Akil Abdul Hamid Kureshi, J.

1. In these references, common question of taxability of the receipts by a cooperative housing society from a portion of sale consideration received by its member at the time of transfer of the plot has arisen. In ITR No. 33/98, the question framed is as under:

"Whether on the facts and in the circumstances of the case, the Tribunal is justified in confirming the order of the CIT(A) deleting the addition of Rs. 3,25,387/- made on account of premium account received for transfer of plots?"

2. A group of Income-tax applications came up for consideration before the Division Bench where the Revenue wanted such a question to be referred in different cases but in similar factual background. Revenue was of the opinion that the amount received by a cooperative society from the portion of the sale consideration received by its member at the time of transfer of the plot constituted its income and was therefore, taxable under the Income Tax Act. The assessees opposed the applications basing reliance on the Division Bench decision of the Gujarat High Court in case of Commissioner of Income-tax v. Adarsh Cooperative Housing Society Ltd. reported in 213 ITR 677. The Division Bench noted that Bombay High Court in case of Commissioner of Income-tax v. Presidency Cooperative Housing Society Ltd. reported in 216 ITR 321 had taken a different view. The Court unable to subscribe to the view taken in case of Adarsh Cooperative Housing Society Ltd., (supra), directed the Tribunal to furnish statement of case in all the matters and further referred the question for the opinion of larger Bench.

3. For some reason, these proceedings remained dormant for a long time and ultimately present larger Bench came to be constituted. Advocates appearing for the Revenue as well as assessees made detailed submissions and relied on several authorities to which we would refer to at appropriate stages.

4. Since the material facts are almost identical, for the purpose of this judgment, we may refer to the facts as arising in ITR No. 33/1998. Assessee is a cooperative housing society and was registered on 16.12.1943. For the assessment year 1986-1987, the assessee filed its return of income showing total income of Rs. 17,879/-. The assessee society had given its plots on lease to its members for the purpose of constructing residential units. Bye-laws of the society provided that upon transfer of a plot of land allotted to a member to incoming member, the society would collect 50% of the excess received by such outgoing member. During the year under consideration, the society collected such premium of Rs. 1,25,387/- upon transfer of four plots. The society claimed that the premium amount was not a revenue receipt. The Assessing Officer in his order dated 30.3.1989, however, held that the assessee was not a cooperative society but an association of persons engaged in the business and accordingly, added the said sum of Rs. 1,25,387/- as the income of the assessee.

5. The society preferred appeal before the CIT(Appeals) and argued that the society is governed by the provisions contained in the Gujarat Cooperative Societies Act. The bye-laws of the society stipulate that the amount so collected is to be utilised partly for promoting a development fund and partly for direct expenditure for the development of the area and providing civic amenities in the society. According to the society, therefore, as per the principle of mutuality, such amount was not taxable in the hands of the society. CIT (Appeals), following the decision of the Income Tax Appellate Tribunal in case of Adarsh Cooperative Housing Society Ltd., allowed the appeal.

6. Revenue carried the matter in appeal before the Tribunal. The Tribunal noted that the decision of ITAT in case of Adarsh Cooperative Housing Society Ltd. was also confirmed by the Gujarat High Court in case of Adarsh Cooperative Housing Society Ltd. (supra) and dismissed the Revenue's appeal.

7. On the basis of su