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2016 (12) TMI 237 - HC - Income TaxTaxability 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:- A combined reading of the preamble to the Bye – laws and salient objects noted supra, lead to an irresistible inference that the Society was formed to save individual salt manufacturers from extinction as per the advise tendered by the Salt Expert Committee. 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.
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