NEW IDEAL CO - OPERATIVE HOUSING SOCIETY LIMITED, MUMBAI V. INCOME TAX OFFICER , WARD -19(2)(4), MUMBAI

ITA 2681/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5578 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 30-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Set aside; FORM 26AS
• Section: 143(1); 80P; 20

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) I.T.A. NO. 2681/MUM/2019 (ASSESSMENT YEAR 2015-16 ) NEW IDEAL COOPERATIVE HOUSING SOCIETY LIMITED 87, MILAN BUILDING TARDEO ROAD MUMBAI-400 034. PAN : AAAAN1563G VS . ITO WARD 19(2)(4) 2 ND FLOOR MATRU MANDIR MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI RASHMIKANT MODI DEPARTMENT BY MS. SMITA VERMA DATE OF HEARING 01 . 1 2 . 20 2 0 DATE OF PRONOUNCEMENT 03.02.2021 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SHORT LEAR NED CIT(A)] DATED 5.3.2019 PERTAINS TO A.Y. 2015-16. 2. THE GROUNDS OF APPEAL READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLANT SUBMITS THAT THE HONORABLE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN UPHOLDING THE ADJUSTMENTS BY WAY OF MAKING DISALLOWANCE OF DEDU CTION U/S 8OP BY CENTRALIZED PROCESSING CENTRE, BENGALURU TO THE RETURNE D INCOME WITHOUT GIVING ANY INTIMATION FOR MAKING ANY ADJUSTMENTS OF DI SALLOWING THE DEDUCTION CLAIMED BY THE APPELLANT U/S 8OP OF RS. 2, 91,169/-. THE APPELLANT SUBMITS THAT THE ADJUSTMENTS MADE TO THE RETURNED INCOME BE DELETED AND DEDUCTION CLAIMED U/S 8OP BE ALLOWED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLANT SUBMITS THAT THE HONORABLE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN UPHOLDING THE ACTION OF CENTRALIZED PROCESSING CENTRE, BENGALURU OF DISALLOWING THE INTEREST INCOME OF RS. 2,41,169/- EARNED ON FIXED DE POSITS HELD WITH CO- OPERATIVE BANKS CLAIMED BY THE APPELLANT U/S 80P(2)(D ) OF THE INCOME TAX ACT, 1961. NEW IDEAL COOPERATIVE HOUSING SOCIETY LIMITED 2 THE APPELLANT SUBMITS THAT THE DEDUCTION OF RS. 2,47,769 /- CLAIMED U/S 8OP (2)(D) OF THE INCOME TAX ACT, 1961 BE ALLOWED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE APPELLANT SUBMITS THAT THE HONORABLE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN NOT GIVING A DECISION ON THE GROUND OF APPEAL RAISED FOR ALLOWI NG THE STATUTORY DEDUCTION OF RS. 50,000/- AVAILABLE TO AND CLAIMED BY THE APPELLANT CLAIMED U/S 80P(2)(C)(II) OF THE INCOME TAX ACT, 1961. THE APPELLANT SUBMITS THAT THE HONORABLE COMMISSIONER O F INCOME TAX (APPEAL) BE DIRECTED TO PASS CORRIGENDUM FOR GIVING DECISION ON THE GROUND OF APPEAL RAISED FOR ALLOWING STATUTORY DEDUCTION OF RS. 50,000/- CLAIMED BY THE APPELLANT U/S 80P(2)(C)(II) OF THE INCOME TAX ACT, 1 961. 