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Non taxable income

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This query is : Resolved

LIJO (Querist)
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02 July 2013 Dear all,

Our client is a resident association. Their income is not taxable on the basis of principle of mutuality. But in the last year they offered income for tax. Now department issued a notice to pay higher tax. can they apply for exemption based on the principle of mutuality. How we can claim this while filing returns..

thanks and regards...

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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02 July 2013 If any surplus is remaining after meeting the expenses out of the mutual receipts, it has to be explained on the basis of the principle of mutuality. Interest income earned from the FDRs or deposits made out of such surplus money is taxable.
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While filing the return only Income from Other Sources has to be shown.
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