Ajit K.Sengupta, J. - (1.) In this reference under Section 256(2) of the Income-tax Act, 1961, for the assessment year 1984-85, the following question of law has been referred to this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the transfer fee of Rs. 40,870 was not taxable income of the assessee ?"
(2.) Shortly stated, the facts are that the assessee is a co-operative housing 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".
(3.) 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 the transfer fees. There is an element of mutuality in respect of transfer fees and, therefore, this receipt is not to be subjected to tax. Accordingly, the sum of Rs. 40,870 was deleted from the total income.;