TMI Blog2019 (10) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... his 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 filed its return of income on 6th August, 2014 declaring the total income at ₹ 13,41,806/-. The Assessing Officer, in the order passed u/s 143(3) dated 13th December, 2016 disallowed the amount of ₹ 23,98,582/- being interest paid to members from the interest received of ₹ 34,84,631/- on the ground that the deduction is not allowed as per section 57(iii) of the IT Act. In appeal, the ld.CIT(A) upheld the action of the Assessing Officer by r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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. We have considered the rival submission and perused the order passed by the lower authorities. There is no dispute to the fact that assessee is a registered society form with the basic object to provide for maintenance and repair of common arrears and facilities of the building to its members. There is no dispute about the maintenance charges being collected and utilised towa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 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 learne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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