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Hatkesh Co-op Housing Society Ltd vs. ACIT (ITAT Mumbai) on itatonline.org!
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Hatkesh Co-op Housing Society Ltd vs. ACIT (ITAT Mumbai) on itatonline.org!
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Duties of the Trustee - National Paralegal College
nationalparalegal.edu/willsTrustsEstates.../TrustAdministration/DutiesOfT...Rather, he blindly invested the trust's funds in these stocks. This type of ... Jordan has an affirmative duty to prudently invest the trust assets. That obligation can ...[PDF]
III. Trusts and Trust Responsibilities - Lincoln Institute of Land Policy
www.lincolninst.edu/subcenters/...state-trust.../trustlands-responsibility.pd...can be either express or implied – to the beneficiary of the trust.8 The most ... [T]he standard or measure of care, diligence, and skill required of a trustee in the ... that the trustee has a "duty … to invest and manage the funds of the trust as a ... each investment should still be “prudent” when viewed in the context of the strategy ...
Trust law - Wikipedia, the free encyclopedia
en.wikipedia.org/wiki/Trust_lawThe trustee is given legal title to the trust property, but is obligated to act for the ... When a landowner left England to fight in the Crusades, he conveyed .... An implied trust is one created by a court of equity because of acts or situations of the parties. ... The trust's affairs may include prudently investing the assets of the trust, ...[PDF]
Read a free sample chapter from 'The Law of Trusts'
bookshop.blackwell.co.uk/extracts/9780199540921_penner.pdf(2) a duty to invest so that the fund is preserved from risk yet a reasonable return ... however, if they do not invest as a prudent investor would. e Trustee Act 2000, ... at is, he may make any investment he could make if the funds were his own. ..... It should not be assumed, however, that if a trust fund administered from the ...[PDF]
Nonprofit Guide to Prudent Investing - Maine Lake Association
www.mainecola.org/Portals/.../Prudent%20Non%20Profit%20Investing.p...Traditionally, nonprofit organizations invested charitable funds relatively conservatively. ... suited to the terms of the trust or needs of the nonprofit organization. Over the past decade, the ... with the legal authority and duty to make decisions regarding financial .... of the prudent investor rule, the trustee should consider the ...[PDF]
Fundamental Duties of a Trustee - Edward Jones
www.edwardjones.com/groups/ejw_content/.../web043726.pdfEach person in receipt of this outline should independently confirm any ... Trust and/or investment-advisory services are provided by Edward Jones Trust .... not dispersing trust funds for the beneficiary's education led to the decision by the trial ... The duty to administer can also appear in a subtler context as an implied duty.
Understanding Fiduciary Duty - Bar Journal Article
https://www.floridabar.org/.../a90812c2b64922f9852576d5007366ed!O...[T]he relation and duties involved need not be legal; they may be moral, social, ... If a relation of trust and confidence exists between the parties (that is to say, ... action plaintiffs and their attorneys were held to owe an implied fiduciary duty to ..... care is the duty of a trustee to invest or manage the assets of an estate prudently, ...
Socially Responsible Investment and Fiduciary Duty: Putting the ...
www.academia.edu/.../Socially_Responsible_Investment_and_Fiduciary_...In the standard case, however, as with e.g. pension funds and mutual funds, the purpose ... The duty to exercise due care and prudence is typically taken to imply that ... law professors Langbein and Posner, e.g., '[t]he duty of prudent investing […] ... Whereas the purpose of the trust certainly should be respected, which most ...
Chapter 2: Duties of Directors - Corporate and Insolvency Law Policy
www.ic.gc.ca/eic/site/cilp-pdci.nsf/eng/cl00692.htmlThe duty is a "fiduciary" duty because the obligation to act in the best interests of the ... is the conduct that might be expected of a reasonably prudent person. .... Where a charitable corporation holds restricted trust funds or endowment funds, ..... He or she should then leave the room for the discussion and abstain from voting ...
COMMON QUESTIONS AND ANSWERS REGARDING TRUSTS
montereytrust.com/common-questions.htmHow should the trust be invested so that I will in fact receive assets that are still ... Also, it may be a violation of the duty of the trustee to invest the portfolio prudently ... He is a beneficiary of the trust and he seems to be favoring his kids over me. .... shareholders, managers and staff, make no warranties, expressed or implied, ...
< Fiduciary Duties of the Trustee
Under the common
law, trustees are charged with a series of
fiduciary duties – duties which can be either
express or implied – to the beneficiary of the trust.
The most important
of these are, -
(1) to manage the trust
in accordance with the instructions of the settlor;
(2) a duty of good
faith, which requires the trustee
to put the best interests of the trust ahead of his
own;
(3) a duty of prudence, which requires the
trustee to manage the trust property with the same degree of skill that a
prudent person would
exercise in his or her own affairs; and
(4) a duty to preserve and protect the trust assets, or trust corpus, to
satisfy both present and future
claims against the trust.>
Look Into Or Better Through; for Help and More Clues >
CROSS REFER > http://praja.in/en/blog/m...
