TMI Blog1993 (5) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... using society. During the year relevant to the assessment year 1984-85, the assessee received transfer fee amounting to Rs. 45,870 for change of hands of flats. Following the treatment given to similar receipts in earlier assessments, the Assessing Officer held that the receipts were taxable as income. The administrative expenditure of the assessee was estimated at Rs. 5,000. The Assessing Officer, therefore, included a sum of Rs. 40,870 as the assessee's income under the head "Other sources". The assessee went in appeal. The Commissioner of Income-tax, following the earlier findings in the assessee's case, held that the persons became members first before they are entitled to get the flats transferred in their names or are liable to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve society. He has brought to our attention the judgment of the Madras High Court in the case of CIT v. Madras Race Club [1976] 105 ITR 433. In that case, the assessee was carrying on the business of a race club. It provided facilities for other games, etc., to its members and subscriptions were taken from the members. The question was whether the club was entitled to exemption and whether the business which it was carrying on with profit motive was destructive of the principle of mutuality. There, the Madras High Court was of the view that, where there is a contribution of monies by certain persons coming together for trading Or non-trading purposes without any idea of making a profit, the same cannot be brought within the ambit of taxatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciple of mutuality, the income remains, in reality, the income of the contributors. In that case, on the facts of the case, the Gujarat High Court found that, under rule 38 of the constitution of the assessee-association, the surplus assets of the assessee shall, at the time of its dissolution, be used in the manner proposed in the resolution passed by the association. Apparently, any resolution which might come up for consideration in future would not necessarily provide for the distribution of the surplus assets only amongst the members of the association. In case the assets of the association are not liable to be returned to the members, the identity between the contributors and the recipients would be lost. This would militate against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contribution. What is important is that the members as a class will be entitled to the benefit. Our attention has also been drawn to the Full Bench decision of the Patna High Court in the case of CIT v. Bankipur Club Ltd. [1992] 198 ITR 261. In that case, the assessee-club has a bar where drinks are supplied to the members and their guests. The club also serves refreshments and meals to its members. It has also a set of rooms which are let out to the members. It has got a hall which is let out with furniture to the Rotary Club, Lions Club, etc., on payment. Apart from permanent members, the club, under its articles of association, has also temporary members, lady members, honorary members and patrons. The guests of the members cannot eat or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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