3. BRIEF FACTS OF THE CASE ARE AS UNDER :- THE ASSESSEE IS A COOPERATIVE HOUSING SOCIETY, FIL ED ITS RETURN OF INCOME ON 28-12-2016. THE ASSESSEE CLAIMED DEDUCTION OF RS . 2,47,769/- U/S. 8OP(2)(D) AND RS. 50,000/- U/S. 80P(2)(C)(II). THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE ACT BY THE CPC, BENGAL URU, WHEREIN THESE DEDUCTIONS WERE NOT GRANTED. THE TOTAL INCOME WAS C OMPUTED U/S. 143(1) AT RS. 15,50,090/- AND IT RESULTED INTO DEMAND OF RS. 1,34,864/-. THE TOTAL INCOME AS PER INTIMATION U/S. 143(1) IS RS. 15,50,0 90/- AND THE TAX PAYABLE COMPUTED THEREON AT RS. 4,75,888/-. 4. UPON ASSESSEES APPEAL LEARNED CIT(A) ONLY REFER RED TO DISALLOWANCE OF DEDUCTION U/S. 80P(2)(D). HE HAS NOTED THAT THIS IS AN ADJUSTMENT DONE TO THE RETURNED INCOME FILED BY THE APPELLANT WITHOUT GIVI NG ANY INTIMATION FOR MAKING ANY ADJUSTMENTS EITHER IN WRITING OR IN ELEC TRONIC MODE AS PER THE PROVISIONS OF SECTION 143(L)(A) OF THE ACT. LEARNED CIT(A) REJECTED THE CONTENTION REGARDING DISALLOWANCE MADE U/S. 80P(2)(D) FOR RS. 2,47,769/-BEING INTEREST RECEIPT FROM COOPERATIVE BANK. IN THIS REGARD HE RE FERRED TO THE PROVISIONS OF THE ACT AND REFERRED TO SEVERAL OTHER DECISIONS. HE FINALLY HELD AS UNDER :- IN VIEW OF THE ABOVE DISCUSSIONS AND RESPECTFULLY F OLLOWING THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE ABOVE REFERRED CASE OF PCIT VS. TOTAGARS CO-OPERATIVE SALE SOCIETY, I AM OF THE CONSID ERED OPINION THAT THE INTEREST INCOME EARNED BY THE APPELLANT FROM CO-OPERAT IVE BANK IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(D) OF THE ACT. NEW IDEAL COOPERATIVE HOUSING SOCIETY LIMITED 3 IN VIEW OF ABOVE DISCUSSIONS, IT IS HELD THAT THE INTE REST INCOME EARNED FROM INVESTMENT OF SURPLUS FUNDS WITH THE CO-OPERATIVE BA NKS ARE NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(D) OF THE ACT. HENCE, THE DEDUC TION U/S. 80P(2)(D) OF THE ACT, OF RS. 2,47,769/- CLAIMED BY THE ASSESSEE IS NO T ALLOWED AND DISALLOWANCE MADE BY THE ASSESSING OFFICER IS CONFIR MED. ACCORDINGLY, THE GROUND NO'S. 1 & 2 RAISED IN APPEAL ARE DISMISSED. 5. THE LEARNED CIT(A) DID NOT ADJUDICATE THE GROUND OF DENIAL OF DEDUCTION U/S. 80P(2)(C)(II) FOR AN AMOUNT OF RS. 5 0,000/-. 6. AGAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE THE ITAT. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS. I FIND THAT IN THIS CASE ASSESSEE HAS BEEN DENIED THE CLAIM OF DEDUCTIO N UNDER SECTION 80P(2)(D) & 80P(C)(II) IN AN ORDER U/S. 143(1)(A) OF THE ACT. SECTION 80P(2)(D) PROVIDES DEDUCTION TO A COOPERATIVE SOCIETY IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVID ENDS DERIVED BY THE CO- OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER C OOPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME. SECTION 80P(2)(C) PROVIDES DEDUCTION TO A COOPERATIVE SOCIETY AS UNDER :- (C) IN THE CASE OF A CO- OPERATIVE SOCIETY ENGAGED IN ACTIVITIES OTHER THAN THOSE SPECIFIED IN CLAUSE (A) OR CLAUSE (B) (EITHER INDEPE NDENTLY OF, OR IN ADDITION TO, ALL OR ANY OF THE ACTIVITIES SO SPECIFIED), SO MUCH O F ITS PROFITS AND GAINS ATTRIBUTABLE TO SUCH ACTIVITIES AS DOES NOT EXCEED. (II) IN ANY OTHER CASE, TWENTY THOUSAND RUPEES. EXPLA NATION- IN THIS CLAUSE, CONSUMERS CO-OPERATIVE SOCIETY MEANS A SOCIETY FO R THE BENEFIT OF THE CONSUMERS;] 8. FIRST OF ALL IT IS NOTED THAT THE ADJUSTMENT HAS BEEN DONE BY THE CPC BENGALURU UNDER SECTION 143(1)(A) OF THE ACT. SECT ION 143(1)(A) PROVIDES FOR PROCESSING OF RETURN WHERE THE TOTAL INCOME IS COMP UTED AFTER MAKING CERTAIN ADJUSTMENT. IT READS AS UNDER :- 143.(1) WHERE A RETURN HAS BEEN MADE UNDER SECTIO N 139, OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTION 142, SUCH RE TURN SHALL BE PROCESSED IN THE FOLLOWING MANNER, NAMELY: ( A ) THE TOTAL INCOME OR LOSS SHALL BE COMPUTED AFTER MA KING THE FOLLOWING ADJUSTMENTS, NAMELY: ( I ) ANY ARITHMETICAL ERROR IN THE RETURN; [***] NEW IDEAL COOPERATIVE HOUSING SOCIETY LIMITED 4 ( II ) AN INCORRECT CLAIM, IF SUCH INCORRECT CLAIM IS AP PARENT FROM ANY INFORMATION IN THE RETURN; [( III ) DISALLOWANCE OF LOSS CLAIMED, IF RETURN OF THE PREVIOUS YEAR FOR WHICH SET OFF OF LOSS IS CLAIMED WAS FURNISHED BEYOND THE DUE DATE SPECIFIED UNDER SUB-SECTION (1) OF SECTION 139; ( IV ) DISALLOWANCE OF EXPENDITURE INDICATED IN THE AUDIT R EPORT BUT NOT TAKEN INTO ACCOUNT IN COMPUTING THE TOTAL INCOME IN THE RETURN; ( V ) DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTIONS 10AA, 80-IA, 80- IAB, 80-IB, 80-IC, 80-ID OR SECTION 80-IE, IF THE RET URN IS FURNISHED BEYOND THE DUE DATE SPECIFIED UNDER SUB-SECTION (1) OF SECTION 139; OR ( VI ) ADDITION OF INCOME APPEARING IN FORM 26AS OR FOR M 16A OR FORM 16 WHICH HAS NOT BEEN INCLUDED IN COMPUTING THE TOTAL INCO ME IN THE RETURN: PROVIDED THAT NO SUCH ADJUSTMENTS SHALL BE MADE UNLESS AN INTIMATION IS GIVEN TO THE ASSESSEE OF SUCH ADJUSTMENTS EITHER IN WRITING OR IN ELECTRONIC MODE: PROVIDED FURTHER THAT THE RESPONSE RECEIVED FROM THE A SSESSEE, IF ANY, SHALL BE CONSIDERED BEFORE MAKING ANY ADJUSTMENT, AN D IN A CASE WHERE NO RESPONSE IS RECEIVED WITHIN THIRTY DAYS OF THE ISSUE OF SUCH INTIMATION, SUCH ADJUSTMENTS SHALL BE MADE:] [PROVIDED ALSO THAT NO ADJUSTMENT SHALL BE MADE UNDE R SUB-CLAUSE (VI) IN RELATION TO A RETURN FURNISHED FOR THE ASSESSMENT Y EAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 2018;] 9. IN MY CONSIDERED OPINION THE ADJUSTMENT DONE BY DENIAL OF DEDUCTION U/S. 80P(2)(D) AND 80P(2)(C)(II) IN THIS CASE DOES NOT FALL IN ANY OF THE ABOVE. THAT A COOPERATIVE SOCIETY WILL NOT GET EXEMPTION O N THE INTEREST EARNED ON DEPOSITS IN COOPERATIVE BANK IS NOT SOMETHING WHICH IS A SUBJECT MATTER OF ADJUSTMENT UNDER SECTION 143(1)(A) OF THE ACT. I FI ND THAT DESPITE NOTING THAT THERE ARE TRIBUNAL DECISIONS IN FAVOUR OF ASSESSEE, THE LEARNED CIT(A) HAS CHOSEN NOT TO FOLLOW THE SAME BY REFERRING TO SOME OTHER DECISIONS. I FURTHER FIND THAT LEARNED CIT(A) HAS COMPLETELY ERRED IN TR EATING THE ASSESSEE AS COOPERATIVE BANK AND INVOKING THE PROVISIONS OF SEC TION 80P(4). SECTION 80P(4) PROVIDES THAT :- (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY I N RELATION TO ANY CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. EXPLANATION. FOR THE PURPOSES OF THIS SUB-SECTION, ( A ) 'CO-OPERATIVE BANK' AND 'PRIMARY AGRICULTURAL CREDIT SOCIETY' SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF T HE BANKING REGULATION ACT, 1949 (10 OF 1949); NEW IDEAL COOPERATIVE HOUSING SOCIETY LIMITED 5 ( B ) 'PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELO PMENT BANK' MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TAL UK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG-TERM CREDIT FOR AGRIC ULTURAL AND RURAL DEVELOPMENT ACTIVITIES. 10. HONOURABLE SUPREME COURT IN THE CASE OF CITIZEN COOPERATIVE SOCIETY LTD. (CIVIL APPEAL NO. 10245 OF 2017 VIDE ORDER DA TED 8.8.2017) HAS SETTLED THE LAW THAT FOR BEING CONSIDERED AS A COOPERATIVE BANK LICENCE FROM RBI IN THIS REGARD IS A SINE QUA NON. IN ABSENCE OF THE RBI LIC ENCE AS SUCH THE ASSESSEE CANNOT BE TREATED AS COOPERATIVE BANK. HENCE DISALL OWING THE DEDUCTION BY REFERRING TO THE PROVISIONS OF SECTION 80P(4) IS CO MPLETELY UNSUSTAINABLE. MOREOVER SECTION 80P(2)(D) PROVIDES EXEMPTION TO IN TEREST EARNED ON FIXED DEPOSIT IN COOPERATIVE SOCIETIES. IT IS NOBODY'S CA SE THAT COOPERATIVE BANK ARE NOT COOPERATIVE SOCIETIES. 11. MOREOVER SIMILAR ISSUE WAS ELABORATELY DEALT BY A LARGER BENCH OF HONOURABLE SUPREME COURT IN THE CASE OF THE MAVILAY I SERVICE COOPERATIVE BANK LTD. & ORS. VS. CIT, CALICUT & ORS. (CIVIL APP EAL NOS. 7343-7350 OF 2019 DATED 12.1.2021 AND THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. WE MAY GAINFULLY REFER TO THE HON'BLE APEX COURT OBSERVATI ON IN PARA 21 AS UNDER, WHEREIN THE HON'BLE APEX COURT REFERRED TO ITS EARL IER DECISION OF CITIZEN COOPERATIVE SOCIETY LTD. (SUPRA) :- THE FOLLOWING PROPOSITIONS MAY BE CULLED OUT FROM THE JUDGMENT: (I) THAT SECTION 80P OF THE IT ACT IS A BENEVOLENT PR OVISION, WHICH WAS ENACTED BY PARLIAMENT IN ORDER TO ENCOURAGE AND PROM OTE THE GROWTH OF THE CO-OPERATIVE SECTOR GENERALLY IN THE ECONOMIC LIFE OF THE COUNTRY AND MUST, THEREFORE, BE READ LIBERALLY AND IN FAVOUR OF THE ASS ESSEE; (II) THAT ONCE THE ASSESSEE IS ENTITLED TO AVAIL OF DED UCTION, THE ENTIRE AMOUNT OF PROFITS AND GAINS OF BUSINESS THAT ARE ATTRIBUTABLE TO ANY ONE OR MORE ACTIVITIES MENTIONED IN SUBSECTION (2) OF SECTIO N 80P MUST BE GIVEN BY WAY OF DEDUCTION; (III) THAT THIS COURT IN KERALA STATE COOPERATIVE MAR KETING FEDERATION LTD. AND ORS. (SUPRA) HAS CONSTRUED SECTION 80P WIDELY AND LIBERALL Y, HOLDING THAT IF A SOCIETY WERE TO AVAIL OF SEVERAL HEADS OF DEDUC TION, AND IF IT FELL WITHIN ANY ONE HEAD OF DEDUCTION, IT WOULD BE FREE FROM TAX NOTW ITHSTANDING THAT THE CONDITIONS OF ANOTHER HEAD OF DEDUCTION ARE NOT SATI SFIED; NEW IDEAL COOPERATIVE HOUSING SOCIETY LIMITED 6 (IV) THIS IS FOR THE REASON THAT WHEN THE LEGISLATU RE WANTED TO RESTRICT THE DEDUCTION TO A PARTICULAR TYPE OF CO-OPERATIVE SOCIETY , SUCH AS IS EVIDENT FROM SECTION 80P(2)(B) QUA MILK CO-OPERATIVE SOCIETIES, THE LEGISLATURE EXPRESSLY SAYS SO - WHICH IS NOT THE CASE WITH SECTION 80P(2)(A )(I); (V) THAT SECTION 80P(4) IS IN THE NATURE OF A PROVISO TO THE MAIN PROVISION CONTAINED IN SECTION 80P(1) AND (2). THIS PROVISO SP ECIFICALLY EXCLUDES ONLY CO- OPERATIVE BANKS, WHICH ARE COOPERATIVE SOCIETIES WHO MUST POSSESS A LICENCE FROM THE RBI TO DO BANKING BUSINESS. GIVEN THE FACT TH AT THE ASSESSEE IN THAT CASE WAS NOT SO LICENCED, THE ASSESSEE WOULD NOT FALL WITHIN THE MISCHIEF OF SECTION 80P(4). 12. HENCE ON MERITS ALSO THE ORDER OF LEARNED CIT(A ) DENYING THE DEDUCTION U/S. 80P(2)(D) IS NOT SUSTAINABLE. 13. AS REGARDS THE STATUTORY DEDUCTION U/S. 80P(2)( C)(II) OF THE ACT, THERE IS NO REASON WHY THE SAME SHOULD BE DENIED. MOREOVER, THE SAID ADJUSTMENT IS NOT FALLING IN ANY OF THE ADJUSTMENT PERMITTED BY 1 43(1)(A) OF THE ACT. HENCE, ASSESSEES CLAIM OF DEDUCTION U/S. 80P(2)(C)(II) HA S ALSO BEEN WRONGLY DENIED IN THE PROCESSING DONE U/S. 143(1)(A) OF THE ACT. THE LEARNED CIT(A) HAS FAILED TO DECIDE THE SAME DESPITE ASSESSEES GROUND IN THIS R EGARD. THE SAME IS DIRECTED TO BE ALLOWED. 13. HENCE, IN THE BACKGROUND OF THE AFORESAID DISCU SSION, RESPECTFULLY FOLLOWING THE PRECEDENT AS ABOVE I SET ASIDE ORDER OF LEARNED CIT APPEALS DECIDE THE ISSUES IN FAVOUR OF ASSESSEE. 14. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULE S BY PLACING THE RESULT ON NOTICE BOARD ON 3.2.2021. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI; DATED : 03/02/2021 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT NEW IDEAL COOPERATIVE HOUSING SOCIETY LIMITED 7 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI