Concept of mutuality helps apartment owners association to get 100 per cent tax relief on income earned from contribution and rentals paid by its members. But apartment owners association will have to pay income tax for rent received from non-members, advertisement of hoardings, rents from mobile or cable tower etc. Interest earned from deposits or interest on investments other than co-operative bank will attract income tax.

The principle of mutuality derives from the concept that income earned by a person from external sources is taxable. Thus income derived from oneself cannot be treated as income thus cannot be taxed.

Reference:

Income Tax and Rebate for Apartment Owners Association