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2022 (12) TMI 1316

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..... essee as well as the decision of Manipal Centre Apartment Owners Association [ 2013 (9) TMI 1293 - ITAT BANGALORE] . We are inclined to hold that as the assessee, an association of owners of Sunny Park Apartment is required to provide facilities and other amenities to the owners/occupants of the apartments and therefore, is required to make deposit with CESC Ltd. for availing electricity service connection. The interest earned on such deposit has a clear and direct nexus to the expenditure incurred in the form of electricity consumption charges and therefore, the same is allowable for set off against the expenditure and the principle of mutuality does apply on the alleged sum of interest earned on deposit with CESC Ltd. Thus, the finding .....

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..... security deposit with Calcutta Electric Supply Corporation (CESC); such deposit was made by the assessee in conformity with the rules of the CESC for supply of electricity to Sunny Park Apartment; this deposit was not made with a view to deployment of idle funds; it was made in pursuance of one of the objects of the society and the interest earned was merely incidental; moreover, such interest was not received by the assessee but was adjusted with the amount due by the assessee for the payment of electricity charges; the income not being income earned from investment of surplus funds ought to be regarded as income arising in the course of fulfilment of the objects of the assessee and thus ought not to be treated as income from other sources .....

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..... of power connection and since this deposit was necessary to carry out the object of the association, the principle of mutuality should be applied on the said sum. 6. On the other hand, ld. D/R vehemently argued supporting the orders of both the lower authorities. 7. I have heard rival contentions and perused the records placed before me. The issue in challenge before me relates to interest earned on deposit with CESC Ltd. of Rs. 93,161/- Rs. 95,556/- for AYs 2014-15 2015-16 respectfully. Ld. Counsel for the assessee contended that it was mandatory for the association to deposit with CESC Ltd. for supply of power and therefore, principle of mutuality should be applied. On the other hand, we notice that ld. CIT(A) did not accept thi .....

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