29 June 2009
a group housing society makes FDRS of its surplus with bank and earns interest . the bank deducts TDS. HOWEVER society distributes entire interest among members AFTER deuctting TDS on it.therefore net interest income of society is NIL. However it claims refund of TDS deducted by bank from I.TAX authorities. My queries are 1. Since society divides entire interest among member .is interest exempt in society hands 2 net interest (intt earned - intt. given to member )is nil, will the society get refund of TDS deducted by bank REFERENCE to some case laws shall be highly appreciated
29 June 2009
1. No interest is not exempt in the hands of society. Distributing the income is a different issue. 2. Yes certainly the society will get the TDS refund deducted by the bank if your income is Nil. Please note generally the housing society distributes the dividend to its members and not the interest. Distribution of dividend doesnt makes the income Nil.
01 July 2009
Sir Regarding interest income ,there are HC judgements in Director of Income-tax Vs. Alll India Oriental Bank of Commerce Welfare Society (2003) 130 Taxman 575 (Delhi) and The Country Club Vs. The Director of Income-tax ITA 84/2003 wherein interest income was held exempt on Principle of Mutuality.Please clarify.an early response shall be highly appreciated Thank you
CAclubindia
