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2018 (5) TMI 240
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....ommissioner of Income Tax (Appeals) [CIT(A)] is bad, both in the eye of law and on the facts. 2. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 1,63,77,013/- on account of interest from bank. (ii) That the above-said addition has been confirmed despite the fact that the said interest income being earned is exempt as per the principle of mutuality. (iii) That the said addition has been confirmed disregarding the judgment of the various high courts, whereby the same was held to be exempt on the principle of mutuality by the Court. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts ....
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.... the Income of the AOP. In view of aforesaid factual and legal position, please show cause as to why the interest income. Income from Non-members and other Income which is not covered by the Principle of mutuality may not be treated as Income of the association." 4. In this regard the assessee submitted reply of the above notice which stating that the basic object of the society is to provide for maintenance, repair and replacement of common area and provide facilities for the benefits of the flat owners of the building in order to ensure that there is no default by any flat owner and interest bearing maintenance security is taken from each of the flat owner. The security deposit so obtained are kept in fixed deposit with the bank on whi....
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....he assessee by Rs. 1,63,77,013/-. 7. Feeling aggrieved from the order of the assessing officer, the assessee appealed before the ld. CIT(A) and filed written submissions also and relying some case laws. The Ld. CIT(A) after considering the submissions of the assessee and facts of the case, he upheld the action of the assessing officer. From the order of the ld. CIT(A), the assessee appealed before the Income Tax Appellate Tribunal. 8. The ld. AR submitted that the addition made by the assessing officer and sustained by the CIT(A) is unjustified. He drew our attention to the paper book page no. 42 which is Apartment buyers agreement Under clause "h" it has been provided that each allottee shall pay an amount as security for the payment....
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....is the list of the apartment owners to whom interest has been paid on their security deposit after deduction of tax at source. It was further contended that the assessee society has not claimed exemption in respect of the interest earned by it on its own fund as is evident from its income and expenditure account at paper book page 6 where interest income of Rs. 5,50,248 has been shown separately and including in the computation of income at paper book page 2 and paid taxes thereon. 9. On the other hand the ld. DR relied on the order of the lower authorities and further submitted that the assessee society is not entitled to claim deduction of the interest expenditure in view of the judgment of the Supreme Court in the case of Bangalore Cl....
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....xed deposit with Bank and payment of interest on the security deposit to the flat owners. The interest expenditure has been incurred wholly and exclusively for earning such interest income on Bank deposit. As per the Apartment buyers agreement there is an obligation on every buyer to make security deposit and there is corresponding obligation on the society to pay interest on such deposit. Thus, the contention of the learned AR that this interest expenditure has not been incurred to earn interest income is incorrect. The assessee society has paid interest each one after deducting tax at source. Thus, it is not a case of exemption on the principle of mutuality. Such interest paid by the assessee society is taxable in the hands of the Apartme....