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2022 (12) TMI 1316 - AT - Income TaxInterest earned on deposit - principle of mutuality - assessee being an association for the residents of Sunny Park Apartment had to make deposit with CESC Ltd. for the purpose of power connection - Assessee contended that it was mandatory for the association to deposit with CESC Ltd. for supply of power and therefore, principle of mutuality should be applied. On the other hand, we notice that CIT(A) did not accept this contention holding that on the alleged sum, principle of mutuality will not apply and it is taxable under the head “income from other sources” - HELD THAT:- On going through the submissions made by assessee as well as the decision of Manipal Centre Apartment Owners Association [2013 (9) TMI 1293 - ITAT BANGALORE]. We are inclined to hold that as the assessee, an association of owners of Sunny Park Apartment is required to provide facilities and other amenities to the owners/occupants of the apartments and therefore, is required to make deposit with CESC Ltd. for availing electricity service connection. The interest earned on such deposit has a clear and direct nexus to the expenditure incurred in the form of electricity consumption charges and therefore, the same is allowable for set off against the expenditure and the principle of mutuality does apply on the alleged sum of interest earned on deposit with CESC Ltd. Thus, the finding of ld. CIT(A) is reversed and the alleged addition is deleted. Hence, grounds of appeal raised by the assessee are allowed.
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