2019 (10) TMI 648

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....w and against the facts and circumstances of the case. 2. The Addition made is solely based on judgment of Bangalore Club which is a Commercial Club whereas the Assessee is a Resident Welfare Association (RWA). 3. The Learned Assessing Officer has disregarded the fact that the Interest paid to Members is out of Maintenance Security held separately for each member by RWA. 4. The said Interest paid to each members has been made after deduction of Tax at Source and is offered for Taxation in the hands of members. Addition made on this account will lead to Double Taxation which is against the principles of Taxation." 3. Facts of the case, in brief, are that the assessee is a resident welfare association (RWA) and f....

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.... aside and the grounds raised by the assessee be deleted. 6. The ld. DR, on the other hand, heavily relied on the order of the CIT(A). 7. I have considered the rival arguments made by both the sides and perused the relevant material on record. The only dispute to be decided in the impugned ground is regarding allowability of interest paid on interest bearing maintenance security deposit to the members. I find an identical issued had come up before the Tribunal in the case of sister RWA of the assessee, namely, Belaire Condominium Association (supra). I find the Tribunal in ITA No.655/Del/2018, order dated 25th April, 2018 for assessment year 2014-15, has decided the issue in favour of the assessee by observing as under:- "10.....

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....as 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 Apartment owner. In view of these facts, we are of the view that interest expenditure is to be set off against the interest....