names only after the impugned payments were made to the assessee-society. It was also found that the amounts were paid in…

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