Section 115BAD — Tax on Income of Certain Resident Co-operative Societies

Section 115BAD of the Income-tax Act, 1961, provides an optional tax regime for resident co-operative societies. Under this section, eligible co-operative societies can opt to be taxed at a concessional rate of 22% (plus applicable surcharge and cess) on their total income, provided they forgo certain deductions and exemptions. This section is significant as it offers a simplified tax structure aimed at reducing the tax burden on co-operative societies, thereby encouraging their growth and compliance. The statutory test requires the society to exercise this option on or before the due date of filing the return of income for the relevant assessment year. The burden of proof lies with the taxpayer to demonstrate eligibility and compliance with the conditions of the section. In practice, this section is crucial for co-operative societies seeking to optimize their tax liabilities while maintaining compliance with the tax laws.

Common Litigation Flashpoints

1. Eligibility criteria for opting the concessional tax rate
2. Interpretation of deductions and exemptions to be forgone
3. Timing and procedural compliance for exercising the option
4. Impact on carry forward and set off of losses

Judgments on Section 115BAD — Tax on Income of Certain Resident Co-operative Societies

• Income Tax Officer (Exemption) vs Wrestling Federation of India — ITAT,
  The proviso to Section 2(15) does not apply if the receipts are incidental to the fulfillment of the charitable objectives and not used as business receipts.
• Union of India & Anr. vs M/s. Ganpati Dealcom Pvt. Ltd. — SC,
  The 2016 Amendment Act cannot be applied retrospectively as it creates new offences and substantive changes, which cannot be applied to past transactions.
• Radhasoami Satsang, Saomi Bagh, Agra vs Commissioner of Income Tax — SC,
  A fundamental aspect permeating through different assessment years, if sustained by not being challenged, should not be changed in a subsequent year without material change.
• Anand Education Society vs Asstt. Director of Income Tax(E) — ITAT,
  The AO must substantiate claims of excessive payments to relatives with evidence of unreasonableness compared to market standards.
• Aditya Birla Nuvo Limited vs The Deputy Director of Income-tax — HC,
  The beneficial ownership of shares, despite being registered in the name of a permitted transferee, determines the taxability of capital gains in India.