M/S RAJAT APARTMENT CO-OPRATIVE HOUSING SOCIETY LTD., Mumbai V. ACIT CIRCLE-19(3), Mumbai

ITA 2622/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4940 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 26-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Revised return; TDS
• Section: 142(1); 201; 143(2); 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR , AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO . 2622 /MUM/201 9 ( / ASSESSMENT YEAR: 201 5 - 1 6 ) M/S. RAJAT APARTMENT CO - OPERATIVE HOUSING SOCIETY LTD. 20, MO UNT PLEASANT ROAD, MALABAR HILL, MUMBAI - 400006 . / VS. ACIT, CIRCLE 19(3) MUMBAI. ./ ./ PAN/GIR NO. : AAABR0118C ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 04 / 0 1 / 20 2 1 /DATE OF PRONOUNCEMENT: 01 / 04 / 2021 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRES ENT APPEAL AGAINST THE ORDER DATED 28.02.2019 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 18 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 201 5 - 1 6 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - I THE LD. AO ERRED IN ASSESSING THE INCOME AT RS.49,74,210/ - AS AGAINST RS.26,37,860/ - AS PER RETURN OF INCOME FILED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. AO ERRED IN (A) DISALLOWING THE CLAIM U/S 80P(2)(D) OF RS.13,39,633/ - ON INTEREST EARNED FROM I NVESTMENT IN CO - OPERATIVE BANKS. ASSESSEE BY : SHRI JAYESH DADIA REVENUE BY: SHRI B HARAT ANDHALE (DR) ITA NO .2622 / M/201 9 A.Y. 2015 - 16 2 (B) RELYING ON CITIZEN CO - OPERATIVE SOCIETY LTDS CASE WHEREIN THE CLAIM OF THE ASSESSEE SOCIETY U/S 80P(2)(A) WAS DENIED AS THE SOCIETY WAS ENGAGED IN THE ACTIVITY OF FINANCE AND WAS ALSO ENGAGED IN GRANTING LOANS TO G ENERAL PUBLIC AS WELL AND HENCE COULD NOT BE TERMED AS CO - OPERATIVE SOCIETY. THESE FACTS ARE TOTALLY DIFFERENT FROM THE CASE OF YOUR APPELLANT WHICH HAS CLAIMED DEDUCTION U/S 80P(2)(D). 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS R ETURN OF INCOME ON 23.09.2015 DECLARING TOTAL INCOME TO THE TUNE OF RS.26,06,640/ - . FURTHER, THE ASSESSEE FILED THE REVISED RETURN OF INCOME ON 22.08.2016 DECLARING TOTAL INCOME TO THE TUNE OF RS.26,37,860/ - . THE CASE WAS SELECTED FOR SCRUTINY. NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE . THE ASSESSEE IS A CO - OPERATIVE HOUSING SOCIETY, GIVING SERVICE TO ITS MEMBERS. THE ASSESSEE WAS EARNING ITS INCOME BY WAY OF SUBSCRIPTION, SERVICE CHARGES ETC . FROM ITS MEMBERS AND INTER EST ON SAVINGS AND F. D. FROM CO - OPERATIVE BANKS. THE ASSESSEE EARNED THE INTEREST INCOME IN SUM OF RS.13,39,663/ - FROM ITS INVESTMENTS IN FIXED DEPOSITS AND TIME DEPOSITS ETC. WITH CO - OPERATIVE BANKS. THE ASSESSEE CLAIMED THE INTEREST INCOME IN SUM OF RS. 13,39,663/ - AS EXEMPT U/S 80P(2)(D) OF THE I. T. ACT, 1961. THE CLAIM OF THE ASSESSEE WAS DECLINED BY THE AO AND IN APPEAL BEFORE THE CIT( A), THE CIT(A) PARTLY ALLOWED THE CLAIM OF THE ASSESSEE, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE U S. ISSUE NO. 1 4 . ISSUE NO. 1 IS GENERAL IN NATURE WHICH NOWHERE REQUIRED ANY ADJUDICATION. ITA NO .2622 / M/201 9 A.Y. 2015 - 16 3 ISSUE NO . 2 5 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE IN SUM OF RS.13,39,633/ - U/S 80P(2)(D) OF THE ACT ON INTEREST INCOME EARNED FROM INVEST MENT IN CO - OPERATIVE BANKS. AT THE OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ISSUE HAS DULY BEEN COVERED BY TH E DECISION S OF HONBLE ITAT MUMBAI BENCH IN THE CASE OF LANDS END CO - OPERATIVE HOUSING SOCIETY LTD. VS. ITO IN ITA. NO.35 66/M/2014 FOR THE A.Y.2009 - 10 DATED 15.01.2016, KALIANDAS UDYOG BHAVAN PREMISES CO - OP. SOCIETY LTD. VS. ITO IN ITA. NO. 6547/M/2017 FOR THE A.Y. 2014 - 15 DATED 25.04.2018, MERWANJEE CAMA PARK CO - OP HOUSING SOCIETY LTD. IN ITA. NO.6139/M/2014 FOR THE A.Y.2010 - 11 DATED 27.09.2017, SEA GREAN CO - OPERATIVE HOUSING SOCIETY LTD. IN ITA. NO.1343/M/2017 FOR THE A.Y.2013 - 14 DATED 31.03.2017 AND THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF TOTAGARS CO - OPERATIVE SALE SOCIETY (78 TAXMANN.COM 169) , THEREFORE , THE CLAIM OF THE ASSESSEE IS LIABLE TO BE ALLOWED IN THE INTEREST OF JUSTICE. IT IS ALSO ARGUED THAT THE ISSUE HAS ALSO BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF MUMBAI BENCH IN THE CASE OF M/S. JAI MATAJI CO - OPERATIVE CREDIT SOCIETY LTD. VS. ITO IN ITA. NO.3334/M/2017 FOR THE A.Y.2012 - 13 DATED 14.08.2017 , HENCE THE CLAIM OF THE ASSESSEE IS LIABLE TO BE ALLOWED. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. THIS ISSUE HAS BEEN DISCUSS ED AND DECIDED BY THE HONBLE ITAT MUMBAI BENCH IN THE CASE OF LANDS END CO - OPERATIVE HOUSING SOCIETY LTD. VS. ITO IN ITA. NO.3566/M/2014 FOR THE A.Y.2009 - 10 DATED 15.01.2016. THE RELEVANT FINDING IS HEREBY REPRODUCED AS UNDER.: - ITA NO .2622 / M/201 9 A.Y. 2015 - 16 4 8.3 WE HAVE HEARD THE RI VAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE CIT(A) ENHANCED THE INCOME OF THE ASSESSEE BY REJECTING THE DEDUCTION U/S 80P(2)(D) OF THE ACT OF RS.14,88,107/ - BEING INTEREST ON INVESTMENT WITH OTHER COOP. BANKS BY FOLLOWING THE DECIS ION IN THE CASE OF BANDRA SAMRUDDIHI CO - OPERATIVE HOUSING SOCIETY LTD.(SUPRA) WHICH WAS PASSED ON THE BASIS OF THE DECISION PASSED BY THE HONBLE SUPREME COURT IN THE CASE OF TOTAGARS CO - OPERATIVE SALE SOCIETY LTD. IN THE CASE OF TOTAGARS CO - OPERATIVE SA LE SOCIETY LTD V/S ITAT (SUPRA) THE HONBLE SUPREME COURT WHILE INTERPRETING THE SECTION 80P(2)(A)(I) OF THE ACT HELD THAT SURPLUS FUNDS NOT IMMEDIATELY REQUIRED IN THE BUSINESS AND INVESTED IN THE SHORT TERM DEPOSIT WOULD BE ASSESSABLE UNDER THE HEAD INC OME FROM OTHER SOURCES WHERE THE COOPERATIVE SOCIETY IS ENGAGED IN CARRYING ON BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND CONSEQUENTLY NO DEDUCTION IS ALLOWABLE U/S 80P(2)(A)(I) OF THE ACT. WHEREAS IN THE CASE BEFORE US THE ISSU E IS WHETHER A CO - OPERATIVE SOCIETY WHICH HAS DERIVED INCOME ON INVESTMENT WITH COOPERATIVE BANKS IS ENTITLED TO DEDUCTION U/S 80P(2)(D). THE PROVISIONS OF SECTION 80P(2)(D) OF THE ACT PROVIDE DEDUCTION IN RESPECT OF INCOME BY WAY OF INTEREST OR DIVIDEND O N INVESTMENTS MADE WITH OTHER COOPERATIVE SOCIETY. FOR THE PURPOSES OF BETTER PROPER UNDERSTANDING OF THESE TWO PROVISIONS THE RELEVANT EXTRACT OF THE SECTION ARE REPRODUCED BELOW: 80P: DEDUCTION IN RESPECT OF INCOME OF CO - OPERATIVE SOCIETIES. 1. WHERE, I N THE CASE OF AN ASSESSSEE BEING A CO - OPERATIVE SOCIETY, THE GROSS TOTAL INCOME, INCLUDES ANY INCOME REFERRED TO IN SUB - SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT ITA NO .2622 / M/201 9 A.Y. 2015 - 16 5 TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB - SECTIO N (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. 2. THE SUMS REFERRED TO IN SUB - SECTION (1) SHALL BE THE FOLLOWING, NAMELY: - (A)IN THE CASE OF A CO - OPERATIVE SOCIETY ENGAGED IN - (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO ANY ONE OR MORE OF MUCH ATTRIBUTES. (D)IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO - OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OT HER CO - OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME. FROM THE CLOSE PERUSAL OF THE PROVISIONS OF U/S 80P(2)(A)(I) AND 80P(2)(D) IT IS CLEAR THAT THE FORMER DEALS WITH DEDUCTION IN RESPECT OF PROFITS AND GAIN OF BUSINESS IN CASE OF THE CO - OPERATIVE SOCIETY CARRYING ON BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS IF THE SAID INCOME IS ASSESSABLE AS INCOME FROM BUSINESS WHEREAS LATTER PROVIDES FOR DEDUCTION IN RESPECT OF INCOME BY WAY INTEREST AND DIVIDEND DERIVED BY ASSESSEE FROM ITS INV ESTMENTS WITH OTHER COOPERATIVE SOCIETY. THUS IT IS AMPLY CLEAR THAT A COOPERATIVE SOCIETY CAN ONLY AVAIL DEDUCTION U/S 80P(2)(D)(I) IN RESPECT OF ITS INCOME ASSESSABLE AS BUSINESS INCOME AND NOT AS INCOME FROM OTHER SOURCES IF IT CARRIES ON BUSINESS OF TH E BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND HAS INCOME ASSESSABLE UNDER THE HEAD BUSINESS WHEREAS FOR CLAIMING U/S 80P(2)(D) IT MUST HAVE INCOME OF INTEREST AND DIVIDEND ON INVESTMENTS WITH OTHER CO - OPERATIVE SOCIETY MAY OR MAY NOT BE ENGAG ED IN THE BANKING FOR ITA NO .2622 / M/201 9 A.Y. 2015 - 16 6 PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND THE HEAD UNDER WHICH THE INCOME IS ASSESSABLE IS NOT MATERIAL FOR THE CLAIM OF DEDUCTION UNDER THIS SECTION. NOW WILL EVALUATE THE ASSESSEES CASE IN THE LIGHT OF THE DECISION OF THE HON BLE SUPREME COURT. THE HONBLE SUPREME COURT IN THE CASE OF TOTAGARS CO - OPERATIVE SALE SOCIETY LTD.(SUPRA) HELD THAT A SOCIETY HAS SURPLUS FUNDS WHICH ARE INVESTED IN SHORT TERM DEPOSITS WHERE THE SOCIETY IS ENGAGED IN THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS IN THAT CASE THE SAID INCOME FROM SHORT TERM DEPOSITS SHALL BE TREATED AND ASSESSED AS INCOME FROM OTHER SOURCES AND DEDUCTION U/S 80(P)(2)(A)(I) WOULD NOT BE AVAILABLE MEANING THEREBY THAT DEDUCTION U/S 80(P)(2)(A)(I) IS A VAILABLE ONLY IN RESPECT OF INCOME WHICH IS ASSESSABLE AS BUSINESS INCOME AND NOT AS INCOME FROM OTHER SOURCES. WHEREAS IN DISTINCTION TO THIS , THE PROVISIONS OF SECTION 80(P)(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 THESE FACTS AND CIRCUMSTANCES WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ENTITLED TO THE DEDUCTION OF RS. 14,88,107/ - IN RESPECT OF INTEREST RECEIVED/DERIVED BY IT ON DEPOSITS WITH COOP. BANKS AND THEREFORE THE APPEAL OF THE ASSESSEE IS ALLOWED BY REVERSING THE ORDER OF THE CIT(A). THE AO IS DIRECTED ACCORDINGLY. 6 . THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF TOTAGARS CO - OPERATIVE SALE SOCIETY (78 TAXMANN.COM 169) HAS DECIDED THE ISSUE AND T HE RELEVANT FIND ING HAS BEEN GIVEN IN PARA NO. 7 TO 1 2 MENTIONED BELOW.: - 7. HOWEVER, THE CONTENTION BEING TAKEN BY THE LEARNED COUNSEL IS UNTE NABLE. FOR THE ISSUE THAT WAS BEFORE ITAT, WAS A LIMITED ONE, ITA NO .2622 / M/201 9 A.Y. 2015 - 16 7 NAMELY WHETHER FOR THE PURPOSE OF SECTION 80P(2)(D) OF THE ACT, A CO - OPERATIVE BANK SHOULD BE CONSIDERED