Law:

Section:

Section 86, read with section 40(ba), of the Income-tax Act, 1961 - Association of persons - Computation of share income of members of - Whether there is no bar on a company, which is member of an AOP/BOI, from getting benefits of section 86 - Held, yes - Whether exclusion provided under section 86 by words 'other than company or co-operative society or a society registered under Societies Registration Act, 1860' would be applicable only to an association of persons or a body of individuals and not to members thereof - Held, yes J. Narayanaswamay for the Appellant. JUDGMENT M.M. Sundresh, J. - The appeal has been filed by the revenue challenging the order passed by the Tribunal in ITA No. 1897/Mad./2008 whereby the order passed by the Commissioner of Income-tax (Appeals)-VI was confirmed. The revenue while filing this appeal has raised the following substantial question of law :- "Whether on the facts and circumstances of the case, the Tribunal was right in holding that assessee company is entitled for deduction towards interest income from Kailas Projects, an Association of Persons as per the provisions of section 86." 2. The facts in brief are as follows :- The assessee was a member of an association of persons titled Kailas Project. The assessee received interest from the said association of persons and claimed the said amount towards exemption under section 86 of the Income-tax Act. However, the Assessing Officer has disallowed the claim of the assessee on the ground that the provisions of section 86 of the Income-tax Act can be made applicable only to the assessee who is not a company or co-operative society. Therefore, inasmuch as the assessee is a company, the Assessing Officer has held that the provisions of section 86 of the Income-tax Act are not applicable to it. However on appeal, the Commissioner of Income-tax (Appeals) has allowed the claim and deleted the additions made by the Assessing Officer. Not satisfied with the same, the revenue took the matter on further appeal before the Tribunal and the Tribunal on a consideration of section 86 and comparing the same with section 40(ba) of the Income-tax Act has concurred with the decision of the…

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