Appeal Details
Counselvise Citation
[2013] 120 COUNSELVISE.COM (IT) 3647 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 2 month(s) 5 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-04-2013
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
B
Assessment Year
2005-2006
Appeal Filed On
14-02-2012
Judgement Text
, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, M UMBAI BEFORE S/SHRI B.R.MITTAL(JM) AND RAJENDRA(AM) . . , !' !' !' !' , !# !# !# !# ! !! ! $ $ $ $ ./I.T.A. NO.1073/M/2012 ( % % % % & & & & / ASSESSMENT YEAR : 2005-06) BANDRA SHIV SAMRUDDHI CO. O. JHSG LTD., 11/3, OFF GURU NANAK ROAD, BANDRA (W), MUMBAI % % % % / VS. ACIT, RANGE 19(3), PIRAMAL CHAMBERS, 3 RD FLOOR, LALBAUG, MUMBAI-12. ( '( /APPELLANT ) .. ( )*'( / RESPONDENT ) '( + ! / APPELLANT BY : SHRI ARVIND KULKARNI )*'( , + ! / RESPONDENT BY : SHRI MOHIT JAIN % , -# / DATE OF HEARING : 15.4.13 ./& , -# / DATE OF PRONOUNCEMENT : 19 .4.13 !0 / O R D E R PER B.R.MITTAL, JM: THE ASSESEE HAS FILED THIS APPEAL FOR ASSESSMENT YE AR 2005-06 AGAINST ORDER DATED 2.11.2011 OF LD CIT(A)-30, MUMBAI ON THE FOLL OWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, LD CIT(A) ERRED IN DISMISSING THE ADMITTED CLAIM OF TH E ASSESSEE IN RESPECT OF INTEREST EARNINGS ON SAVING WITH CO.O.BANK ACCOU NT UNDER SECTION 80P (UNDER THE PRINCIPLE OF MUTUALITY) OF THE INCOME TA X ACT, 1961 WHICH IS GENERATED OUT OF OPERATIONAL INCOME AND WHICH IS AL SO ATTRIBUTED TO THE ACTIVITIES OF THE SAID HOUSING SOCIETY. 2. FURTHER LD CIT(A) MADE EXCESSIVE APPLICATION OF THE FACTS OF THE CASE TOTGARS CO.OP. SALE SOCIETY LTD VS ITO, 322 ITR 28 3 AS FACTS OF THE SAID CASE IS SALES CO.OP SOCIETY AND NOT BEING HOUSING S OCIETY. 3. THE ASSESSEE SOCIETY GENERATED FUNDS FROM THE ME MBERS CONTRIBUTION. THIS IS NOT DISPUTED EITHER BY ASSESSING OFFICER AS WELL AS CIT(A) TO SUPPORT THE RESERVES CREATED FOR THE FAILURE CONTIN GENCIES. 2. BRIEFLY STATED THE RELEVANT FACTS ARE THAT THE A SSESSEE IS A CO-OPERATIVE SOCIETY CONSISTING OF VARIOUS MEMBERS AND HAS THE CONCEPT O F MUTUALITY. DURING THE COURSE OF I.T.A. NO.1073/M/2012 ASSESSMENT YEAR : 2005-06) 2 ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT ASSESSEE HAS SHOWN INCOME BY WAY OF MAINTENANCE CHARGES AND OTHER INCIDENTAL RECOVERY FROM MEMBERS AS PART OF SOCIETY EARNINGS. ASSESSEE CLAIMED DEDUCTIONS OF T HEIR INCOME FROM INTEREST ON SAVING BANK ACCOUNTS AND INTEREST ON FIXED DEPOSIT AND REC EIPT OF TRANSFER FEE BY INVOKING PROVISIONS OF SECTION 80P OF THE ACT. AO ALSO NOTI CED THAT THE EXPENSES INCURRED BY THE ASSESSEE UNDER VARIOUS HEADS HAS BEEN DEBITED TO TH E INCOME AND EXPENDITURE ACCOUNT AGAINST WHICH ASSESSEE HAS RECEIVED THE INCOME BY W AY OF CONTRIBUTION FROM ITS MEMBERS AND WHATEVER THE INCOME RECEIVED BY WAY OF CONTRIBUTION HAS BEEN SPENT FOR MAINTENANCE OF THE SOCIETY. FURTHER, ASSESSEE DERI VED INCOME RECEIVED BY WAY OF INTEREST FROM CO-OPERATIVE BANK ON S.B. ACCOUNT & F IXED DEPOSIT AND ASSESSEE CLAIMED DEDUCTION OF RS.3,27,201 U/S. 80P OF THE ACT. SINC E THE ASSESSEE HAS NOT FILED ANY DETAILS, THE AO DENIED THE CLAIM OF THE ASSESSEE U/ S. 80P AMOUNTING TO RS.3,27,101 AND TREATED THE SAME AS INCOME OF THE ASSESSEE. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE LD CIT(A). 