2017 (8) TMI 963 - SCH - Income Tax

Taxability in hands of society - fund transferred to Distribution Pool Fund Account - respondent Society assessed to tax on its income as person as defined under Section 2(31) - entitlement to claim exemption over its profits paid to its members and claim it as expenditure in the accounts before offering the profit for tax - Held that - No merit in this special leave petition. It is, accordingly, dismissed. HC order confirmed 2016 (12) TMI 237 - KARNATAKA HIGH COURT wherein said the very fact that the Bye-laws permit the Society to recover the manufacturing expenses and other dues from its members is a sufficient and a robust indication that the ownership of the Salt to the extent of their respective share of each individual member continues to remain with the respective member himself. This inference is fortified by Clause 80 of the Bye laws, which permits the members to raise loan on the security of their proportional interest in the Agar and Salt produced . Income of the Society cannot be anything beyond the scope of Chapter XVI of the Bye laws. Therefore, logically the amount transferred to the Distribution Pool Fund Account cannot be brought within the umbrella of Chapter XVI. Hence, it is not taxable in the hands of the Society. In the premise, the substantial question of law deserves to be answered against the appellant Revenue.

Summary

The Supreme Court dismissed a special leave petition after finding no merit in it. The delay was condoned and any pending applications were disposed of accordingly.