LAXMI CO-OPERATIVE HOUSING SOCIETY LTD , MUMBAI V. INCOME TAX OFFICER- 22(2)(3), MUMBAI

ITA 1743/MUM/2023

AI Insights

The case involves multiple appeals by Laxmi Co-operative Housing Society Ltd. against the orders of the Income Tax Officer concerning the disallowance of deductions claimed under section 80P(2)(d) of the Income Tax Act, 1961, for interest earned from deposits in co-operative banks. The primary legal contention was whether the interest income from co-operative banks qualifies for deduction under section 80P(2)(d), given that section 80P(4) specifically excludes co-operative banks from such benefits. The Tribunal referenced several precedents and decisions to conclude that the co-operative society is entitled to the deduction claimed.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124757 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 06-08-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 16-05-2023
• Other Referred Cases: Kaliandas Udyog Bhavan Premises Coop Society Ltd. V/s ITO 21(2)(1) Mumbai (2018) 94 taxmann.com 15 (Mumbai Tribunal), Land End Co-operative Housing Society V/s ITO Ward 16(3)(1) (ITA No. 3566/Mum/2014) (A.Y. 2009-10)
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 148; 243B; 234B; 80P; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE ABY T VARKEY, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No. 1748/MUM/2023 (A.Y. 2012-13) ITA No. 1747/MUM/2023 (A.Y. 2013-14) ITA No. 1743/MUM/2023 (A.Y. 2017-18) ITA No. 1744/MUM/2023 (A.Y. 2018-19) ITA No. 1749/MUM/2023 (A.Y. 2021-22) Laxmi Co-operative Housing Society Ltd. Laxmi Nagar, Khar (W) Mumbai-400052 Vs. Income Tax Officer 22(2)(3) National Faceless appeal Centre स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAAAL1009P Appellant .. Respondent Appellant by : Shri. K. Shivaram & Ms. Neelam C. Jadhav Respondent by : Shri. Manoj Kumar Sinha Date of Hearing 07.08.2023 Date of Pronouncement 24.08.2023 आदेश / O R D E R PER BENCH :- 1. All these five appeals filed by the assessee are directed against the order passed u/s 250 of the Income Tax Act 1961 [hereinafter “the Act”] by the Learned Commissioner of Income P a g e | 2 1748,1747, 1743,1744,1749/Mum/2023 A.Y. 2012-13, 13-14, 17-18, 18-19, 21-22 Laxmi Co-operative Housing society Ltd. Mumbai Tax (Appeals)-34/ [hereinafter „the CIT(A)‟]/National Faceless Appeal Centre, Delhi [NFAC]. Since all these appeals are based on common issue on identical facts, therefore, all these appeals are adjudicated together by taking the ITA No. 1748/Mum/2023 as lead case and its finding will be applied mutatis mutandis to the other appeals filed by the assessee wherever applicable. ITA No. 1748/Mum/2023 A.Y. 2012-13 The revised grounds of appeal filed by the assessee are as under: I. Disallowance of deduction claimed u/s. 80(P)(2)(d) of ₹ 66,36,310/- in respect of interest received from fixed deposits held in the SVC Co-operative Bank, Saraswat Co-Op, Bank & Maharashtra State Co-Op. Bank. 1. The Learned National Faceless Appeal Centre erred in confirming the disallowance of deduction u/s. 80P (2)(d) of ₹ 66,36,310/- in respect of interest earned from deposits kept in co-operative banks. Without appreciating that, co-operatives banks are registered under Co-Operatives Societies Act, 1912 with a license to undertake banking activities, and therefore Appellant is eligible to claim deduction u/s 80P(2()(d). Therefore, disallowance confirmed by the NFAC may be deleted. 2. The Learned national Faceless appeal Centre (NFAC) erred in not following the judgment of the jurisdictional Tribunal which has explained the ratio of the Supreme Court and held that deduction u/s 80P(2)(d) is eligible in respect of interest received from the Co- operative Banks. Therefore, disallowance confirmed by the NFAC may be deleted. P a g e | 3 1748,1747, 1743,1744,1749/Mum/2023 A.Y. 2012-13, 13-14, 17-18, 18-19, 21-22 Laxmi Co-operative Housing society Ltd. Mumbai II Interest u/s 244B of ₹ 14,42,791/- & 234C of u/s. 75,759/- 3. The learned National Faceless Appeal Centre (NFAC) erred in levying the interest of ₹ 14,42,791/- u/s 243B & ₹ 75,79/- u/s 234C of the Act. The appellant denied the liability of interests. Hence, the levy on interest may be directed to be deleted. 