Taxation on interest income of apartment association
This query is : Resolved
21 September 2012
The apartment association is earning interest on fixed deposits from banks which is used for the maintenance expenses. It is collecting maintenance charges only to meet expenses in excess of interest received. Please let me know the taxability of the interest from bank deposits. Will this be exempt on ground of mutuality as it is used to meet the maintenance expenses.
21 September 2012
The recent views taken by courts in the cases of MUTUALITY are not permitting such an item of interest income. However, if the amount is small (A very very SUBJECTIVE indicator), then it can be well argued towards MUTUALITY. In one case where the deposits are nearing 2 cr. This is challenged by the department in appeal.
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