TMI Blog2010 (6) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... findings of the authorities below and the materials available on record. 3. Briefly, the facts of the case are that the Assessing Officer has observed that the assessee is a co-operative society and started a scheme of " Sabhasad Suraksha Yojana" (in short SSY). As per rules of the said scheme, all the members of the society would contribute Rs. 5 as entry fee and Rs. 500 as contribution to Sabhasad Suraksha Fund (in short SSF). This was a kind of insurance scheme and in case of death of a member, a sum of Rs. 1 lakh was paid to the next of the deceased. During the year the assessee collected a sum of Rs. 36,81,000 from its members @ Rs. 40 per member towards contribution to be paid to the dependents of the deceased members besides col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereas the other receipts of Rs. 500 and Rs. 5 were transferred to SSY fund account and reserve fund account respectively which would appear in the balance sheet and were in the nature of capital receipts. The society also decided to collect Rs. 40 as contribution from each member at the time of death of any member and this collection would continue till the end of 15 years after which the society would have sufficient funds to earn interest income out of which payment of Rs. 1 lakh would be made at the time of death of a member. The basic purpose of debiting the account of members by Rs. 40 at the time of death of a member was to create a corpus fund to make the SSY self-sufficient. It was further submitted that the year under consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the members only. I am of the view that contribution to the fund is like contribution to capital account of a firm which could not be treated as income of the firm. Simply because the amount contributed by the members is surplus in a particular year, the said amount cannot be considered as income of the appellant. There is a principle of mutuality since the funds so collected by the society cannot be utilised for any other purpose than for the benefit of its members only. There is no element of income as defined by section 2(24) of the IT Act in his case and therefore the action of the Assessing Officer in treating these contributions as income of the appellant society is not correct. Addition on this account is, therefore, directed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, the amount would be paid to the family members of the deceased. It is, therefore, clear that the assessee society accepted the funds from its members towards the SSY scheme for better future of its members. It is, therefore, a corpus fund received by the assessee society from the members towards SSY scheme. There was no element of income earned by the assessee on receipt of the corpus funds from its members. It is also clear that the purpose of debiting the amount of the members at the time of death of members was to create a corpus fund to make the SSY self-sufficient. It was stated to be the first year of the assessee, therefore, considering the fact that corpus fund was not sufficient further amount was received from the members. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... club house, as contemplated in section 22 of the Act, would be outside the purview of the levy of income-tax". 8. Considering the facts of the case in the light of the above decisions it is clear that under the IT Act the income could be taxed, profits or gains earned or accruing to a person. In the appeal under consideration, there is a principle of mutuality in the sense that identity of the contributors i.e., by the members of the society to the funds and the recipient i.e., members of the assessee society are the same. The scheme was made for the mutual benefit of the members of the assessee society and there was no business transaction between the members of the society and the society. The funds are collected by the society f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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