Sohamnagar Co-Operative Housing Society Ltd. Vibhag II, Ahmedabad V. The Income Tax Officer, Ward-3(3)(6), Ahmedabad

ITA 177/AHD/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0666 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-07-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 20-03-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FORTHEASSESSEESUBMITTEDTHATTHE
• Assessee Lawyers: SHRIMOHITBALANI; ..IHAVECAREFULLYCONSIDEREDTHESUBMISSIONSOFTHE; BRINGINGTHESAMETOTAXBYTHEA.O.
• Keywords: Depreciation; Bogus

Judgement Text

THEINCOMETAXAPPELLATETRIBUNAL AHMEDABAD“SMC”BENCH Before:ShriRamitKochar,AccountantMember SohamnagarCo- OperativeHousing SocietyLtd., VibhagII,GoyalPark Appartment, Vastrapur, Ahmedabad-380015 Gujarat, PAN:AADAS9025K (Appellant) v. TheIncomeTax Officer, Ward-3(3)(6), Ahmedabad, Gujarat (Respondent) Assesseeby:ShriMohitBalani,A.R. Revenueby:Smt.TruptiPatel,Sr.D.R. Dateofhearing:04-07-2024 Dateofpronouncement:30-07-2024 आदेश/ORDER ThisappealinITANo.177/Ahd/2023forassessment year2017-18isfiledbytheassesseebeforeIncomeTax AppellateTribunal,AhmedabadBench,Ahmedabad,which hasarisenfromtheappellateorderdated17-01-2023inDIN &OrderNo.ITBA/NFAC/S/250/2022-23/1048850676(1) ITANo.177/Ahd/2023 AssessmentYear2017-18 I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 2 passedbyld.CommissionerofIncome-tax(Appeals),NFAC, NewDelhiu/s250oftheIncome-taxAct,1961,whichinturn hasarisenfromtheassessmentorderdated06-12-2019 passedbylearnedAssessingOfficeru/s.143(3)oftheIncome- taxAct,1961(OrderNo.ITBA/AST/S/143(3)/2019- 20/1021837174(1)). 2.ThegroundsofappealraisedbytheassesseeinMemoof AppealfiledwiththeITAT,AhmedabadBench,Ahmedabad, readsasunder:- “1ThelearnedCIT(A)haserredinlawandonthefactsofthecase inconfirmingtheactionoflearnedAOinmakinganadditionofRs. 14,60,191/-inrelationtotheexpensesclaimedbytheAppellant againsttheincomethatitearnedu/s57oftheAct. 2Alternativelyandwithoutprejudicetotheabove,expensesmay kindlybeallowedu/s37oftheAct. 3LearnedCIT(A)haserredinlawandonthefactsofthecasein confirmingtheactionoflearnedAOinnotappreciatingvarious evidencesandsubmissionsplacedonrecord. 4LearnedCIT(A)haserredinlawandonthefactsofthecasein charginginterestu/s234/B/C/DoftheAct. 5Yourappellantcraveslibertytoadd,toalter,tomodify,toamend ortowithdraw/deleteanyofthegroundsofappealatanytime,on orbeforethehearingofappeal.” 3.Thebrieffactsofthecasearethattheassesseefiledits returnofincomeon20.03.2018,declaringtotalincomeofRs. I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 3 23,520/-.ThereturnoftheincomewasprocessedbyRevenue u/s.143(1)ofthe1961Act.Thecaseoftheassesseewas selectedforframinglimitedscrutinyassessmentunderCASS. Statutorynoticesu/s.143(2)andu/s.142(1)wereissuedby theAOtotheassessee,whichwereclaimedbytheAOtohave beendulyservedontheassessee.Duringthecourseof assessmentproceedings,theassesseefiledsubmissions beforetheA.O.ItwasobservedbytheA.O.thattheassessee isCo-operativeHousingSociety.Theassessee’smainactivity istocollectmaintenanceschargesfromallthemembersand spendthesaidamountsformeetingthecommonexpensesof societymaintenanceslikestaffsalary,securityexpenses, electricitybill,electricityexpenses,repairandmaintenance, auditfee,printingandstationery,telephoneexpenses,bank charges,gardenmaintenanceexpenses,festivalexpenses, accountcharges,computerannualmaintenance,labourand colourexpenses,depreciation.TheAOobservedthatduring theyearunderconsideration,theassesseehasnotcarriedout anybusinessactivity.Theassessee’sonlysourceofincomeis interestincomeonFDR.TheA.O.observedthattheassessee hasreceivedtheFDinterestincomeofRs.3,82,193/-,and theassesseehasalsoreceivedrentincomeofRs.10,62,390/-, InterestfromMemberofRs.3,580/-,SavingInterestofRs. 