Deemed Conveyance

Deemed Conveyance is a hotly discussed & debated topic these days among the Members of Co- Operative Housing Societies. The credit for these discussions & debates goes to the drive run by Government of Maharashtra for the Deemed Conveyance of the Societies. The Media is also contributing to the information flow on this subject.

The Members of Co- Operative Housing Societies are looking for information on the subject of Deemed Conveyance. is an initiative of IamResilient Technologies Pvt. Ltd. The objective of is to offer authentic information on the subject for the benefit of Members of Societies Planning to go ahead with the Deemed Conveyance of their Property (Land & Structures).


Area under walls can’t be included in carpet area

As per the agreement between the builder, and Shailendra Ghaste and his mother Suman as the joint purchaser, the flat, with a carpet area of 760 sq ft, was sold for Rs 25 lakh.

The state commission observed that the requirement to mention carpet area in the agreement was introduced in 2008 by an amendment to the Maharashtra Ownership of Flats Act. Since the agreement was executed earlier, the builder could not be faulted for mentioning the built-up area instead of the carpet area.

The commission posed the question: What should be accepted when there is a conflict between the typed clause of the agreement and the approved floor plan annexed to it?

Going by the plan approved by the municipal corporation, the flat had a built-up of 760 sq ft. Since this plan had been annexed to the agreement, the commission concluded the builder had not suppressed any fact, and dismissed the complaint.

Shailendra then approached the National Commission, which ordered the builder to get the carpet area re-measured. In his report, the architect included the area under the door jams and the walls.

The National commission observed that the area under the internal and external walls cannot be included in the carpet area. Similarly, the area under the door jams is already accounted for in the floor area and cannot be separately added to the floor space. It concluded that instead of 760 sq ft, the actual carpet area was only 713.39 sq ft, so the area was lesser by 46.61 sq ft. The commission held that the builder was liable for this deficiency and not the estate agent.

Accordingly, in an order delivered by Justice VK Jain on July 24, 2018, the National commission ordered Dailani Developers to refund the value of the deficient carpet area amounting to Rs 1,53,388. In addition, the builder was also directed to refund Rs 7,669 toward stamp duty on the deficit area of 46.61 sq ft. Both these amounts would also carry 9% interest from the date of the complaint till refund.

Conclusion: A builder can be held liable for manipulation in carpet area.

(The author is a consumer activist and has won the Govt.of India & the National Youth Award for Consumer Protection. His email is )

Times of India – 30 July 2018

NCDRC rules areas under walls internal or external cannot be included in Carpet area, orders refund of the value of deficient area and stamp duty.

Due Dates For Co-Operative Society in Maharashtra,

Your dates with Co operative Department if you are an office bearers of Housing Society.

Kindly find the references date and month wise course of action and below are some important dates:

1. Finalisation of Accounts – 15th May.
1A Documents to be kept for members inspection 16th May to 31st May

2. Accounts to be handed over for Audit -1st June.

3. Audit Completion: 31st July.

4. Audit Report Upload – 31st August or 15th September.

5. AGM Date – 30th Sept (to be held on or before).

6. Mandatory Annual Return by Society – by 30th Sept.

7. Mandatory Return by Society About Auditor Appointment – One month from AGM or 31st October.

8. Online Audit Order Generation by Auditor – 31st October.

9. Audit Rectification Report by Society: 3 months from the date of submission of report by auditor.

10. Rectification Report Upload by Auditor through Audit login: Once received from Society.

Victory for cooperative societies, as Supreme Court approves the principle of mutuality, for CHS income

The Supreme Court has upheld the principle of mutuality, which states that a person cannot make profit from himself. We look at how this ruling will affect the levy of tax on receipts, such as non-occupancy charges, transfer fees, service charges, common amenity funds, etc

The Supreme Court (SC) of India recently provided a big relief to cooperative societies (societies), by dismissing the claim of the income tax authorities on levy of tax on various receipts (for example, non-occupancy charges, transfer fees, service charges, common amenity funds, etc.) collected by such societies. The dispute of the tax authorities revolved around a notification dated 09.08.2001, issued under section 79A of the Maharashtra Cooperative Societies Act, 1960 and its applicability on such societies.

Based on this notification, the tax department contended that since these societies have received service charges/ maintenance charges in excess of 10 per cent of the non-occupancy charges, it was contrary to the law and hence, the principle of mutuality fails in such cases. The tax department held that such receipts are in the nature of business, having an element of commerciality and hence, principle of mutuality does not apply. The Income Tax Tribunal overruled the decision of the lower tax authorities, on the ground that the said notification was applicable only to cooperative societies and does not apply to commercial societies.

