Concept of Mutuality

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Income Tax - 2009 - TMI - 34176 - HC
Concept of Mutuality – Taxability of Income received from its members
– Co-operative Housing Society - High Court held that concept of
mutuality can be tested considering the followings (1) Is there any
commerciality involved. (2) From the moneys received are the services
offered in the nature of profit sharing or privileges, advantages and
conveniences. (3) Are the participants and contributors identifiable
and belong to the same class in the case of cooperative housing
society. (4) Do the members have the right to share in the surplus and
do they have a right to deal with its surpluses. - Once these tests
are satisfied, there can be no doubt that the principle of mutuality
will apply to a cooperative Housing Society which has its predominant
activity, the maintenance of the property of the society which
includes its building or buildings and as long as there is no taint of
commerciality, trade or business – Transfer fee received from its
members it not taxable.
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