3. LD CIT(A) FOLLOWING THE DECISION OF HONBLE SUP REME COURT IN THE CASE OF THE TOTGARS CO-OPERATIVE SALE SOCIETY LTD VS ITO, 322 I TR 283(SC), WHEREIN, IT IS HELD THAT INTEREST FROM BANK DEPOSITS AND GOVERNMENT SECURITI ES FALL UNDER THE HEAD INCOME FROM OTHER SOURCES AND HENCE, IT IS TAXABLE U/S.56 OF TH E ACT, CONFIRMED THE ADDITION OF RS.3,27,101 MADE BY THE AO. HENCE, THIS APPEAL BEF ORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, LD A.R. SUBMITTED THAT T HE FUND WAS GENERATED OUT OF CONTRIBUTION RECEIVED FROM THE MEMBERS TO RUN THE A FFAIRS OF THE SOCIETY. HE SUBMITTED THAT INTEREST RECEIVED ON OPERATIONAL FUNDS OF THE SOCIETY IS NOT HIT BY THE AFORESAID DECISION OF HOBLE APEX COURT IN THE CASE OF TOTGAR S CO-OPERATIVE SALE SOCIETY LTD (SUPRA). HOWEVER, LD D.R. SUPPORTED THE ORDER OF L D CIT(A) AND SUBMITTED THAT INTEREST RECEIVED BY THE ASSESSEE ON THE SURPLUS FUNDS IS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. HENCE, ABOVE DECISION OF HON BLE SUPREME COURT (SUPRA) SQUARELY APPLIES TO THE FACTS OF THE CASE. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF LD REPRESE NTATIVES OF PARTIES AND ORDERS OF AUTHORITIES BELOW. I.T.A. NO.1073/M/2012 ASSESSMENT YEAR : 2005-06) 3 6. WE OBSERVE THAT ASSESSEE IS A CO-OPERATIVE HOUSI NG SOCIETY AND HAS DERIVED INCOME BY WAY OF INTEREST FROM CO.OP. BANK, S.B. AC COUNT AND FIXED DEPOSIT. ASSESSEE CLAIMED DEDUCTION OF RS.3,27,201 U/S. 80P OF THE AC T. WE ALSO OBSERVE THAT THE HONBLE SUPREME COURT IN THE CASE OF TOTGARS CO-OPERATIVE S ALE SOCIETY LTD (SUPRA) HELD THAT INTEREST FROM BANK DEPOSITS AND GOVERNMENT SECURITI ES FALL UNDER THE HEAD INCOME FROM OTHER SOURCES AND IT CANNOT FALL WITHIN THE EXPRES SION PROFIT AND GAINS OF BUSINESS. IT IS ALSO HELD THAT SUCH INTEREST INCOME CANNOT BE SA ID TO BE ATTRIBUTABLE TO THE ACTIVITIES OF THE SOCIETY AND INTEREST INCOME ACCRUING TO THE SOCIETY DOES NOT QUALIFY FOR DEDUCTION U/S. 80P. THE HONBLE MADRAS HIGH COURT IN THE CAS E OF MADRAS CRICKET CLUB VS ITO, 334 ITR 238 (MAD) ALSO HELD THAT THE PRINCIPLE OF MUTUA LITY ON INVESTMENT OF SURPLUS FUNDS IN THE FORM OF F.D AND SECURITIES DOES NOT SPECIFY THE CONCEPT OF MUTUALITY AND, THEREFORE, THE BENEFIT OF EXEMPTION CANNOT BE EXTENDED TO THE INTEREST. INCOME. WE OBSERVE THAT LD CIT(A) FOLLOWING THE ABOVE DECISIONS CONFIRMED T HE ADDITION OF RS.3,27,101 MADE BY THE AO. THERE IS NO DISPUTE TO THE FACT THAT ASSE SSEE HAS DERIVED INCOME BY WAY OF INTEREST INCOME, S.B. ACCOUNT AND FIXED DEPOSIT AND , THEREFORE, INTEREST RECEIVED BY THE ASSESSEE ON THE SURPLUS FUNDS IS TO BE ASSESSED UND ER THE HEAD INCOME FROM OTHER SOURCES. IN VIEW OF ABOVE AND RESPECTFULLY FOLLOW ING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF THE TOTGARS CO-OPERATIVE SALE SOCIETY AND ALSO THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF MADRAS CRI CKET CLUB(SUPRA), WE UPHOLD THE ORDER OF LD CIT(A) AND REJECT THE GROUNDS OF APPEAL TAKEN BY ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY ASSESSEE IS DISMI SSED. 1 -2 % 1- #1 , 34 ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH APRIL, 2013. . !0 , ./& #! 5 6%2 19 TH APRIL,2013 / , 7 SD/- SD/- ( !' , /RAJENDRA ) ( . . /B.R.MITTAL ) !# / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 6% DATED 19 / 04/2012 . % . ./ PARIDA , SR. PS I.T.A. NO.1073/M/2012 ASSESSMENT YEAR : 2005-06) 4 !0 !0 !0 !0 , ,, , )-9 )-9 )-9 )-9 :!9&- :!9&- :!9&- :!9&- / COPY OF THE ORDER FORWARDED TO : 1. '( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. ; ( ) / THE CIT(A)- 4. ; / CIT 5. 9<7 )-% , , / DR, ITAT, MUMBAI 6. 7= > / GUARD FILE. !0% / BY ORDER, *9- *9- *9- *9- )- )-)- )- //TRUE COPY// 3 /ASSTT. REGISTRAR) , / ITAT, MUMBAI
