INCOME TAX ACT, 1961

Section 4

Income - Mutuality principle - Income from pay and park charges, rent from Towers and Interest from Fixed Deposit -

Assessee was an association formed by the unit owners of the commercial condominium under the Karnataka Societies Registration Act, 1960. It collects funds and maintenance charges from its members and maintains the building. It received income from pay and park charges, rent from Towers and Interest from Fixed Deposit. Out of this income, it claimed exempt income on mutuality concept after deducting personal expenses. AO did not consider the objections raised by the assessee and made the disallowance of amount claimed under exempt income category and assessed tax under sections 234A and 234B. Held: The matter was squarely covered by the judgment delivered in case of Bangalore Club v. CIT (2013) 29 taxmann.com 29 (SC) : 2013 TaxPub(DT) 434 (SC) because in the present case also, the incomes in question, i.e, pay and park charges, rent from Towers cannot be considered to be covered by the doctrine of mutuality. With regard to interest on Fixed Deposit also, the doctrine of mutuality was certainly not at all applicable as the said incomes were undisputedly earned by assessee from non-members and such earning of income was not in the course of providing certain facilities by the assessee to its members. Thus, following the same, the issue was answered in favour of department and against the assessee.

Followed:Bangalore Club v. CIT (2013) 29 Taxmann.com 29 (SC) : 2013 TaxPub(DT) 434 (SC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2015-16

SUBSCRIBE FOR FULL CONTENT