TMI Blog2021 (10) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... the association as IFMD was not a voluntary deposit made by the apartment owners with the object of earning an income but was a compulsory condition for receiving possession of the apartment HELD THAT:- In the light of this judgment of the Hon'ble Supreme Court in the case of Bangalore Club [ 2013 (1) TMI 343 - SUPREME COURT ] find that the first appellate authority has examined the relevant part of the agreement between Clarison property, the owners/users, the legend Condominium Association, M/s. Ajanta Builder Pvt. Ltd. The relevant findings of the agreement has been extracted elsewhere in the findings of the CIT(A). Considering the relevant part of the agreement in the light of the decision of the Hon'ble Supreme Court (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 41,71,334/- 6. Assessee was required to explain as to why the income from commercial activities and non members be not brought to tax in view of judgment of the Hon'ble Supreme Court in the case of CIT Vs. Bangalore Club 350 ITR 509. No. plausible reply was given by the assessee the only reply given by the assessee is that on the basis of income earned and expenses incurred, the AOP has filed the ITR and due taxes has been paid showing income under the head profit and gains from business and profession as well as income from other sources. 7. After considering the facts and the submissions the AO concluded as under:- The reply of the assessee has been considered but found not accepta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red the appellant's submissions. I have also perused the copy of the agreement dated 16.07.2017 filed by the appellant. This agreement is between the following four persons i) M/s. Clarion Property Limited. ii) The owners/Users iii) The Legend Condominium Association iv) M/s. Ajanta Builder Pvt. Ltd. 3.7 Para C D of this agreement reads as under:- C. After the completion of the complex, an Association of the owners of various units in the complex was formed under the Haryana Apartment Ownership Act and the Developer handed over the maintenance of common areas comprised in the area falling under the share of the developer other than the restricted common areas to the Association. D. The said Associati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sociation within 2 months of being called upon to do so by the third party association. 3.10 It is apparent from the reading of the aforesaid provisions of the agreement that the interest free maintenance deposit was given by the owners to the association and not to the builder. It was the association which has thereafter deposited the money with the builder on which the association was to receive interest @ 6%. Further, there was no obligation on the part of the builder to provide the maintenance services as submitted by the appellant. The deposit made by the association with the builder @ 6% interest per annum is similar to a deposit with the bank. Such receipts of interest from the builder by the Association even if used for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Supreme Court in the case of Bangalore Club (supra). The relevant part of the judgment read as under:- For a receipt to be exempt on the principles of Mutuality, three conditions have to be satisfied. The first is that there must be a complete identity between the contributors and participators. The second is that the actions of the participators and contributors must be in furtherance of the mandate of the association. The third is that there must be no scope of profiteering by the contributors from a fund made by them which could only be expended or returned to themselves. On facts, though the interest was entered from banks which were corporate members of the club, it was not exempt on the ground of mutuality because (i) the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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