OMKAR 1998 Co Op Housing Society Ltd, College Road V. Income Tax Officer, Ward 1(1), Nashik, Gadkari Chowk

ITA 284/PUN/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2102 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-05-2024
• Assessment Year: misc
• Appeal Filed On: 13-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(1); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE ‘A’ BENCH, PUNE ITAT-Pune Page 1 of 6 BEFORE HON’BLE S. S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपऩल स ं . / ITA No. 0284/PUN/2024 निर्धारण वषा / Assessment Year : 2018-19 Omkar 1998 Co-op. Housing Society Patil Lane No-3, College Road, Nashik-422005 PAN: AAAAO3664M . . . . . . . अपीलार्थी / Appellant बिधम / V/s Income Tax Officer, Ward-1(1), Nashik . . . . . . . प्रत्यर्थी / Respondent द्वधरध / Appearances Assessee by : None for the Assessee Revenue by : Mr Ramnath Murkunde [‘Ld. DR’] स ु नवाई की तारीख / Date of conclusive Hearing : 28/05//2024 घोषणा की तारीख / Date of Pronouncement : 29/05/2024 आदेश / ORDER Per G. D. Padmahshali, AM; By this appeal the assessee impugned DIN & Order No. ITBA/NFAC/S/250/2022-23/1047089679(1) dt. 07/11/2022 passed u/s 250 of Income-tax Act, 1961 [‘the Act’ hereafter] by National Faceless Appeal Centre, Delhi [‘NFAC’ hereafter] arising out of order of intimation passed u/s 143(1) of the Act for assessment year 2018-19 [‘AY’ hereinafter]. Omkar 1998 Co-op. Housing Society Vs ITO ITA No.0284/PUN/2024 AY:2018-19 ITAT-Pune Page 2 of 6 2. The case was called twice; none appeared on bequest of the assessee. The Ld. DR however sought our attention assessee’s letter dt. 28/05/2024 whereby the appellant society requested for adjournment for preparation of paper book and collecting documents etc. After considering the issue involved in the present appeal, we deem it fit to reject the request and proceed to adjudicate the issue on merits ex-parte u/r 24 of ITAT-Rules, 1963 with the able assistance from the Revenue 3. The long and short of the case is that; the appellant assessee is a co- operative housing society registered under the provisions of Maharashtra State Co-op. Societies Act. For the year under consideration the assessee was in receipt of (a) contribution of ₹86,400/- from its members and (b) interest of ₹49,993/- income from the investment held with co-operative banks/institutions. The return of income filed by the assessee declaring loss of ₹14,569/- was processed summarily u/s 143(1) of the Act by determining total income at ₹71,831/- as against the returned loss. The aggrieved assessee futilely contested the determination in an appeal before first appellate forum. Thus, hurt by the orders of tax authorities below, the appellant is in appeal before us. 4. We have heard the Ld. DR; and subject to provision of rule 18 of ITAT- Rules, 1963 perused material placed on record, case laws relied upon by both the rival parties and considered the facts in light of settled legal position which are forewarned to parties present. Omkar 1998 Co-op. Housing Society Vs ITO ITA No.0284/PUN/2024 AY:2018-19 ITAT-Pune Page 3 of 6 5. From the facts solidified by the Ld. DR we note that, there is no dispute over the nature of receipt from members as contribution towards common pool and the amount of interest received/earned by the assessee was from its investment/deposits held with co-operative banks/institutions. 6. We also note that, the Ld. CPC/AO while processing the return has brought to tax the amount of contribution disregarding the mutuality and further denied the deduction u/s 80P(2)(d) of the Act both owning to incorrect computation and information contained in the return of income filed by the assessee. In an appeal, while confirming the determination of Ld. CPC/AO, the Ld. NFAC did also reiterate that, the appellant failed to enter the details of contribution received from the members is governed by the principle of mutuality and also failed to classify correctly interest received by it from the co-operative bank/institution is eligible for deduction u/s 80P(2)(d) of the Act. 7. The two issues viz; (a) non-taxability of contribution received from members towards common pool and (b) allowability of deduction u/s 80P(2)(d) of the Act against the interest earned from the deposits held by one co-operative society with another co-op. society is no-more res-integra. 