TMI Blog2016 (6) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... s constructed by the Society by utilising additional FSI available with it - treatment as business income - Held that:- Tribunal on examination of the facts before it has came to the conclusion that the contribution of ₹ 1.10 Crores received by the Society was from its members (four new members) and the allotment of four new tenaments was also done only to the existing members. It is an undisputed position that the four new members were members of the Society prior to the allotment of the tenaments to them and also before making their contribution. It is not the case of the Revenue that there is absence of complete identity of the contributors and participants of the Society. So far the second test is concerned viz. that the actions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant has paid the Court Fees for the appeals relating to A.Y. 1998-99, 1999-2000 and 2000-01. 3. The Revenue has urged the following substantial questions of law for our consideration : (i) Whether on the facts and circumstances of the case and in law, the Tribunal was justified in holding that the collection of ₹ 2 lac by the assessee society as interest free loan, from incoming members as a binding precondition for becoming a member, are not revenue receipts ? (ii) Whether on the facts and circumstances of the case and in law, the Tribunal was right in not treating the income of ₹ 1.1 crores as Business Income arising from the sale of four flats constructed by the Society by utilising additional FSI available with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the existing members came forward to seek allotment of the four additional tenaments which were to be constructed on exploitation of the unutilized FSI. (b) In 1998, four persons sought membership of the Society. The factual matrix of the events relating to the admission and contribution for the new four tenaments from the four new members of the society is summarized as under : Sr. No. Name of New Member Date of Applicatin by new members fro fresh membership Date of managing committee meeting approving the membership Date of first instalment of contribution Date of allotment letter issued by Society 1 Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s appeal holding there is no reason to disturb the findings of the Assessing Officer. (e) On further appeal by the respondent Society, the Tribunal by the impugned order has held that it is undisputed position that all the four persons who were allotted the tenaments were the members of the Society at the time when they made contribution in the aggregate of ₹ 1.10 Crores and also when the four additional tenaments were alloted to them. The amounts paid by them would be covered under the concept of mutuality. This is so as a class contributors and the participants of the respondent Society are common. The Tribunal while allowing the Society's appeal inter alia placed reliance upon the decision of the Apex Court in Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Apex Court in Banglore Club Vs. Commissioner of Income Tax, 350 ITR, 509. The Apex Court has observed that the basis of not taxing surplus funds in the hands of an Assessee on the principle of Mutuality finds its origin in the concept of no man can make a profit of himself. The Apex Court in Banglore Club (supra) set out three tests to be satisfied as under before the principle of mutuality can be applied as under : (i) There must be a complete identity between the contributors and the participants as a class; (ii) The actions of the participants and contributors must be in furtherance of the activities of the assessee; and (iii) There must be no scope of profiteering by the contributors from a fund made by them, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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