4,727/-andTorrentInterestincomeofRs.7,301/-.TheA.O. observedthattheinterestincomeonFDRswasinthenature I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 4 ofincomefromothersources,andtheassesseehasshownthe saidincomeinthecomputationofincomefiledwithreturnof income.TheA.O.alsoobservedthattheassesseehasclaimed deduction/expensesofRs.27,34,560/-u/s.57oftheAct.The Interestincomeearnedbytheassesseehasbeenshownunder thehead‘incomefromOtherSources’u/s.56,andasper Section57ofthe1961Act,deductionofonlythoseexpenses wereallowablewhicharedirectlylinkedtotheearningofthe saidincome.TheA.O.observedthatinthecaseofthe assesseenoexpenditurewasexpendedwhollyandexclusively forthepurposeofearningsuchincomeandthereforethese expensesarenotallowableagainstthesaidinterestincome. 3.2.TheA.O.issuedshowcausenoticetotheassesseewhy theinterestincomeofRs.14,60,191/-earnedfromFD,rent income,interestfrommember,SavingInterestandTorrent interestincomeshouldnotbetreatedasincomefromother sourcesandshouldnotbebroughttotax,withoutallowing anyexpenditure,sincenoexpenditureclaimedwasincurred whollyandexclusivelyforearningtheinterestincome.The assesseesubmittedthatthesimilarissuearoseinassessment year2013-14,andLd.CIT(A)hasfullyallowedtheappealand entireadditionmadebytheA.O.wasdeletedbyld.CIT(A).The AOalsoobservedthatHon’bleCIT(A)-3,Ahmedabadhas decidedappealinthefavourofdepartmentonsimilarissuein I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 5 thecaseofParisarCo-operativeHousingSocietyLimited.The A.O.observedthattheinterestincomeearnedbyassesseeon FDRwithNationalizedBankandsavingbankinterestarealso notcoveredwithmutuality,astheseareaccretiontothe surplusfundormaintenancedepositparkedwithbanks.The saidinterestisgeneratedontheinvestmentofsuchfundsis notanincomewhichisreceivedfromtheMembersofthe assesseebutfromthirdpartiessuchasthebankswithwhom thefundsareinvested.Thus,theseincomedonotfulfillthe conditionofmutuality,andhenceinterestincomeearnedby theassesseefromthebankswillnotfallwithintheambitof themutualityprinciplesandwouldtherefore,bechargeable totaxinthehandsoftheassessee.TheA.O.alsoreliedupon decisionofHon’bleSupremeCourtinthecaseofBangalore Clubv..CIT(2013)29taxmann.com29(SC). TheAOobserved thattheassesseehasitselfshowninterestincomeofRs. 14,60,191/-asinterestincomebywayofincomefromother sourcesu/s56ofthe1961Actandclaimeddeductionu/s57 ofthe1961Actinrespectofmaintenanceexpenses,sothere isnodisputeregardingtheprinciplesofmutuality.TheA.O. alsoobservedthattheassesseecouldnotdemonstratethat themaintenanceandotherexpensestotheextentofRs. 