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Mutuality concept for taxation of co-operative society

Tax queries 376 views 2 replies

Our client is a Society registered under the Societies Act of Tamilnadu.

The Society is not-for-profit but for the common benefit of the members. It has no other income other than the subscripttion from Members.

The Surplus will not be distributed to the members.

AS per the Mutuality concept under Income Tax Act one of the primary condition for claiming expemption is that the contributors and Participators to Surplus to be the same.

As per the Societies Act, on dissolution of the society, the surplus should not be distributed to Members ( who are the contributors ) but to be transferred to Other Registred Society.

Will the concept of mutuality be affected just becaue of that on Dissolution of the society the surplus would not be distrubutible to Contributors as per State Act.

 

Thank & Regards

Karthick V

Replies (2)

As the concept of mutuality remains intact, by transfer of dissolution capital to another registered society; the tax liability should not arise.

Thank you sir.


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