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Mihir Tanna  |984 Answers  |Ask -

Tax Expert - Answered on Sep 20, 2023

Mihir Ashok Tanna, who works with a well-known chartered accountancy firm in Mumbai, has more than 15 years of experience in direct taxation.
He handles various kinds of matters related to direct tax such as PAN/ TAN application; compliance including ITR, TDS return filing; issuance/ filing of statutory forms like Form 15CB, Form 61A, etc; application u/s 10(46); application for condonation of delay; application for lower/ nil TDS certificate; transfer pricing and study report; advisory/ opinion on direct tax matters; handling various income-tax notices; compounding application on show cause for TDS default; verification of books for TDS/ TCS/ equalisation levy compliance; application for pending income-tax demand and refund; charitable trust taxation and compliance; income-tax scrutiny and CIT(A) for all types of taxpayers including individuals, firms, LLPs, corporates, trusts, non-resident individuals and companies.
He regularly represents clients before the income tax authorities including the commissioner of income tax (appeal).... more
Asked by Anonymous - Sep 08, 2023Hindi
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Can a registered Apartment owner's Association (AOP under IT Act) create Repairs & Renovation Fund in Balance Sheet for the purpose of major repairs at a future date by contribution from members?. Our Auditor opines no such fund permitted for AOP. All contribution for that year is to be treated as Income and tax is to be deducted or we have to collect full contributions and spend in that financial year to avoid IT which is highly impracticable. Kindly clarify.

Ans: Apartment owner's association AOP (usually housing society) can collect contribution for Repairs & Renovation and set aside for specific purpose. However, as per specified format of co-operative society act, same is first included in Income and on expense side same is shown as transfer to specified fund.

For Income tax purpose, AOP can be governed by concept of mutuality wherein contributor and beneficiary are same person. As person can not earn from self, accordingly, contribution given by members which is required to be utilised for own benefit (repair) is not taxable.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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