AS A CO - OPERATIVE SOCIETY OR NOT? FOR, IF A CO - OPERATIVE BANK IS CONSIDERED TO CO - OPERATI VE SOCIETY, THEN ANY INTEREST EARNED BY THE CO - OPERATIVE SOCIETY FROM A CO - OPERATIVE BANK WO NECESSARILY BE DEDUCTABLE UNDER SECTION 80P(I) OF THE ACT. 8. THE ISSUE WHETHER A CO - OPERATIVE BANK IS CONSIDERED TO BE A CO - OPERATIVE SOCIETY IS NO LONGER RES INT EGRA. FOR THE SAID ISSUE HAS BEEN DECIDED BY THE ITAT ITSELF IN DIFFERENT CASES. MOREOVER, THE WORD 'CO - OPERATIVE SOCIETY' ARE THE WORDS OF A LARGE EXTENT, AND DENOTES A GENUS, WHEREAS THE WORD 'CO - OPERATIVE BANK' IS A WORD OF LIMITED EXTENT, WHICH MERELY DEMARCATES AND IDENTIFIES A PARTICULAR SPECIES OF THE GENUS CO - OPERATIVE SOCIETIES. CO - OPERATIVE SOCIETY CAN BE OF DIFFERENT NATURE, AND CAN BE INVOLVED IN DIFFERENT ACTIVITIES; THE COOPERATIVE SOCIETY BANK IS MERELY A VARIETY OF THE CO - OPERATIVE SOCIETIES . THUS THE CO - OPERATIVE BANK WHICH IS A SPECIES OF THE GENUS WOULD NECESSARILY BE COVERED BY THE WORD 'CO - OPERATIVE SOCIETY'. 9. FURTHERMORE, EVEN ACCORDING TO SECTION 56(I)(CCV) OF THE BANKING REGULATIONS ACT, 1949, DEFINES A PRIMARY CO - OPERATIVE SOCIETY BANK AS THE MEANING OF CO - OPERATIVE SOCIETY. THEREFORE, A CO - OPERATIVE SOCIETY BAN. WOULD BE INCLUDED IN THE WORDS 'CO - OPERATIVE SOCIETY'. 10. ADMITTEDLY, THE INTEREST WHICH THE ASSESSEE RESPONDENT HAD EARNED WAS FROM A CO - OPERATIVE SOCIETY BANK THEREFORE, ACCORDING TO SEC. 80P(2)(D) OF THE I.T. ACT, THE SAID AMOUNT OF INTEREST EARNED FROM A CO - OPERATIVE SOCIETY BANK WOULD BE DEDUCTABLE FROM THE GROSS INCOME OF THE CO - OPERATIVE SOCIETY IN ITA NO .2622 / M/201 9 A.Y. 2015 - 16 8 ORDER TO ASSESS IT: TOTAL INCOME. THEREFORE, THE ASSESSING OFFICER WA S NOT JUSTIFIED IN DENYING THE SAID DEDUCTION TO THE ASSESSE RESPONDENT. 11.THE LEARNED COUNSEL HAS RELIED ON THE CASE OF TOTGARS CO - OPERATIVE SALE SOCIETY LTD. V. ITO (2010) 322 ITR 283/188 TAXMAN 282 (SC). HOWEVER, THE SAID CASE DEALT WITH THE INTERPRETA TION, AND THE DEDUCTION, WHICH WOULD BE APPLICABLE UNDER SECTION 80P(2)(A)(I) OF THE I.T. ACT. FOR, IN THE PRESENT CASE THE INTERPRETATION THAT IS REQUIRED IS OF SECTION 8OP(2)(D) OF THE I.T. ACT AND NOT SECTION 80P(2)(A)(I) OF THE IT. ACT. THEREFORE, THE SAID JUDGMENT IS INAPPLICABLE TO THE PRESENT CASE. THUS, NEITHER OF THE TWO SUBSTANTIAL QUESTIONS OF LA CANVASSED BY THE LEARNED COUNSEL FOR THE REVENUE EVEN ARISE IT IS THE PRESENT CASE. 12. FOR THE REASONS STATED ABOVE, THIS COURT DOES NOT FIND ANY MERIT IN THE PRESENT APPEAL. HENCE, THE APPEAL IS DISMISSED. 7 . TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES AND ALSO CONSIDERING THIS FACT THAT THE SIMILAR ISSUE HAS BEEN INVOLVED IN THE ABOVE CITED JUDGMENT S , THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ENTITLED FOR THE DEDUCTION U/S 80P(2)(D) IN RESPECT OF THE INTEREST INCOME OF RS. 13,39,633/ - EARNED FROM I NVESTMENT IN CO - OPERATIVE BANKS. ACCORDINGLY, WE ALLOWED THE APPEAL OF THE ASSESSEE BY REVERSING THE ORDER OF THE CIT(A) IN QUEST ION . ITA NO .2622 / M/201 9 A.Y. 2015 - 16 9 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 01 /04 /2021 SD/ - SD/ - ( RAJESH KUM AR ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 01 / 0 4 /202 1 V IJAY PAL SINGH/ SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) , / ITAT, MUMBAI