Principle of mutuality and taxation on cooperative societies

In this issue, the Bombay High Court, while dismissing the appeal of the tax department, ruled that the receipts of the societies are not in the nature of business income, generating profits/ surplus and therefore, not taxable. To claim the higher chunk of tax from similar issues, the tax authorities approached the SC. The SC observed that the doctrine of mutuality, is based on the theory that a person cannot make profit from himself. An amount received from a member, therefore, cannot be regarded as income of the society and treated as taxable in nature. The tax department has never challenged that the receipts of such societies have been utilised for purposes other than for the benefit of the members. The essence of the principle of mutuality, lies in the identification of the contributors and the participants, who are also the beneficiaries. Any surplus in the common fund, therefore, does not constitute income but will only be an increase in the common fund, meant to meet sudden/ future events.

Taxation on non-occupancy charges, transfer charges and contributions to the common fund

It was also observed by the SC that transfer charges are generally paid by the outgoing member. If part of it is paid by the transferee, it would not partake the nature of profit or commerciality, as the amount is utilised only after the transferee is admitted as a member. The moment the transferee is included as a member, the principle of mutuality comes into picture. In the event of non-admission of such transferee, the amount is returned. The same applies for non-occupancy charges, which are levied by the society and are payable by a member, who does not occupy the premises but lets it out to a third person. The charges are, again, utilised only for the common facilities and amenities for the members of society. Similarly, any contribution to the common fund, by a member disposing of a property, is utilised for meeting sudden or regular heavy repairs, to ensure continuous and proper maintenance of the society, which ultimately accrues to the enjoyment, benefit and safety of the members.

The SC further ruled that once a member is admitted to the society, the members form a class and accordingly, the identity of such members is irrelevant and the principle of mutuality is attracted automatically. The SC, relying on a plethora of rulings, went on to conclude that there was no profit motive or sharing of profits amongst the members. The surplus, if any, was not shared amongst the members but was available for providing better facilities to the members. There was a clear identity between the participants and the contributors, to the common fund of the society.


By bringing an end to the prolonged war between such societies and the tax department, the decision of the SC would be welcomed by such societies, as going forward, they would be free from tax hassles and will be governed by the principle of mutuality, leading to all receipts from the members being tax-exempt.

Further, the SC has not specifically mentioned anything about the income received by cooperative housing societies. It is interesting to note that although the decision is restricted to non-residential societies, it should also provide shelter to residential societies, as the underlying principle of mutuality remains the same for all types of societies. Further, once the principle of mutuality is established, all the receipts shall be exempt from tax, even though the same are in excess of the quantum as specified under some other law for time being in force.



Landmark Judgement on Transfer Charges

Please find herewith land mark judgment delivered on 10-4-2018 pertaining to refund of transfer charges by Bombay High Court with interest. Basically Transfer of flat is a contract between outgoing and incoming member. Just to have involvement of the society in the earlier years RS. 1/- was charged as transfer Fee. Now transfer fee is RS. 500/- and maximum amount collected under share premium account is RS. 25,000/-

For Co-operative Societies Residents Users & Welfare Association.

Adv Vinod Sampat

⭐😀HC says the demand of admission fees in sum of 5 % of the sale price for purpose of admitting a new member against purchase of a flat, has no legal sanction or propriety under the scheme of MCS Act, Rules and Byelaws to be framed thereunder..⭐

⭐Membership of chs is an open membership. It is not possible to put any restriction on such membership save and except as may b provided undr Act, Rules, Byelaws made consistently with the Act and Rules.. section 23(1) of MCS prohibits any society from refusing membership duly qualified under mcs rules and byelaaws of such society for such membership without sufficient cause.. if any person were to be refused admission on account of certain fee or charge, such fee or charge must be legally justified so as to give rise to sufficient cause. If any person were to be refused payment of such fee or charge, in other words, so as to amt a sufficient cause, must hav a sanction of law.. the particular GBR dated 7th Jan 1993, which autborizes society to charge a sum of 5 % of sale price of flat as admission fee for the purpose of new membership has no legal sanction. There is no such provision in d Act or the Rules or indeed in the byelaws of the society in the present case, which enables the society to pass such GBR..⭐

In law, it.must be shown that the society, which is a creature of statute, has the power to take particular action complained of witjin d framedwork of such statute or otherwise under law..

⭐What is important in law is not the identity of the person, who actually makes payment but d identity of the person on whose behalf the payment is made. It is very clear from resolution of the society that this payment is in the nature of admission fee for the purpose of admitting new members against purchase of flat in the society. In other words, it is a charge to be levied on new member.. it is immaterial who makes this payment.. such payment has no sanction of law and wrongly recoverd frm new member. It is wholly immaterial who made this payment willingly or under protest. As long as it is money wrongly paid, it can be recovered by the payer from the payee within the period of limitation..

There is nothing to suggest that this payment was made voluntary by new member and hav taken the advantage of this payment.. thid is also not a case of voluntary donation..

There is no doubt that the period of limitation in such case is years from the date on which the act or omission with reference to which the dispute arose took place section 92(1)(b) of Limitation Act 1963.. As this dispute is related to an act or omission on the part of the society against the member⭐😀👇👇


Click Here for the full judgement

Relief for 50 non-residental societies

Supreme court rejects I-T department’s claim, gives relief to 50 non-residential societies in Mumbai

In a major relief to over 50 societies of the non-residential premises in Mumbai, the Supreme Court has struck down the Income Tax Department’s claim of tax which they collect as charges for non-occupancy, transfer, common amenity fund and certain other charges.

The Income Tax Department had appealed against the Bombay High Court dismissing its claim over such receipts as being taxable as business income, generating profit and surplus having an element of commerciality. Societies like Mittal Tower Premises, Mittal Court Prem-ises, Venkatesh Premises, Sea Face Park Society New Maker Chamber had claimed that their receipts were exempt from income tax based on the doctrine of mutuality.

In a judgment delivered on Monday, the bench of Justices Rohinton Fali Nariman and Navin Sinha dismissed the Income Tax Department, upholding the Bombay High Court’s verdict that its claim was based on the notification issued by the state government on 09.08.2001 under the Maharashtra Cooperative Societies Act, 1960 is applicable only to cooperative housing societies and has no application to a premises society which consists of the non-residential premises. It also noted that there was no profit motive or sharing of profits among the members as the surplus was used for providing better facilities to the members.

The Income Tax Department had based its case on the ground that receipt of non-occupancy charges by the society from its members beyond 10% of service/maintenance charges permissible under the notification dated 09.08.2001 stands excluded from the principle of mutuality and was taxable. The order was upheld by the Commissioner of Income Tax (Appeals) but struck down by the Income Tax Appellate Tribunal holding that the said notification did not apply to premises society. The High Court even set aside the finding that payment by the transferee member was taxable. The respondent societies’ case was that the charges collected by them were for general maintenance a the premises and other facilities and general amenities to the members and the fact that the members who were not self-occupying may have to pay at a higher rate was irrelevant so long as the receipts were utilised for the benefit of the members as a class.

Click Here for the full judgement


Outward No: Ka.15/Circular/RERA/
Carpet Area/3.
Office of the Inspector General
of Registration & Stamp Controller,
Maharashtra State, Pune-1.
Date : 02/01/2018.


Sub: Guidelines No. 5 for Mumbai City and Guidelines No.4 For rest of Maharashtra

1.2 ratio has been mentioned in guidelines no.5  for Mumbai City and No.4 for rest of Maharashtra  in respect of calculating built up area from carpet area in the guidelines with annual valuation rate table.

The Maharashtra Real Estate Regulatory. Authority has issued Circular No.4/2017, Dt. 14/6/2017 regarding calculation of carpet area under Section 2(k) of Real Estate (Regulation & Development). With it they have given illustrative sketches regarding which area to be included in carpet and which not to be included. -Accordingly  it is necessary to include area of inner walls of the flat in carpet area. It is mentioned that area  covered by the external walls, and similarlyareas  under services shafts,  exclusive balcony or verandah area and exclusive open terrace area shall not be included. Incidental to said changes individual memorandums and also memorandums from CREDAI regarding making changes in valuation guidelines were received.  Therefore it is make changes in the ratio calculating carpet area from built area. Thus, following changes have been made in guidelines no.5 for Mumbai City and guidelines no.4 for rest of Maharashtra.

CarpetArea/Built up Area :-  

  1. The rate mentioned in annual, valuation rate are of built up area. If documents mentioned Carpet area, then valuation should be made by drawing built up area as follows :

Built up area = 1.1 x Carpet area or Carpet area = Built up area / 1.1

However if there is any other mentioned other than Carpet area and if the said area is more than Carpet area x 1.1 then, valuation should be made by considering the area mentioned in the documents. However in the case of open   parking, terrace and balcony, only mentioned area should be considered.

  1. Valuation of closed balcony adjacent to the flats/offices/shops/industrial properties should be made with sales price of the respective use of concerned annual valuation rate table.
  2.  If open balcony adjacent to the Flats/ Offices/ Shops/Industrial use is shown in documents and plans with it , then its.valuation should be made at the rate of 40% of the sale price of respective use shown in annual valuation rate          according to Instruction No.15 for Mumbai and Instruction No. 14 for rest of Maharashtra.
  3. Hereinbefore since area under all walls in the flats sold was not incorporated in carpet area, for the sale/agreement of such resale flats, earlier 1.2 ratio should be used for calculating built up area according to carpet area with balcony area.  However if there is mention of built up area or saleable area except carpet area in the document, then that area should be considered directly. The ratio 1.2 should not be applied to it.

The said Circular shall be came into force from the date of issue.

The copy of the said Circular is available on the web site

(Anil Kavade)

Inspector General of Registration & Controller of Stamps, Maharashtra State, Pune.