TaxTMI 
TaxTMI 
2024 (9) TMI 82
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....in short referred to as "CIT(A)"), arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') relating to the Assessment Year 2018-19. 2. The brief facts of the case are that the assessee is Co-operative Housing Service Society formed for the purpose of maintenance and upkeepment of the residential apartment 'Venus Parkland'. For the Asst. Year 2018-19, assessee filed its Return of Income on 23.07.2018 declaring Nil Income. The return was taken up for scrutiny assessment and made addition of Rs. 24,71,127/- namely fixed deposit interest income of Rs. 24,31,919/-, Rental Income of Rs. 35,041/- and Interest on Income Tax refund of Rs. 4,167/-. 3. Aggrieved against t....
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....irectly linked to the earning of the said income. In the instant case of the assessee society, no expenditure was spent wholly and exclusively for purpose of earning such interest income, hence, expenses/deduction claimed by the assessee are not allowable to the extent of the above heads of income. 3.1. Regarding assessee's submission on not given deduction u/s 80P of Rs. 50,000/-, the Ld. CIT(A) held that considering the facts of the case and position of law as contained in section 80P(2)(c), since the assessee had shown income under the head 'income from other source' is not entitled to claim deduction amounting to Rs. 50,000/- u/s.80P(2)(c)(ii) and the ground of appeal is dismissed. Thus the disallowance of expenditure claimed....
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....mbers. 5. The Ld. CIT(A)-NFAC erred on facts and in law in not appreciating the fact that major part of interest earned on FDRS has been utilized to incur repairs and maintenance in the year under consideration itself. 6. The Ld. CIT(A)-NFAC erred on facts and in law in confirming addition of Rs. 35,041/- being rent received from the members without appreciating that said rent is not assessable to tax applying principles of mutuality and the same forms part of net income of Rs. 4,64,486/-. 7. The Ld. CIT(A)-NFAC erred on facts and in law in confirming addition of Rs. 4,167/- being interest on income-tax refund without justifiable reasons. 5. During the course of hearing, Ld. Counsel Shri Sakar Sharma appearing ....
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....nd for this purpose, assessee referred to the Ground No. 3 under which said relief is sought. Ld. Counsel by referring to Page 7 of Paper Book contended that the basic purpose of assessee co-op society is to maintain the property of the members of the Society, for which assessee Society derives funds from various sources. Even income earned by way of interest on bank FDRs, as well as rent received has been applied to maintain the property of 'Venus Parkland' which is evident from the profit and loss account and only net surplus of Rs. 4,64,486/- remained and rest of the amounts earned have been spent to meet maintenance expenses. Thus the Ld. Counsel submitted that there is no justification in taxing entire amount of interest earned....
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....ideration and perused the materials available on record. It is seen from Page No. 7 of the Paper Book namely Profit and Loss account for the year under consideration, income earned by way of interest on bank Fixed Deposits as well as Rent Receipt charges on Community Hall Charges, Festival Charges Income, Other Misc. Income have been applied for the maintenance of the property namely Electrical Expenses, House Keeping Charges, Repair & Maintenance of Bore well, Lift Maintenance, Road Repairing Expenses, Repairing and Maintenance of Plumbing works, Security Charges, Water Tank Cleaning expenses, etc. for the residential property of 'Venus Parkland'. Thus the net surplus shown by the assessee is Rs. 4,64,486/-. Thus the income earned from var....
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....to the common fund must be entitled to participate in the surplus and the participators in the surplus are contributors to the common fund. The law envisages a complete identity between the contributors and the participants in this sense. The principle postulates that what is returned is contributed by a member. Any surplus in the common fund shall therefore not constitute income but will only be an increase in the common fund meant to meet sudden eventualities. A common feature of mutual organizations in general can be stated to be that the participants usually do not have property rights to their share in the common fund, nor can they sell their share. Cessation from membership would result in the loss of right to participate without rece....