27,34,670/-areincurredforthepurposesofearninginterest incomeonbankdepositasperprovisionofSection57ofthe 1961Act.TheAOobservedthatasperprovisionsofSection I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 6 57(iii)ofthe1961Act,anyotherexpenditure(notbeinginthe natureofcapitalexpenditure)laidoutorexpendedwhollyand exclusivelyforthepurposeofmakingorearningsuchincome isdeductibleforcomputingtheincomeundertheheadincome fromothersources.TheAOobservedthatintheinstantcase, thisconditionisnotsatisfiedorprovedhowthemaintenance expensesincurredisforthepurposesofearninginterest income.TheAOheldthatinterestincomeearnedbythe assesseefromnationalizedbankwillfallunderthepurviewof Section56ofthe1961Act,andthusthemaintenance expenditureincurredbytheassesseeforthepurposesof computationofincomeundertheheadofincomefromother sourcesisnotdeductiblefrominterestincomeonbank depositsastheseexpenditurehadnoroleinearningthe aforesaidinterestincomefromFDRandrentincome.Thus, theA.O.disallowedtheexpensesclaimedu/s.57oftheActby theassesseetotheextentofRs.14,60,191/-whichstood addedbytheAOtothetotalincomeoftheassessee. 4.Aggrieved,theassesseefiledfirstappealwithld.CIT(A),who dismissedtheappealoftheassesseebyholdingasunder: 6.5.Ihavecarefullyconsideredthesubmissionsofthe appellantandalsothecopyoftheappellateorderpassed bytheCITAppealsintheappellant'sowncaseforthe earlieryear.Attheoutset,itistobestatedherethateach I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 7 assessmentyearisseparatebyitselfandthefullfacts havetobeanalyzedbeforereachingconclusions.The statuteprovidesthatagainsttheincomechargeableunder head'Incomefromothersources’thedeductiononaccount ofexpenditure,notbeinginthenatureofcapital expenditure,laidoutorexpendedwhollyorexclusivelyfor thepurposeofmakingorearningsuchincomeis deductible.Inotherwords,theassesseehastoestablish itsclaimofexpenditurewithinparameters"laidoutor expendedwhollyandexclusivelyforthepurposeof makingorearningsuchincome".Itiswellsettledthatthe assesseemusthaveincurredexpenditureforthepurpose ofearningincomefromothersources;thisisthecondition precedentforallowingdeductionundersection57(iii)of theAct.Inotherwords,itisincumbentupontheassessee claimingthesaidexpendituretoestablishnexusbetween theexpenditureandincomeandintheabsenceofthe same,theassesseeisnotentitledtotheclaimof expenditureundersection57(iii)oftheAct.For determiningtheapplicabilityofsection57(iii)oftheAct whathastobeseenisthepurposeofexpenditureandthe purposemustbeforearningtheincome.Thelinkis betweenexpenditureincurredandincomeearned.Tobe eligiblefordeductionundersection57(iii)oftheAct, expenditureincurredshouldbelinkedtoearningofincome. 6.6.TheHon'bleSupremeCourtinCITv.RajendraPrasad Moody[1978]115ITR519hadobservedasunder:- "Whatsection57(iii)requiresisthattheexpendituremust belaidoutorexpendedwhollyandexclusivelyforthe purposeofmakingorearningincome.Itisthepurposeof I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 8 theexpenditurethatisrelevantindeterminingthe applicabilityofsection57(iii)andthatpurposemustbe makingorearningofincome. 6.7.Inarecentcasereportedin[2018]90taxmann.com 422(PuneTrib.),INTHEITATPUNEBENCH'B'inthecase ofPoonaClubLtd.v.AssistantCommissionerofIncome- tax,Circle-4,Pune,InITAPPEALNOS.1068&1069 (PUNE)OF2014FOR[ASSESSMENTYEARS2008-09AND 2009-10),DATEDJANUARY23,2018,theissue consideredwas: "IT:Whereassessee-clubreceivedmembershipfeefrom variousmemberswhichwerekeptinFDRsandinterest earnedthereonwasbroughttotaxundersection56,in viewoffactthatassesseefailedtoestablishnexus betweenexpenditureincurredundervariousheadsand earningofsaidinterestincome,itsclaimfordeduction undersection57(iii)wastoberejected".TheHon'bleITAT hasheldthat: "Section57,readwithsection56,oftheIncome-taxAct, 1961-Incomefromothersources-Deductions(Interest) Assessmentyears2008-09and2009-10Assessee,a MembersClub,wasestablishedforpromotionofsports andactivitiesconnectedwiththesportsDuringrelevant years,assesseereceivedmembershipfeefromvarious memberswhichwerekeptinFDRswithbanks- Assessee'scasewasthatincaseinterestincomefrom FDRSwastaxedundersection56as'incomefromother services',itshouldhavebeenalloweddeductionunder section57(iii)whilecomputingsaidincome-Revenue authoritiesrejectedassessee'sclaim-Whethereligibilityfor I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 9 deductionundersection57(iii)arisesonlyifexpenditure hasbeenlaidoutwhollyandexclusivelyforpurposeof earningincomewhichischargeableundersaidhead 'incomefromothersources'Held,yesWhethersince assesseefailedtoestablishnexusbetweenexpenditure incurredundervariousheadsincludingdepreciationand hadalsofailedtojustifyapportionmentofexpenditureto earningofinterestincome,itsclaimwasrightlyrejectedby authoritiesbelow-Held,yes[Paras32and35][Infavour ofrevenue]" 6.8Thefactsoftheappellant'scaseissquarelycovered withthefactsofthecasedecidedbyITATPuneBench. Keepinginviewtheaforesaiddecisionandalsothe findingsgivenintheassessmentorderwithelaborate reasons,Iholdthattheappellantisnoteligibletoclaim deductionsundersection57oftheAct.Accordingly,the disallowancemadeintheassessmentisconfirmed, 7.Intheresult,theappealisdismissed. 5.Stillaggrieved,theassesseehasnowfiledsecondappeal withtheTribunal,andtheLd.Counselfortheassessee submittedthattheassesseeisaCo-operativeHousingSociety. Itwassubmittedthattheassesseeincursmaintenance expensesformaintainingthesocietyundervariousheads, andtheassesseecollectsmaintenancechargesfromits members.Theld.Counselfortheassesseesubmittedthatthe assesseereceivedinterestfromFDRwithNationalizedBankas wellasrentalincomewasreceivedfromHutchfromlettingout I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 10 ofcommonterracetoHutch(nowVodafone).Theassesseehas fileditscopyofAuditedIncomeandExpenditure account(placedonrecordinfile),anditwassubmittedthatthe assesseehasincurredtotalexpensesundervariousheads towardsmaintenanceofthehousingsocietyaggregatingtoRs. 27,34,671/-,whilethetotalreceiptsaretothetuneofRs. 28,08,191/-whichincludedgeneralmaintenanceofRs. 11,13,600/-collectedfromitsmembers,maintenanceincome ofRs.65,000/-collectedfromtenants,paidparkingofRs. 1,07,000/-,otherincomeofRs.22,400/-andtransferfeeof Rs.40,000/-.Apartfromabove,thereisanincomefrom interestonFDRofRs.3,82,193/-,Interestfrommembersof Rs.3,580/-,RentfromHutch(net)ofRs.10,62,390/-from lettingoutofcommonterracetoHutch(nowVodafone),saving bankinterestofRs.4,727/-,TorrentInterestincomeofRs. 7,301/-.Thus,itwassubmittedthatthereisasurplusofRs. 73,520/-(excessoftotalincomeovertheexpenditure),and afterclaimingdeductionofRs.50,000/-u/s80P(2)(c)(ii),the incomedeclaredandofferedfortaxationbytheassesseewas Rs.23,520/-inthereturnofincomefiledwithRevenue.Ifthe otherincomesuchasinterestandrentalincomeasaboveare excluded,thereisadeficitastheexpendituretowards maintenancewerehigherthanmaintenancecollectedfromits Members/tenants.Itwassubmittedthattheassessee constructed80residentialflatsforitsmembers,andinorder I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 11 tokeepmaintenancelow,itcollecteddepositofRs.50,000/- fromeachofitsmemberswhichamountwaskeptinFDRwith nationalizedbanks,andtheinterestreceivedthereonis utilizedtobearthemaintenancecostofthesocietyunder differentheads.Theassesseehasalsorelieduponjudgment andorderofHon’blePunjabandHaryanaHighCourtinthe caseofCITv.MarutiEmployeesCo-OperativeHousingSociety BuildingSocietyLtd.(2010)320ITR254(P&H) ,andthe judgmentandorderofHon’bleKarnatakaHighCourtinthe caseof TotgarsCo-OperativeSaleSocietyLtd.v.ITO(2015)58 taxmann.com35(Kar.),anditwassubmittedthattheassessee iseligiblefordeductionu/s.57oftheActagainsttheinterest ondepositetc.receivedbytheassessee.Thus,itwas submittedthattheassesseeistobeallowedtosetoff interest/rentalincomeandmaintenanceincomeetc.against themaintenanceexpensesofthesocietyincurredunder differentheads.Itwassubmittedthatthesemaintenance expensesincurredformaintainingthesocietyisforthebenefit ofthemembersofthesociety.Theassesseesubmittedthat eithertheseexpensesaretobeallowedu/s57orSection37of the1961Act.Referencewasalsodrawntoprovisionsrelated tosetoffandcarriedforwardoflosessincludingSection70 and71ofthe1961ActTheLd.Sr.D.R.relieduponthe decisionoftheLd.CIT(A). I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 12 6.Ihaveconsideredthecontentionsofboththepartiesand perusedthematerialonrecord.Ihaveobservedthatthe assesseeisaCo-operativeHousingSocietyengagedin maintainingandupkeepofResidentialHousingSociety consistingof80residentialflatsconstructedbyitforits Members.Theassesseefileditsreturnofincomeon 20.03.2018,showingtotalincomeofRs.23,520/-.Duringthe courseofassessmentproceedings,theA.O.observedthatthe assesseeisCo-operativeHousingSociety,itsmainactivityis tocollectmaintenanceschargesfromallthemembersand spendthesaidamountsformeetingofthecommonexpenses ofsocietymaintenancesandthatthereisnobusinessactivity carriedoutbytheassessee.Theassesseehasalsoreceived FDRinterestRs.3,82,193/-andreceivedrentalincome(net) ofRs.10,62,390/-fromlettingoutofcommonterraceto Hutch(nowVodafone),InterestFromMemberofRs.3,580/-, thesavingbankinterestincomeofRs.4,727/-andTorrent InterestincomeofRs.7,301/-.Therewereincomereceived fromMemberstowardsGeneralmaintenancetothetuneofRs. 11,13,600/-,PaidParkingofRs.1,07,000/-,Tenant MaintenanceincomeofRs.65,000/-andincomefrom TransferFeeofRs.40,000/-.Theassesseehasincurred maintenanceexpensesundervariousheadstothetuneof Rs.27,34,671/-,andasperincomeandexpenditureaccount theassesseehasexcessofincomeoverexpenditureofRs. I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 13 73,520/-,ifboththemaintenanceincomeaswell rental/interestincomeareconsidered.Theassesseehas declaredincomeofRs.23,520/-astaxableincomeinthe returnofincomefiledwithRevenue,afterclaimingdeduction u/s.80P(2)(c)(ii)ofRs.50,000/-.TheA.O.didnotallowthe deductionofRs.14,60,191/-withrespecttovariousinterest incomeandrentalincomeearnedbytheassesseeasitwas observedbytheA.O.thatthemaintenanceexpensesetc. incurredbytheassesseeformaintainingthehousingsociety arenotincurredwhollyandexclusivelyforthepurposeof earningofinterestincomeandrentalincome,andthushitby Section57(iii)(theassesseehavingdeclareditsincomeunder thehead‘incomefromothersources’chargeabletotaxu/s56), andhenceRs.14,60,191/-wasdisallowedandaddedtothe incomeoftheassesseebybringingthesametotaxbytheA.O.. TheLd.CIT(A)dismissedthefirstappealfiledbytheassessee. TheassesseeisCo-OperativeHousingSocietyandconstructed 80residentialflatsforitsmembers,andnowthemaintenance andupkeepofthesaidhousingsocietyiscarriedoutbythe assessee.Theassesseecollectsmaintenancechargesfromits membersandtenants,transferfeeontransferofflatinthe