Author : Anonymous
( Author )
24 June 2012
An company is taking care of maintainence of a residential complex. The main source of income to the company are
a.) Interest from bank fixed deposits which is credited to the profit Loss in the books of company and expenses are debited, this amount is derived from the share capital of the company subscribed by all flat owners in the ratio of their holding in the area of the complex.
b.) The company is also earning some income in the form of charges collected from the owners for use of Gym, Generator,swmimming pool etc.which are all credited to the profit and loss account of the comapny.
In the computation of income for income tax the interest income is deducted from the Profitloss as per profit and loss account and its shown under the head Income from other sources. And loss under the head business is set off against the head income from other sources as per the provisions of section 71 of the income tax act 1961.
Is it correct to show interest income from " Income under other Sources" as the source of income is from the share contributed by the owners of the flats.