PRINCIPLES OF MUTUALITY - Taxmann
M/s Bangalore Club vs. CIT (Supreme Court)
<> On the facts of the case, as undetrstood. the SC ruling ipso facto / on all fours, would apply, provided -
(A) the assessee is a members’ club;
(B) the source of income, the deposits with bank, which itself is a member (corporate member) of the assessee club; and
(C) the interest income is that earned on ‘fixed deposits ‘ placed with the bank.
The moot points which arise, but obviously left open, for an inconclusive debate and dispute, are these:
Could the apex court ruling be straightaway applied to every other legal entity, not being a members’ club and is distinguishabe also on the other abovestated facts?
For instance, to interest or other like income incidental to the existence and relatable to its activities in relation to its members, in a case such as, – a co-operative society or a company or an association constituted and formed by the co-owners of units i.e. flats or apartments in a residential or commercial building. In one’s view, relying on the presently obtaining judicial opinion, the answer can only be an emphatic “NO’.
In a manner of speaking, the SC ruling can be regarded to have opened the ‘pandora’s box’ yet again; and it is for the CBDT to, with a view to avoiding / obviating a spate of fresh litigation, soon come out with favourable clarifications, for the benefit of the concerned people, in line with the present legal position, as enunciated in decided court cases; also well setlled, accepted and followed by the Revenue.
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Income Tax Law: Month-Year ... is exempt on the grounds of mutuality, as in such cases ... is exempt from taxunder the doctrine of mutuality and the case for its exemption is ...
... found to be covered by principle of mutuality, the same cannot be brought to tax ... case, the Income TaxAppellate Tribunal erred in law ... Mutuality offers a tax exemption ...
tax cases, was incorrect. At any rate, it was found that mutuality is not lost, when ... recognition for exemption ongrounds of mutuality was ... The law as regards ...
... of the concept of mutuality? In this article, the author goes through the basic case law and ... mutuality for claiming exemption from tax ... declaring nil income on ground ...
... the principle of mutuality and hence cannot be claimed as exempt on this ground. ... to satisfy the mutualityconcept. CASE LAW ... of Income-tax) as a proposition of law, the ...
http://apartmentadda.com/blog/2013/01/17/is-income-tax-applicable-for-society-fds/#comment-80077
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Is Income Tax applicable for Society FDs?
Jan 17th, 13 / 0 Comments /
A Residential Society* collects Funds from its Members and pays for Common Expenses from such Funds. The Society does not pay Income Tax for any Excess of this Income over Expenses. This is allowed due to the Principle of Mutuality.
At the end of a Financial Year, any Excess Fund , typically termed as Reserve Fund, is invested in Fixed Deposits with a Bank, towards future exigencies.
Same is done with Corpus Fund, Sinking Fund, Repairs and Maintenance Fund etc.
The Bank pays annual Interest on these Fixed Deposits, like any other Fixed Deposits.
Question: Should Income Tax be applicable on the Interest paid by the Bank for Fixed Deposits by Residential Societies?
Answer: If you go by Supreme Court’s definition of “Principle of Mutuality” as clarified in below Case, the answer is YES.
FACT: In Mumbai almost every Society has Fixed Deposits with Saraswat Co-operative Bank or District Co-Operative banks. The core benefit being Interest on Fixed Deposits are exempted from TDS. However in Mumbai, the Co-operative Housing Society (CHS) is also mandated to become Member of The District Central Co- operative Bank of the District. The understandable purpose of this membership is to bring the Bank and the Society under the Concept of Mutuality.
In other Indian cities, this is not a well known fact, nor is the Society registered in The District Central Co-operative Bank, so as to utilize such benefits. Residential Societies open Bank Accounts in any Bank per their preference, including Private Banks.
Should Interest on Society FDs be Taxable?
SUPREME COURT CLARIFIES PRINCIPLE OF MUTUALITY
A Landmark Judgement passed by Supreme Court on 14-January-2013, gives great clarity on “Principles of Mutuality”, under which the Tax Exemption of Societies is also justified.The Case
M/s Bangalore Club vs. Commissioner of Income Tax (CIT)The Bangalore Club (an Association of People, AOP) created Fixed Deposits with Banks which are also Members of the Club. It claimed that the Interest earned on these Fixed Deposits should be exempt from Income Tax, as the Income is subject to the Principle of Mutuality. Commissioner of Income Tax claimed to the contrary.
The Verdict
In our opinion, unlike the surplus amount itself, which is exempt from tax under the doctrine of mutuality, the amount of interest earned by the assessee (Bangalore Club) from the member banks will not fall within the ambit of the mutuality principle and will therefore, be exigible to Income-Tax in the hands of the assessee-club.The surplus funds in the hands of the assessee (Bangalore Club) were placed at the disposal of the corporate members viz. the banks, with the sole motive to earn interest, which brings in the commerciality element and thus, the interest so earned by the assessee has to be treated as a revenue receipt, exigible to tax. It was pleaded that transaction between the assessee and the member banks concerned was in the nature of parking of funds by the assessee with a corporate member and was nothing but what could have been done by a customer of a bank and therefore, the principle that “no man could trade with himself” is not applicable.
