TMI Blog1996 (10) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1988-89, a sum of ₹ 1,05,130 were received on the transfer of plots. These amounts were reflected in the accounts as transfer fees . It was stipulated in the Agreement that if the building is used for not less than 10 years then at the rate of ₹ 250 per sq. yd. and in other cases at the rate of ₹ 500 per sq. yd. should be charged from the seller of the plot towards transfer fees. Before the Assessing Officer it was contended that such transfer fee is not exigible to tax in view of the principle of mutuality. This contention was not accepted. The amount of Transfer fee was added to the income. The DCIT(A) upheld the addition. Hence these appeals. 3. Sri Atul K. Jassani, learned counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Mutual Insurance Ltd. v. Hills [1932] 16 Tax Case 430, 447, it was held: The cardinal requirement is that all the contributors to the common funds must be entitled to participate in the surplus and that all the participators in the surplus must be contributors to the common fund, in other words, there must be complete identity between the contributors and the participators. 6. The Hon''ble High Court of Bombay in the case of CIT v. Bombay Oil-seeds Oil Exchange Ltd. [1993] 202 ITR 198/71 Taxman 351 has held: The cardinal principle to apply the test of mutuality is that all the contributors to the common fund must be entitled to participate in the surplus and that all the participators in the surplus must be contri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee-society was regarded as a mutual body and, consequently, the amount received by the assessee from its members on allotment of land by lease as also 50 per cent of the amount from its members on transfer of lands by such members has been held not liable to be taxed as income of the assessee. 11. In the case of Presidency Co-operative Housing Society Ltd. (supra), the assessee, a co-operative society took on lease certain land from Bombay Housing Board for the purpose of building houses for its members. It divided the loan so allotted to it into plots in favour of its members by taking an amount, which was, in turn, handed over to the Housing Board. The Lease Deed executed by each of the members in favour of the society stipulated, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ety with its members. Therefore, whenever, there was any excess receipt by the principle on transfer of its interest, the society was entitled to half of this excess. It was true that there was no irregularity about the receipt of such an amount. It depended on the member transferring his interest. But this itself was not sufficient to take away from the receipt the character of income. Even a payment which may be received occasionally can be income. Hence, the amount received by the society was not capital receipt but was assessable to tax as income of the society. 12. The identity of the recipient with the contributor is a condition precedent to enable the benefit of mutuality. In the present case, the contributor is the transferor. De ..... X X X X Extracts X X X X X X X X Extracts X X X X
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