TMI Blog1995 (7) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... the members and from the receipts, the assessee-society was running a school called as Tagore Public School. A community centre as well as a hospital were also being constructed with the funds raised from the members. Separate accounts (profits and loss account as well as the balance-sheet) were maintained in respect of the receipts and expenditures of the society and in respect of the Tagore Public School. The accounting year ended on 30th June, in both the years. The assessee-society had received transfer fee of Rs. 1,34,000 in the assessment year 1978-79 and Rs. 1,48,400 in the next assessment year. The assessment for the year 1978-79 was finalised on an income of Rs. 1,34,625 and in the next assessment year at Rs. 1,52,150. The Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onation from 11 persons 24,000 forschool (iii) Donation from one member 1,000 to the hospital (iv) Donations from 27 members 98,000 in the A/c of Tagore Public School ---------------- 1,34,000 ------------------- The ld. counsel has, therefore, submitted that while receiving the transfer fee, the assessee-society had specifically shown it under the specific head to which the members had donated money. It is contended that the society was in the nature of a cooperative mutual society and whatever money was collected by way of transfer fee that was utilised to provide facilities to the residents and also for running the school, hospital and a community centre. The income was earned solely for the benefit of the members of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is said to have been carried out by the assessee-society. The society only rendered services for the mutual benefit of the members. 5. The ld. D.R. has, in reply, contended that the receipt in the hands of the assessee-society was neither casual in nature nor voluntary. A fixed schedule had been drawn as per which the members transferring plots of land were required to pay transfer fee. Therefore, it was not a voluntary donation by the members. The amounts were received as a consideration for the transfer of land from one member to another. Our attention had been drawn to the Tribunal's order dated 2-9-1985 in ITA No. 270/84 relating to the subsequent assessment year 1980-81. It was held in that case that the transfer fee was a source of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf-serving evidence created by the assessee and since the payment was not voluntary, this was not a donation at all. The amount was collected in pursuance of resolution No. 3 dated 1-12-1974 and there was no element of voluntary or ex gratia payment. One of the objects, as per the bye-laws, happened to be charitable or educational purposes. It is stated that the receipts in the hands of the school was not in dispute and, therefore, the narrow question which is to be decided related to the nature of transfer fee received by the assessee-society. 6. The ld. counsel for the assessee had drawn our attention to certain judicial pronouncements. The following decisions have been cited before us which relate to the receipts in the hands of clubs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld to be exempt. In the case of CIT v. Cochin Oil Merchants' Association [1987] 168 ITR 240, the Kerala High Court was dealing with a trade association which was rendering service to the members and non-members for a fee. That association was incorporated as a company. It was held that the association was a mutual association. Similarly, our attention has been drawn to a decision of the Andhra Pradesh High Court in the case of CIT v. Nataraj Finance Corpn. [1988] 169 ITR 732. In that case it was held that an entity would be a mutual benefit association if all the participators to the common fund are also contributors and their identity is established. What is required is that the members as a class should contribute to the common fund and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vely for the promotion of the objects set out in the memorandum and no part of such income or property could be distributed amongst the members in any form. It was noted by the Hon'ble Supreme Court that the dominant or primary purpose of the assessee was to promote commerce and trade in art silk yarn, raw silk, cotton yarn, art silk cloth etc. It was held that the dominant or primary purpose of the promotion of commerce and trade in art silk etc. was an object of public utility not involving the carrying on of any activity for profit within the meaning of section 2(15) of the Act. It was held that the company was entitled to exemption under section 11(1)(a) of the Act. A question relating to the receipt of transfer fee has been examined by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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