TMI Blog2022 (9) TMI 1267X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Apex court in the case of Bangalore Club Vs CIT(2013) 35 ITR 509. c. That the appellant craves for the permission to add, delete or amend grounds of appeal before or at the time of hearing of appeal. 3. Brief facts of the case are that, the assessee filed its return by declaring an income of Rs. 26,78,577/-. The Ld. A.O. noted that the assessee has received total interest of Rs. 3,89,02,546/- on Interest Bearing Maintaining Security (IBMS). Out of the said amount Rs. 16 lakhs was received as interest on interest and the remaining amount of Rs. 3,73,02,450/- was received as interest on IBMS. The said amount of Rs. 3,73,02,450/-was claimed as exempt and not offered for taxation. The Ld. A.O has asked the assessee to explain why ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thoughtful consideration. 7. It is found that the assessee has received a total receipt of Rs. 3,89,02,450/- as interest on IBMS Security, out of the said amount a sum of Rs. 3,73,02,450/- has been received as IBMS and Rs. 16,00,000/- has been received as interest on IBMS interest. The assessee has offered amount of Rs. 16,00,000/- for taxation, whereas interest at Rs. 3,73,02,450/- has not been offered for taxation on the plea that the said interest amount has to be distributed to its members proportionately after deduction of TDS at applicable rate. The Ld. A.O was the opinion that deduction of the TDS on distributed interest income amongst members does not absolve the society/assessee from its taxation obligation. Therefore, held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be set off against interest income earned on such deposit has also been rejected by the AO. After going through the facts of the case we are of the considered opinion that the AO has gone wrong in rejecting this contention of the assessee society. As rightly pointed out by the learned AR that the assessee society has obtained the interest bearing maintenance security called IBMS from the flat owners and such security deposit has been deposited with the Bank on which interest has been earned. Thus, there is a direct nexus in earning interest on such fixed deposit with Bank and payment of interest on the security deposit to the flat owners. The interest expenditure has been incurred wholly and exclusively for earning such interest income o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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