The Reasoning
THREE conditions must be satisfied, for an Income to be Exempt on the Principle of Mutuality1) There must be a complete identity between the contributors and participators.
2) The actions of the participators and contributors must be in furtherance of the mandate of the association.
3) There must be no scope of profiteering by the contributors from a fund made by them which could only be expended or returned to themselves.
How this case violates all three Conditions
1) The arrangement lacks a complete identity between the contributors and participators. Till the stage of generation of surplus funds, the setup resembled that of a mutuality; the flow of money, to and fro, was maintained within the closed circuit formed by the banks and the club, and to that extent, nobody who was not privy to this mutuality, benefited from the arrangement. However, as soon as these funds were placed in fixed deposits with banks, the closed flow of funds between the banks and the club suffered from deflections due to exposure to commercial banking operations. During the course of their banking business, the member banks used such deposits to advance loans to their clients. Hence, in the present case, with the funds of the mutuality, member banks engaged in commercial operations with third parties outside of the mutuality, rupturing the ‘privity of mutuality’, and consequently, violating the one to one identity between the contributors and participators as mandated by the first condition. Thus, in the case before us the first condition for a claim of mutuality is not satisfied.
2) Once parked as FD, the surplus funds were not used for any specific service, infrastructure, maintenance or for any other direct benefit for the member of the club. These were taken out of mutuality when the member banks placed the same at the disposal of third parties, thus, initiating an independent contract between the bank and the clients of the bank, a third party, not privy to the mutuality. This contract lacked the degree of proximity between the club and its member, which may in a distant and indirect way benefit the club, nonetheless, it cannot be categorized as an activity of the club in pursuit of its objectives. It needs little emphasis that the second condition postulates a direct step with direct benefits to the functioning of the club. For the sake of argument, one may draw remote connections with the most brazen commercial activities to a club’s functioning. However, such is not the design of the second condition. Therefore, it stands violated.
3) The facts at hand also fail to satisfy the third condition of the mutuality principle i.e. the impossibility that contributors should derive profits from contributions made by themselves to a fund which could only be expended or returned to themselves. This principle requires that the funds must be returned to the contributors as well as expended solely on the contributors. True, that in the present case, the funds do return to the club. However, before that, they are expended on non- members i.e. the clients of the bank. Banks generate revenue by paying a lower rate of interest to club-assessee, that makes deposits with them, and then loan out the deposited amounts at a higher rate of interest to third parties. This loaning out of funds of the club by banks to outsiders for commercial reasons, in our opinion, snaps the link of mutuality and thus, breaches the third condition.
This was a Case with a Club – an Association of Persons.
Will the Verdict be different for an Apartment Owners Association, or a Co-operative Housing Society?
Will the Verdict be different for an Apartment Owners Association, or a Co-operative Housing Society?
CREDITS: Thanks to Mr. V. Swaminathan for bringing this Judgment to our notice. Read the full Case. This article has direct excerpts from this document.
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Tags: Bangalore Club, Fixed Deposits, Society Tax, Supreme Court
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Sorry San, I am unable to accept the ‘Credits’ or the ‘Thanks’ so promptly extended.
My deep regret is that the very purpose of my drawing the SC ruling to besides your attention, to the common attention of the concerned people at large has been, unwittingly or otherwise, defeated / thwarted/ shortcircuited.
For, it is my firm conviction that, the SC ruling can not be rightly relied or invoked for application in any other case with distinct facts and circumstances.
For an elucidation, reproduce below, my comment posted on the reported dec ision @itatonline:
On the facts of the case, as undetrstood. the SC ruling ipso facto / on all fours, would apply, provided -
(A) the assessee is a members’ club;
(B) the source of income, the deposits with bank, which itself is a member (corporate member) of the assessee club; and
(C) the interest income is that earned on ‘fixed deposits ‘ placed with the bank.
The moot points which arise, but obviously left open, for an inconclusive debate and dispute, are these:
Could the apex court ruling be straightaway applied to every other legal entity, not being a members’ club and is distinguishabe also on the other abovestated facts?
For instance, to interest or other like income incidental to the existence and relatable to its activities in relation to its members, in a case such as, – a co-operative society or a company or an association constituted and formed by the co-owners of units i.e. flats or apartments in a residential or commercial building. In one’s view, relying on the presently obtaining judicial opinion, the answer can only be an emphatic “NO’.
In a manner of speaking, the SC ruling can be regarded to have opened the ‘pandora’s box’ yet again; and it is for the CBDT to, with a view to avoiding / obviating a spate of fresh litigation, soon come out with favourable clarifications, for the benefit of the concerned people, in line with the present legal position, as enunciated in decided court cases.
Among others, a comprehensive analytical study in an article published sometime ago by ICAI and available in public domain may be gone through for having one’own skewed ideas or thoughts on the subject controversy cleared and corrected.