2. Fact in brief is that the assessee is a co-operative society consisting various members on the concept of mutuality. The assessee has filed return of income for the assessment year 2012-13 on 27.09.2012 declaring income of ₹ Nil. The case of the assessee was reopened by issuing of notice u/s 148 of the Act on 03.01.2018 on the ground that the assessee has earned income from interest on FDR and interest on SB account totaling to ₹66,36,310/- received from the co-operative bank and after claiming various expenses the assessee had claimed deduction u/s 80P(2)(d) of the Act at ₹32,54,869/-. 3. AO was of the view that since the assessee had earned interest from co-operative banks and not from co-operative society, therefore, it was not eligible for deduction u/s 80P(2)(d) of the Act. On query assessee explained that co-operative banks are registered co-operative society, therefore, the interest received from the co-operative bank is eligible for deduction u/s 80P(2)(d) of the Act. However, the AO has not agreed with the submission P a g e | 4 1748,1747, 1743,1744,1749/Mum/2023 A.Y. 2012-13, 13-14, 17-18, 18-19, 21-22 Laxmi Co-operative Housing society Ltd. Mumbai of the assessee. The AO referred Finance Act 2006 vide which deduction u/s 80P(4) of the Act available to the co-operative bank was withdrawn w.e.f. available from 1.04.2007. The AO was of the view that as per the provisions of section 80P (4) of the Act w.e.f. 01.04.2007 deduction u/s 80P(4) was not available to the co-operative banks. He also observed that co-operative Bank is a commercial bank and does not fall under the purview of a co- operative society. Therefore, the AO held that deduction u/s 80P(2)(d) of the Act claimed by the assessee on interest earned from the deposit maintained with co-operative banks is not allowable. Therefore, the same was added to the total income of the assessee. 4. Aggrieved, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) has dismissed the appeal of the assessee. 5. During the course of appellate proceedings before us the Ld. Counsel contended that section 80P(4) exclude only the corporative bank for claiming deduction u/s 80P(4) of the Act, however, interest income derived by the co-operative society from its investment maintained with the co-operative bank would be entitled for deduction u/s 80P(2)(d) of the Act. The Ld. Counsel filed paper book and referred various decisions of the ITAT on the issue that interest income earned from the deposit kept with P a g e | 5 1748,1747, 1743,1744,1749/Mum/2023 A.Y. 2012-13, 13-14, 17-18, 18-19, 21-22 Laxmi Co-operative Housing society Ltd. Mumbai the co-operative bank is entitled for deduction u/s 80P(2)(d) of the Act. 6. On the other hand the Ld. DR supporting the order of the Lower authority. 7. Heard both the side and perused the material on record. During the year under consideration assessee society has received of ₹66,36,310/- from the deposit maintained with the co-operative banks and claimed deduction u/s 80P(2)(d) of ₹33,81,441/- after excluding expenses incurred for its members. The AO has disallowed the claimed of deduction stating that co-operative banks are not co-operative society. The AO stated that deduction u/s 80P(2)(d) of the Act cannot be allowed when there is investment in co-operative bank and such income from investment made with Co-operative Banks after insertion of sub section 4 of section 80P is not eligible for deduction u/s 80P(2)(d) of the Act. However, we consider though the co-operative bank pursuant to the insertion of sub section 4 of section 80P is no more entitled for claim of deduction u/s 80P of the act, but a co- operative bank continue to be a co-operative society registered under the co-operative society Act. Therefore, interest income derived by a co-operative society from its investment held with the co-operative bank would be entitled for claim of deduction P a g e | 6 1748,1747, 1743,1744,1749/Mum/2023 A.Y. 2012-13, 13-14, 17-18, 18-19, 21-22 Laxmi Co-operative Housing society Ltd. Mumbai u/s 80P(2)(d) of the Act as held in the various decision of benches of ITAT Mumbai. 8. In this regard the Ld. Counsel has referred the decision of the ITAT Mumbai in the case of Kaliandas Udyog Bhavan Premises Coop Society Ltd. V/s ITO 21(2)(1) Mumbai (2018) 94 taxmann.com 15 (Mumbai Tribunal) where in held that- Para 7- "We are of the considered view, that though the co- operative bank pursuant to the insertion of Sub-section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but however, as a co- operative bank continues to be a co-operative society registered under the Co- operative Societies Act, 1912 (2 of 1912), or under any other law for the time being enforced in any state for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank, would be entitled for claim of deduction under Sec.80P(2) (d) of the Act." And also the decision of the ITAT Mumbai in the case of Land End Co-operative Housing Society V/s ITO Ward 16(3)(1) (ITA No. 3566/Mum/2014) (A.Y. 2009-10) wherein held that- “The provisions of section 80P(2)(d) of the Act provides for deduction in respect of income of a coop society by way of interest or dividend from its investments with other coop society if such income is included in the gross total income of the such coop society.” In view of this above facts following the decision as discussed supra we consider that the decision of Ld. CIT(A) in sustaining P a g e | 7 1748,1747, 1743,1744,1749/Mum/2023 A.Y. 2012-13, 13-14, 17-18, 18-19, 21-22 Laxmi Co-operative Housing society Ltd. Mumbai the disallowance made by the AO is not justified. Therefore grounds no 1 and 2 are allowed. Ground No.3 – levying of interest u/s 234B and 234C of the Act. The interest u/s 234B and 234C is to levied mandatorily as per law. Therefore the AO is directed to charge interest as per law, after verification. Therefore, this ground of appeal is allowed for statistical purpose. In the result the appeal filed by the assessee is partly allowed. ITA No. 1747/Mum/2023 A.Y. 2013-14. Since this appeal is based on identical fact and issue, as we have adjudicated vide ITA No. 1748 as supra, therefore, applying findings of that case mutatis mutandisto this appeal the ground no.1 and 2 are allowed and ground no. 3 is allowed for statistical purpose. In the result the appeal filed by the assessee is partly allowed.. ITA No. 1743/Mum/2023 A.Y. 2017-18. Since this appeal is based on identical fact and issue, as we have adjudicated vide ITA No. 1748 as supra, therefore, applying findings of that case mutatis mutandis to this appeal the ground no.1 and 2 are allowed and ground no. 3 is allowed for statistical purpose. P a g e | 8 1748,1747, 1743,1744,1749/Mum/2023 A.Y. 2012-13, 13-14, 17-18, 18-19, 21-22 Laxmi Co-operative Housing society Ltd. Mumbai In the result the appeal filed by the assessee is partly allowed ITA No. 1744/Mum/2023 A.Y. 2018-19. Since this appeal is based on identical fact and issue, as we have adjudicated vide ITA No. 1748 as supra, therefore, applying findings of that case mutatis mutandis to this appeal the ground no.1 and 2 are allowed and ground no. 3 is allowed for statistical purpose. In the result the appeal filed by the assessee is partly allowed ITA No. 1749/Mum/2023 A.Y. 2021-22. Since this appeal is based on identical fact and issue, as we have adjudicated vide ITA No. 1748 as supra, therefore, applying findings of that case mutatis mutandis to this appeal the ground no.1 and 2 are allowed and ground no. 3 is allowed for statistical purpose. In the result the appeal filed by the assessee is partly allowed Order Pronounced in Open Court on 24.08.2023 Sd/- Sd/- (ABY T VARKEY) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Place: Mumbai Date 24.08.2023 ANIKET SINGH RAJPUT/STENO P a g e | 9 1748,1747, 1743,1744,1749/Mum/2023 A.Y. 2012-13, 13-14, 17-18, 18-19, 21-22 Laxmi Co-operative Housing society Ltd. Mumbai आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतधकरण/ ITAT, Bench, Mumbai.