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Non-occupancy charges are exempt on ground of mutuality even if in excess of limits
In Mittal Court Premises Co-op Society vs. ITO 320 ITR 414, the Bombay High Court held that non-occupation charges paid by a member to a commercial co-op society was covered by the principle of mutuality and so was not chargeable to tax. In the last paragraph of the judgement, the Court held that even if the charges were in excess of the limits imposed by the notification issued by the Government, still the principles of mutuality would apply.
Though the judgement is reported in 320 ITR 414, the said last paragraph has been omitted to be printed therein. The said last paragraph reads as follows:
“Apart from that even assuming that these Government Notifications were applicable if the society could not have charged excess amount it will have to be refunded to the members. A member is not prohibited from gifting any amount to the society for the objects of the society. The principle of mutuality would not cease on account of these aspect. At the highest, authorities under the Co-operative Societies Act and Rules if any action is taken may direct an additional amount to be refunded. In our opinion, therefore, contribution by way of non occupancy charges, principle of mutuality would apply and consequently,”
Note: In
Sind Co-operative Housing Society vs. ITO 317 ITR 47 (Bom) it was held that if any amount has been received
beyond the amount notified by the Government, the principle of mutuality would
not apply to that amount.
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