8. The appellant is a housing co-operative society and admittedly is governed by the doctrine of mutuality. This doctrine of mutuality refers to the principle that one cannot engage into a business with self. If the identity Omkar 1998 Co-op. Housing Society Vs ITO ITA No.0284/PUN/2024 AY:2018-19 ITAT-Pune Page 4 of 6 of contributor and participator to common pool is marked by oneness, then a profit motive cannot be attached to such a venture/unit. Thus, the contribution or excess of contribution over expenditure of such a unit/venture is not taxable under the present fiscal law for the lack of a profit motive and conclusion on this account should invariably be facts based. This proposition finds force in the decision of Hon’ble Supreme Court in ‘Yum Restaurants (Marketing) Pvt. Ltd Vs CIT’ reported in 424 ITR 630 [Equivalent citation 189 DTR 1/ 313 CTR 37 / 271 Taxman 217 / 116 taxmann.com 374 (SC)], wherein Hon’ble lordships have categorically held that ‘existence of mutuality is a factual exercise’. Once the nature of receipt is clearly established & accepted as ‘contribution towards common pool’, then it leaves with no grant or sanction to tax the same in the hands of recipient assessee disregarding the principle of mutuality. 9. While assessing the income of the assessee it was incumbent on the Revenue to find-out as to whether a such receipt/income the assessee claimed in its return is assessable or not. Merely because the assessee included certain receipt/income in incorrect column of its return for a particular year, it could not confer any jurisdiction on the department to tax that receipt/income in that year even though legally such receipt/income is not taxable as per law. This view finds fortified in the decision of Hon'ble Delhi High Court, in the case of ‘CIT Vs Bharat General Reinsurance Co. Ltd.’ [1971, 81 ITR 303 (Del)] Omkar 1998 Co-op. Housing Society Vs ITO ITA No.0284/PUN/2024 AY:2018-19 ITAT-Pune Page 5 of 6 10. The amount of ₹86,400/- received by the appellant from its member was admittedly towards contribution to common pool of the society and since is governed by the doctrine of mutuality hence is inexigible to tax. The incorrect reporting of such contribution while filing the return would per-se does not change the character & nature of such receipt, therefore such incorrect reporting would in no case sanction the tax authorities to bring it under the tax net. Thus the addition made on this score stands deleted as contra-legem. 11. Insofar as the allowability of deduction u/s 80P(2)(d) is concerned, on perusal of section 80P(2)(d) of the Act it is ostensibly clear that interest & dividend income derived by one cooperative society from its investment held with other cooperative societies is eligible for deduction u/s 80P(2)(d) of the Act. 12. In the present case, the reasoning given by the tax authorities in denying the claim for deduction u/s 80P(2)(d) of the Act is that the claim for qualifying deduction wasn’t made correctly in appropriate column of the return etc., cannot be ground for denial of lawful claim/entitlement. 13. In view of the Central Board of Direct Taxes 14 (XL – 35) 1955 circular dt. 11/04/1955, the mistake if any committed by assessee in the return of income, it should be taken care properly by the revenue and ignorance of assessee cannot be the pointer, for silence on the part of revenue. The scope of the above circular is elaborately finds explained in Omkar 1998 Co-op. Housing Society Vs ITO ITA No.0284/PUN/2024 AY:2018-19 ITAT-Pune Page 6 of 6 catena of judicial precedents including ‘CIT Vs Ahmedabad Keiser-E-Hind Mills Co. Ltd’ [1981, 128 ITR 486 (Guj)], ‘Parekh Brothers Vs CIT’ [1984, 15 Taxman 539 (Ker)], ‘Dattatraya Gopal Shette Vs CIT’ [1984, 150 ITR 460 (Bom)], ‘Rajeev Biswas Vs UOI’ [2023, 459 ITR 36 (Cal)]. 14. Once it is on record that the interest income earned by the assessee is from its investment/deposit held with co-operative societies/institution, the income qualified for deduction u/s 80P(2)(d) of the Act. When the tax authorities found that the assessee made erroneous claims or error in claiming the eligible deduction which requires correction in accordance with law, then the tax authorities pursuant to binding circular and former judicial precedents were duty bound to correct the same which they failed. The views adopted by the tax authorities below in our considered opinion are not in conformity with legal position and binding judicial precedents, hence vacated. Resultantly, we reverse the denial of deduction. 15. In result, the appeal of the assessee is ALLOWED and all the grounds stands adjudicated accordingly. In terms of rule 34 of ITAT Rules, order pronounced in open court on this Wednesday 29 th day of May, 2024. -S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER प ु णे / PUNE ; ददना ां क / Dated : 29 th day of May, 2024. आदेश की प्रनिनलनप अग्रेनषि / Copy of the Order forwarded to : 1.अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The Pr.CIT, -Concerned 4. The NFAC, Delhi, New Delhi 5. DR, ITAT, A Bench, Pune 6. गार्डफ़ाइल / Guard File. Ashwini आदेशान ु सार / By Order वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्यायादधकरण, प ु णे / ITAT, Pune