Shivranjni Co.operative Housing Society, Ahmedabad V. A.O, Ahmedabad

ITA 286/AHD/2021

AI Insights

The case involves Shivranjni Co-op. Housing Society appealing against the order of the CIT(A)-3, Ahmedabad, which upheld the Assessing Officer's decision to tax the society's income at the maximum marginal rate. The society argued that it operates on principles of mutuality and its income should not be taxable. Initially, the society's return was filed incorrectly by its CA, declaring a surplus income, which was accepted by the CPC but taxed at a higher rate. The CIT(Appeals) dismissed the society's appeal, leading to this tribunal appeal. The tribunal found merit in the society's arguments about the principles of mutuality and consistency in tax treatment over the years, thus restoring the matter to CIT(Appeals) for re-examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131525 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-07-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 01-11-2021
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Maximum Marginal Rate
• Section: 154; 143(3); 80P; 143(2)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member M/s. Shivranjni Co-op. Hou sing S ociety, 61, Shivranjani Society, 132 ft. Ring Road, Satellite, Ah medabad PAN: AAGAS3590 Q (Appellant) Vs The Asses sing Officer , Ah med abad (Resp ondent) Asses see b y : Shri Sa kar Sha rma, A. R. Revenue by : Shri Atul Pandey , S r. D. R. Date of hearing : 03-07 -2 023 Date of pronouncement : 12-07 -2 023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax, CIT(A)-3, Ahmedabad, in proceeding u/s. 250 vide order dated 21/02/2020 passed for the assessment year 2018-19. ITA No. 286/Ahd/2021 Assessment Year 2018-19 I.T.A No. 286/Ahd/2021 A.Y. 2018-19 Page No. Shivranjni Co.op. Housing Society vs. A.O. 2 2. The assessee has taken the following Grounds of Appeal:- “1. The Ld. CIT (A) erred on facts and in law in upholding action of Assessing Officer i.e. CPC in invoking provisions of section 154 without appreciating that the issue as to whether income of a Co- Operative Housing Society is assessable as Co-op Society u/s 80P or as AOP at maximum marginal rate itself is debatable and therefore, no rectification u/s 154 was permissible. 2. The Ld. CIT (A) erred on facts and in law in upholding action of Assessing Officer i.e. CPC in assessing income of the appellant at maximum marginal rate without appreciate that share of each member in the cooperative Society is specific and identifiable and therefore, while assessing income of appellant as AOP, income of the appellant was not to be charged at maximum marginal rate. 3. The Ld. CIT (A) erred on facts and in law in upholding action of Assessing Officer i.e. CPC in taxing member's share capital contribution as revenue receipt. 4. The Ld. CIT (A) erred on facts and in law in upholding action of Assessing Officer i.e. CPC in taxing member's contribution as revenue receipt without appreciating that unconsumed contribution is returnable to the members. 5. Without prejudice to the Ground Nos 1-4, The Ld. CIT (A) erred on facts and in law in not granting deduction u/s 80P(2)(c)(ii) amounting to Rs. 50,000/- admissible to Co-op Society.” 3. At the outset, we observe that the appeal is time barred by 560 days. The assessee has filed application for condonation of delay, in which it was submitted that appeal order passed by Ld. CIT(Appeals) was communicated on 21-02-2020, but appeal could not be prepared and submitted due to non- availability of counsel during Covid period. Accordingly, primarily the I.T.A No. 286/Ahd/2021 A.Y. 2018-19 Page No. Shivranjni Co.op. Housing Society vs. A.O. 3 delay was caused owing to the fact that owing to the Covid pandemic, the assessee was precluded from filing appeal within time, due to bona fide reasons beyond the control of the assessee. Accordingly, it was submitted that in the interest of justice that the delay in filing of the present appeal may be condoned. Looking into the facts of the instant case, in the interest of justice, we are hereby condoning the delay in filing of the present appeal. 4. On merits, the brief facts of the case are that the assessee has filed return of income showing total income of 2,72,718/- and computed tax at 1,136/- on such income. However, the counsel for the assessee submitted that at the time of filing of return of income, the same was inadvertently filed by the CA of the assessee in the status of AOP, whereas, the assessee is a cooperative society, working solely for the benefits of its members, and the income of the assessee is not liable to be taxed, since it is based on the principles of mutuality. The return of income was processed by CPC and in the intimation issued by CPC u/s 143(3) of the Act, it accepted income filed by the assessee, however, tax was computed 81,816/- i.e. at the maximum marginal rate. 5. Before Ld. CIT(Appeals), the assessee submitted that the surplus of 2,72, 718/- has been offered as income in the return of income by mistake. The assessee submitted that the surplus should not have been taxed as it’s taxable income because the assessee is governed by the principles of mutuality. Ld. CIT(Appeals) however, dismissed the appeal of the assessee with the following observations: I.T.A No. 286/Ahd/2021 A.Y. 2018-19 Page No. Shivranjni Co.op. Housing Society vs. A.O. 4 “It is seen that the appellant itself has shown income of Rs. 2,72,718/- in. the return of income. The CPC has not made any adjustment in the total income. The CPC has only re-computed the tax which is as per provisions of Act. As the intimation/rectification order has been passed on the basis of return filed by the appellant, there is no mistake in the order passed by the CPC. Therefore, the ground of appeal is dismissed. 5. In result, the appeal is dismissed.” 6. Before us, the counsel for the assessee submitted that the assessee is a society, which works only for the benefits of its members, and therefore, the surplus income has been inadvertently offered to tax in the return of income filed by the assessee for the impugned assessment year. The counsel for the assessee submitted that even in the later and the earlier assessment years,it is an accepted position that the assessee is governed by the principles of mutuality and therefore, Ld. CIT(Appeals) erred in facts and law in not appreciating this position. Further, the counsel for the assessee submitted that the Department should have issued notice u/s 143(2) of the Act, before subjecting the assessee to the maximum marginal rate of tax. The assessee also furnished copies of returns for the previous and subsequent assessment years, in support of the contention that the assessee is governed by the principles of consistency, and therefore, cannot be subject to the higher rate of tax. In response, the Ld. DR relied on the observations made by the Ld. CIT(Appeals) in the appellate order. 7. We have heard the rival contentions and perused the material on record. Before us, the main arguments put forth by the counsel for the I.T.A No. 286/Ahd/2021 A.Y. 2018-19 Page No. Shivranjni Co.op. Housing Society vs. A.O. 5 assessee is that in this particular year, a mistake has been committed by the CA of the assessee, wherein at the time of filing return of income, the surplus income earned by the assessee, which operates on the principle of mutuality, has been incorrectly offered to tax in the return of income. However, in the past years as well as in the succeeding assessment years, the income earned by the assessee has not been subject to tax, since it is a society formed exclusively for the benefit of its members, and the Department has accepted this position both in the preceding and succeeding assessment years. Accordingly, in view of the well-established principles of “consistency”, the surplus income earned by the assessee cannot be subject to tax, since this income was offered to tax purely by way of mistake by the CA of the assessee at the time of filing of return of income. Accordingly, looking into the facts of the instant case, in the interest of justice, the matter is being restored to the file of Ld. CIT(Appeals) to analyse whether this position taken by the assessee that it’s income has not been subject to tax in any of the earlier or succeeding assessment years by the Department, is factually correct. It is a well-settled principle of law that if there is no change in facts relation to assessee’s case, then the position taken by the Department in the earlier and succeeding assessment years should not be disturbed, unless certain new facts are before the Department, which would necessitate it to change its earlier position. The assessee may also place the necessary documents on record in support of its case before Ld. CIT(Appeals). In the result, the matter is restored to the file of Ld. CIT(Appeals) with the aforesaid directions. I.T.A No. 286/Ahd/2021 A.Y. 2018-19 Page No. Shivranjni Co.op. Housing Society vs. A.O. 6 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 12-07-2023 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 12/07/2023 (TRUE COPY) आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद