PATHARE PRABHU CO OPERATIVE HOUSING SOCIETY LIMITED, Mumbai V. Income Tax Officer, Ward 22(2)(1), Mumbai

ITA 2088/MUM/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0777 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Next Hearing Date: 22-07-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 19-04-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “K (SMC)” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI SUNIL KUMAR SINGH, JM ITA No.2088/Mum/2024 (Assessment Year: 2014-15) Pathare Prabhu Co Operati ve Housin g soc iet y L i m ited Plot No.340, 12 th F oad, Prabhu Na ga r, Kha r (W est) Mum bai-400 052 Vs. Income Tax Officer Ward 22(2)(1), Mumbai-400 012 (Appellant) (Respondent) PAN No. AAAP4549G Assessee by : Shri Prashant Chapekar, AR Revenue by : Shri Rajneesh Yadav, DR Date of hearing: 23.07.2024 Date of pronouncement : 24.07.2024 O R D E R PER PRASHANT MAHARISHI, AM: 01. ITA No. 2088/Mum/2024 is filed by Pathare Prabhu Co- Operative Housing Society Limited (assessee / appellant), for A.Y. 2014-15, against the appellate order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)] dated 16 th March, 2023, wherein the appeal filed by the assessee against the assessment order passed under Section 143(3) of the Income-tax Act, 1961 (the Act) by the Income Tax Officer, Ward 22(2)(5), Mumbai (the learned Assessing Officer) dated 21 st November, 2016, was dismissed. The assessee is aggrieved with the Page | 2 ITA No.2088/Mum/2024 Pathare Prabhu Co Operative Housing Society Limited; A.Y. 2014-15 same and has preferred the appeal raising following grounds of appeal:- “1. The learned CIT(A) erred in relying on the Supreme Court's decision in Totgar's Co-operative Sales Society Ltd. which judgment is delivered in the context of sec. 80P(2)(a)(i) and wherein it was held that interest on surplus funds deposited with banks bears the character of income from other sources and not business income, whereas the appellant has claimed deduction under sec. 80P(2)(d) which does not confine the deduction to business income only. 2. The learned CIT(A) failed to appreciate that the mandate of sec. 80P(4) is to deny the benefit of sec. 80P to co-operative banks and not to other co- operative societies investing their funds in co- operative banks. 3. The learned CIT(A) erred in applying the principle of mutuality to the interest income without appreciating that the appellant never claimed that interest is exempt on the principle of mutuality. This interest was offered as income, however, in view of Sec 80P(2)(d) the deduction was claimed. Hence, the application of principle of mutuality is completely erroneous with respect to interest income.” 02. Brief facts of the case shows that assessee is a co- operative housing society filed its return of income on 13 th March, 2015, at a total income of ₹4,47,892/-. The return was picked up for scrutiny by issue of notice under Section 143(2) of the Act dated 21 st September, 2015. The Page | 3 ITA No.2088/Mum/2024 Pathare Prabhu Co Operative Housing Society Limited; A.Y. 2014-15 learned Assessing Officer observed that assessee has earned interest income of ₹39,43,686/- from the investment with fixed deposits with other co-operative banks and therefore, the learned Assessing Officer was of the view that as the income is not earned from its investment with any other co-operative society deduction under Section 80P(2)(d) of the Act is not available. The assessee contended that co-operative banks with which the assessee has placed fixed deposits receipts are also co-operative society and therefore, deduction under Section 80(P)(2)(d)(ii) is allowable. Assessee submitted that the interest income is received from Maharashtra State Co-operative Bank, Shamrao Mittal Co-operative Bank, Saraswat Co-operative Bank Ltd and Cosmos Bank Co-operative Ltd, which are co-operative societies under the co-operative Act. The learned Assessing Officer rejected the contention of the assessee and disallowed the above deduction. The assessment order under Section 143(3) of the Act was passed on 21 st November 2016, determining the total income of the assessee at ₹43,91,580/- by disallowing the deduction under Section 80P(2)(d) of the Act on interest income from co-operative banks amounting to ₹39,43,686/-. 03. Aggrieved with the assessment order, assessee preferred the appeal before the learned CIT (A). The assessee relied upon the several judicial precedents of co-ordinate Benches; however, the learned CIT (A) dismissed the appeal of the assessee and confirmed the above disallowance. Page | 4 ITA No.2088/Mum/2024 Pathare Prabhu Co Operative Housing Society Limited; A.Y. 2014-15 04. We have heard rival contentions. 05. We have carefully considered the rival contentions and hearing the parties of the learned lower authorities. We find that the assessee has received interest on fixed deposits with various co-operative banks and claimed deduction under Section 80P(2)(d) of the Act amounting to ₹39,43,686/-. All the above stated co-operative banks are also co-operative societies and therefore, the denial of deduction under Section 80P(2)(d) of the Act is not proper. The assessee has stated several decisions of the co-operative bank, wherein identical deduction is allowed to them. Whether the co-operative bank from whom the assessee has received interest income is co-operative society or not is the only bone of contention. If they are co-operative societies then deduction is allowable to the assessee. It is also undisputed that assessee is not co- operative bank and therefore, not hit by the provisions of section 80P(4) of the Act. It is not denied by the Revenue that all these co-operative banks are also co-operative societies. Looking to the relevant co-operative Societies Act, it is also found that though this co-operative societies are carrying on banking business but in substance those are co-operative societies who are carrying on banking business but does not loses its character of co-operative society. According to Section 28(10) of the Maharashtra Co-operative Societies Act, 1960, Co-operative Bank means society carrying on the banking business. According to Section 2(27), society means co-operative society. Thus, even those co-operative banks are also co-operative Page | 5 ITA No.2088/Mum/2024 Pathare Prabhu Co Operative Housing Society Limited; A.Y. 2014-15 society. Accordingly, the claim of the assessee for deduction under Section 80P(2)(d) of the Act is allowable. Accordingly, ground no.3, of the appeal is allowed and the learned Assessing Officer is directed to grant deduction of the interest income under Section 80P(2)(d) of the Act. 06. In view of our decision for ground no.3, ground no.1 and 2, are not required to be adjudicated. 07. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 24.07.2024. Sd/- Sd/- (SUNIL KUMAR SINGH) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 24.07.2024 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai