Tax liability on interest earned by Apartment Owners Asscn

 We have a Residential Apartments Owners Association in Bangalore which is Registered under the Karnataka Societies Regn Act 1960.

 

The association collects funds from the members towards usage of clubhouse etc. and also towards sinking funds.

Till the sinking funds are utilised, the same are earning interest in the bank.

I want to know if the interest and other charges  earned by the association are liable to income tax and if so, can the expenses be made by the association in upkeep of the common facilities, be offset against the income to arrive at the taxable income.

 

Thanks

Replies (4)

I think such interest is taxable and set off against expenses made shall be available.

Thank You

Originally posted by :praveen
" I think such interest is taxable and set off against expenses made shall be available.

Thank You
"

Thanks for the reply.

Some  more clarifications please :

 

This opinion is based on theory or practice ? 

will any basic exemption limit be available and can we invest under Section 80C to avail the benefit of Rs 1 lakh ?

Also can any expense be made to setoff the income or there would be any restricitions on the type and amount of the expenses ?

 

Also will the depreciation on clubhouse equipments bought by us be aviailable for offsetting ?

hai sir please clarify this question

An assessee got father’s business after partition from 4 brothers. This assessee already have a business in his individual status. He also filed partition business income and own business income showing in his individual status only. But now the assessee want to transfer the partition business income from individual status to HUF status. Is this possible to transfer? If possible, under which section we can show in HUF status? Please clarify this

 

interest charges are taxable but no deduction is available against it. However, charges collected from members are not taxable. Further, the association can claim exemption u/s 80C and the tax rates are as applicable to an individual.

 

You can refer SC case law of Bankipur Club

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