society,paidparkinginthesocietyetc.frommembers/tenants, andthesaidfundssogeneratedareutilizedformeeting commonmaintenanceexpensesofthehousingsociety.The assesseehasclaimedthatitcollectedinterestfreedepositsof I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 14 Rs.50,000/-fromeachofitsmemberswithaviewtokeep regularmaintenancechargesbeingrecoveredfromits membersonthelowerside,whichinterestfreedepositswere claimedbytobeinvestedasFDRwithbanksforearningof interestincometobeutilizedformeetingcommon maintenanceexpensesofthesociety.Theassesseehasalso tenanteditscommonterraceareatoHutch(nowVodafone)on whichrentincome(net)ofRs.10,62,390/-werereceived.As perauditedIncomeandexpenditureaccount(placedonrecord infile),theassesseeafterconsideringallthereceipts includingrentalandinterestincome,earnednetsurplusofRs. 73,520/-.Theassesseeclaimeddeductionu/s80P(2)(c)(ii)of Rs.50,000/-andofferedbalanceamountofRs.23,520/-for taxation.Iftheotherincomesbywayofrentalandinterest incomeareexcluded,thereisadeficitofRs.13,86,671/-being excessofcommonexpensesincurredbytheassesseefor maintenanceandupkeepofthehousingsocietyoverthe collectionfrommemberstowardsmaintenanceexpenses. Therearenosurplusintheinstantcaseifthereceiptsfrom Memberstowardsmaintenanceofhousingsocietyareco- relatedwiththecommonexpensesincurredbythehousing societyformaintainingthehousingsociety,andratherthereis adeficitofRs.13,86,671/-,ifinterestincomeandrental incomesareexcluded.Theassesseehasarrangeditsaffairsin themannerthatithaskeptitsregularmaintenancecharges I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 15 recoverablefromMemberstowardsmaintaininghousing societyatthelowerlevels,whiledeficitonaccountofexcessof commonmaintenanceexpensesformaintaininghousing societyovermaintenancechargesrecoveredfromitsmembers aresoughttoberecoveredfrominterestandrentalincome, anditcouldnotbesaidthatthisarrangementofaffairsareso organizedbytheassesseeasantaxavoidancemeasureto evadetaxesortodefraudrevenue.ThedecisionofHon’ble PunjabandHaryanaHighCourtinthecaseofMaruti Employees(supra) supportsthestandoftheassessee.No contrarydecisioniscitedbyRevenuebeforeme.Theclaimof theassesseeisforsetoffofthedeficitbeingexcessofcommon maintenanceexpensesincurredformaintainingthehousing societyandthecollectionfrommemberstowards maintenancecharges,againstrentalandinterestincomeis furtherfortifiedinthemannercomputationofincomeismade inthe1961Act,whereingrosstotalincomeunderthefive headsofincomeareaggregatedinthecaseofthetax-payers, andthereafterdeductionsunderChapterVI-Aareallowed. Deductionu/s80Pislistedasoneofthedeductionsallowed underChapterVI-Aforco-operativesocieties.Theincomeisto becomputedunderthefivedifferentheads,andifthereisa lossw.r.t.onesourceofincomeorunderoneheadofincome, setoffofthesaidlossesareallowedasprovidedunder ChapterVIfor‘SetofforSetoffandcarriedforwardoflosses’ I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 16 inthemannersoprovidedunderthesaidchapter.The assesseehasdeclaredincomewithrespecttoitsactivitiesas HousingSocietyformaintainingtheresidentialsocietyunder thehead‘Incomefromothersources’,andthereisadeficit fromthesaidsourceofincometothetuneofRs.13,86,671/- (ifrentalincomeaswellinterestincomearenotconsidered). Thesaidrentalincomeandinterestincomearealsoofferedto taxbytheassesseeandsoughttobetaxedbyRevenue,under thehead‘incomefromothersources’.Idonotfindanybarin