Taxation of 1860 Society

Hi Ajay,

I don't agree with you. There's no doubt about the tax rates of a co-operative society; paragraph B of the part 1 of the First Schedule of each Finance Bill specifies the rates of tax at which a co-operative society would be assessed. Presently, the exemption limit is Rs 10k. The point is: When the Act refers to a co-operative society, it refers to the society registered under the 1912 Act. There's a world of difference between a Co-operative Society registered under the 1912 Act and a Society registered under the Societies Registration Act 1860. I am copy-pasting below the preambles of both these Acts:[An Act to amend the Law relating to Co-operative SocietiesWHEREAS it is expedient further to facilitate the formation of Co-operative Societies for the promotion of thrift and self-help among agriculturists, artisans and persons of limited means, and for that purpose to amend the law relating to Co-operative Societies; It is hereby enacted as follows][An Act for the Registration of Welfare, Literary, Scientific and Charitable Societies.Whereas it is expedient that provision should be made for improving the legal condition of societies established for the promotion of literature, science, or the fine arts], or for the diffusion of useful knowledge, the diffusion of political education or for charitable purposes : It is enacted as follows]Clearly, a 1912 co-operative society is as different from an 1860 society as chalk from cheese. 1860 societies are mostly floated to promote education or some other such object. The 1860 Act is a pre-independence law. It exists in Pakistan also. After the 7/7 London blasts perpetrated by men who attended Madrassas in Pakistan, President Musharraf got all the Madrassas registered under the Society Registration Act, 1860. A co-operative society on the other hand is a just a self-help kind of group, members of whom unite for their own sake and not for the sake of public welfare. An 1860 society too may carry on business, but that business will be incidental to and for the furtherance of the main objective of some general public utility. Members of a co-operative society can distribute the profits from the co-op amongst themselves after 1/4th of the net profits have been transferred to a reserve fund. In case of an 1860 society, no member can receive profit even upon the dissolution of the society. All the assets once they've formed part of corpus of the society would be handed over to a kindred society. So a society registered under the 1860 Act would be assessed as an AOP and therefore entitled to the exemption limit of Rs 1.10k. That is, only if it's carried on some business activity. Routine surplus i/e. excess of income over expenditure of a society can't be brought to tax. That would be in violation of its very constitution and the parent Act of 1860. Thanks,CA Sanjeev Bedi--- In ICAI_CIRC_MEERUT_ CA@yahoogroups. com, ajay rajput wrote:>> Dear Friend,> > In Income tax a Society is assessed as such i.e. with the status of Co-Operative Society.> and the deduction is available under section 80P of the act, futher interest or dividend recevied from other co-operative society is also exempt as per section 80P.> > No surcharge shall be applicable on the society in income tax as well as for the purpose of FBT.> > as far as return is concerned ITR-5 is prescribed for this purpose .> > > With Regards > > CA AJAY RAJPUT > New Delhi> > ca.ajayrajput@ ...> > --- On Thu, 22/5/08, anshuman bardhan anshumanbardhan@ ... wrote:> > From: anshuman bardhan anshumanbardhan@ ...> Subject: {amresh's-CA' s} Re: Taxation of Society> To: ICAI_CIRC_MEERUT_ CA@yahoogroups. com> Date: Thursday, 22 May, 2008, 8:44 AM> > > > > > > > Dear Sir,> Specifically I want to know-> 1.About the status in which a Society would be assessed. I understand that it is AOP/BOI. Is it correct and if yes then the same exemption limit would apply to a society also in filing of returns.> 2. Will the same return form as applicable to AOP/BOI be applicable to Society also.> > Regds> Anshuman Bardhan > Anshuman Bardhan> Chartered Accountant> 690, Behind Tamrakar Badi,> Adarsh Chowk,Sunder& nbsp;Nagar,> Raipur (C.G.)