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2022 (9) TMI 1267 - AT - Income TaxIncome from other sources - Addition of interest earned on IBMS( Interest bearing maintenance security) - scope of principle of mutuality - set off of interest expenditure - AO was the opinion that deduction of the TDS on distributed interest income amongst members does not absolve the society/assessee from its taxation obligation, held that interest earned from banks on IBMS by the assessee society is liable to be taxed under the head of ‘income from other sources’ - whether the interest received by the assessee on IBMS is taxable or not? - HELD THAT:- The said issue has been considered by the Coordinate Bench of the Tribunal in the case of Belaire Condominium Association [2018 (5) TMI 240 - ITAT DELHI] 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 income. As regards the AO's contention that interest paid to member is not eligible deduction in the case of AOP under Section 40 (ba), we have perused the said Section. This clause excludes registered society from its applicability. Accordingly, this clause will not be applicable to the assessee society. Moreover, as rightly contended by the learned AR Section 40 (ba) is applicable while computing business income. This clause is not applicable while computing income from other sources. There is no prohibition in Section 57 (iii) under which deduction of interest is eligible to the assessee society. We direct the AO to delete the addition made on account of the interest. Appeal of assessee allowed.
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