Section70and71asalsoothersectionsunderChapterVI dealingwith‘SetofforSetoffandcarriedforward’forsetoffof thesaidlossofRs.13,86,671/-againstincomefromrentas wellinterestincomeearnedbytheassessee.Itcouldbesaid thattheassesseeincomefromcollectionofmaintenance chargesfromitsmembersisnotchargeabletotaxkeepingin viewtheconceptofmutualityasnobodycanmakeprofitsby dealingwithitselfandhenceonthesameanalogylossesareto beignored,asthesaidcollectionofmaintenancechargesare appliedtowardstheincurringofmaintenanceexpensesforthe upkeep/maintenanceofthehousingsocietywhichisforthe benefitofthemembersofthehousingsocietyandthereisa directcorrelationbetweenparticipantandthecontributors.So faritscollectionfrommembersofmaintenancechargesfalling shortofincurringofexpensesformaintainingthehousing societyisconcerned,thereisadeficitofRs.13,86,671/- I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 17 w.r.t.thissourceofincome.Intheinstantcase,theinterest incomeaswellrentalincomehasanexusandattributability withtheconductofaffairsofthehousingsociety,asthe interestincomehasmainlyarisenfromtheinterestfree depositraisedfromitsmemberswhichstoodinvestedinFDR withbanksaswellrentalincomeisalsofromlettingof commonterraceareaofthehousingsocietyitself,andfurther thattheproceedsofinterestincomeaswellrentalincomeare alsoutilizedforfurtheranceofthemainobjectsofthesociety i.e.themaintainingthehousingsocietyforthebenefitofthe Members,ascouldbeseenthatthereisonlynetsurplusofRs. 73,520/-,ofwhichRs.73,520/-hasbeenofferedtotaxation afterclaimingdeductionu/s80P(2)(c)(ii).Thus,inmyviewin theinstantcasebasedonpeculiarfactualmatrixasis emergingfromtherecords,Idonotfindanybarofsetoffof deficitarisingfromshortfallincollectionfromitsmembers towardsmaintenanceofsocietyvis-à-visexpensesincurredfor maintaininghousingsociety,againstrentalandinterest incomeearnedbytheassesseewhichhasnexusand attributabilitytotheconductoftheaffairsoftheassessee. Therearenoallegationsbyauthoritiesbelowthatthe assessee’sclaimofexpensestowardsmaintenanceofthe housingsocietyinitsAuditedIncomeandExpenditure accounttothetuneofRs.27,34,671/-isbogusorinflatedor I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 18 notgenuine.ItisalsonotthecaseoftheRevenuethatthe assesseehasadoptedanillegitimatedevicebyseeking aforesaidsetoffasantaxavoidancemeasureortoevadetaxes ortodefraudrevenue.ItisalsonotthecaseoftheRevenue thatthesurplusearnedbytheassesseetothetuneofRs. 23,520/-(afterclaimingdeductionofRs.50,000/-u/s 80P(2)(c)(ii))wasnotofferedfortaxation.Ifindmeritinthe appealfiledbytheassessee,whichstoodallowed.,moreso keepinginviewjudgmentandorderofHon’blePunjaband HaryanaHighCourtinthecaseof MarutiEmployees(supra) whichsupportsthestandoftheassessee.Thisappealis decidedonthepeculiarfactsasareemergingfromrecordsand shallnothaveprecedentialvalue.Iorderaccordingly. 7.IntheresultappealfiledbytheassesseeinITANo. 177/Ahd/2023forassessmentyear2017-18standallowed. 8.OrderpronouncedinaccordancewithRule34(4)ofthe IncomeTaxAppellateTribunalRules,1963atAhmedabadon 30.07.2024. Sd/- (RAMITKOCHAR) ACCOUNTANTMEMBER (TrueCopy) Ahmedabad:Dated30/07/2024 I.T.ANo.177/Ahd/2023A.Y.2017-18PageNo. SohamnagarCo-OperativeHousingSocietyLtd.v.ITO 19 आदेशकीप्र्ि्िअगे्ेर/CopyofOrderForwardedto:- 1.Assessee 2.Revenue 3.ConcernedCIT 4.CIT(A) 5.DR,ITAT,Ahmedabad 6.Guardfile. Byorder/आदेशसे, उि/सहायकिंजीकार आयकरअिीिीयअ्िकरण, अहमदाबाद