Appeal details
Counselvise Citation
[2016] 121 COUNSELVISE.COM (IT) 3689 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 7 month(s) 26 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-01-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Assessment Year
2009-2010
Appeal Filed On
20-05-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO. 3566/MUM/2014 ( / ASSESSMENT YEAR: 2009-10) LANDS END CO-OPERATIVE HOUSING SOCIETY LTD 29-D, DONGERSEY CROSS ROAD, MALABAR HILL, MUMBAI 400 006 / VS. I.T.O. WARD-16(1)(3) ROOM NO.220, MATRU MANDIR,2 ND FLOOR TARDEO, GRANT ROAD, MUMBAI 400 007 ./ ./PAN/GIR NO. AAAAL 0060C ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI SATISH MODY / RESPONDENT BY : SHRI DARSI SUMAN RATNAM / DATE OF HEARING : 17/11/2015 !'# / DATE OF PRONOUNCEMENT : 15/01/2016 $% / O R D E R PER RAJESH KUMAR, A. M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 25.03.2014 OF COMMISSIONER OF INCOME TAX (APPEALS)-28, MUMBAI (HE REINAFTER CALLED AS THE CIT(A) ) FOR ASSESSMENT YEAR 2009-10.THE ASSESSEE H AS RAISED FOLLOWING GROUNDS OF APPEAL: 2 ITA NO.3566/MUM/2014 LANDS END CO-OPERATIVE HOUSING SOCIETY LTD VS. I.T. O. 1. ON THE FACTS OF THE CASE AND IN LAW THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFIC ER ON ACCOUNT OF TRANSFER FEES AMOUNTING TO RS.11,00,000/- RECEIVED BY THE AP PELLANT. 2. THE LEARNED CIT (APPEALS) HAS ERRED IN CONSIDERING RS.11,00,000/- RECEIVED TOWARDS CONTRIBUTION FROM MEMBERS OF THE SOCIETY AS INCOME OF THE SOCIETY IN UTTER DISREGARDS TO THE PRINCIPALS OF MUTUALITY. 3. THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.6,04,500/- RECEIVED ON ACCO UNT OF NON-OCCUPANCY CHARGES FROM THE MEMBERS OF THE SOCIETY IN UTTER DI SREGARDS TO THE PRINCIPALS OF MUTUALITY. 4. THE LEARNED CIT (APPEALS) HAS ALSO ERRED IN NOT CON SIDERING THE ORDER OF THE HON. ITAT IN THE CASE OF THE APPELLANT WHERE IN THE TRANSFER FEES RECEIVED ARE TREATED AS RECEIPTS FROM MEMBERS OF THE SOCIETY UND ER THE PRINCIPALS OF MUTUALITY. 5. THE LEARNED CIT (APPEALS) HAS ERRED IN DISALLOWING THE CLAIM OF THE APPELLANT FOR DEDUCTION U/S 80P(2)(D) FOR THE INTEREST EARNED FROM CO-OPERATIVE BANKS. THE LEARNED CIT (APPEALS) THEREBY ENHANCED THE ASSE SSMENT AND MADE AN ADDITION OF RS.14,88,107/- 6. FURTHER THE LEARNED CIT (APPEALS) HAS ERRONEOUSLY A PPLIED THE JUDGMENT OF TOTAGAR CO-OPERATIVE SALE SOCIETY LIMITED (322 ITR2 83) (SC) IN RESPECT OF INTEREST FROM BANK. 7. THE LEARNED CIT (APPEALS) HAS ERRED IN ENHANCING TH E ASSESSMENT BY MAKING AN ADDITION OF RS.2,06,400/- BEING AMOUNT RECOVERED FROM MEMBERS TOWARDS CAR PARKING CHARGES, RS.37,290/- FOR TEMPORARY CAR PARKING CHARGES ON THE GROUND THAT THE SAID RECEIPTS ARE NOT COVERED UNDER THE CONCEPT OF MUTUALITY. 3 ITA NO.3566/MUM/2014 LANDS END CO-OPERATIVE HOUSING SOCIETY LTD VS. I.T. O. 8. THE APPELLANT PRAYS THAT THE RECEIPTS ON ACCOUNT OF TRANSFER FEES AMOUNTING TO RS.11,00,000/- , NON-OCCUPANCY CHARGES AMOUNTING TO RS.6,04,800/- CAR PARKING CHARGES AMOUNTING TO RS.2,06,400/- AND TEMP ORARY CAR PARKING CHARGES AMOUNTING TO RS.37,290/- SHALL NOT BE TREAT ED AS TAXABLE INCOME IN THE HANDS OF THE APPELLANT SOCIETY. 9. APPELLANT ALSO PRAYS THAT IT BE ALLOWED TO TAKE THE DEDUCTION U/S 80P(2)(D) ON INTEREST RECEIVED FROM CO-OPERATIVE BANKS AMOUNTING TO RS.14,88,107/- 2. GROUND NO.01 AND 02 ARE AGAINST THE CONFIRMATION OF ADDITION ON ACCOUNT OF TRANSFER FEE OF RS.11,00,000/- RECEIVED BY THE APPE LLANT SOCIETY. THE BRIEF FACTS ARE THAT THE ASSESSEE WAS FORMED TO LOOK AFTER THE MAI NTENANCE OF THE FLATS OWNED BY ITS MEMBERS. THE SOCIETY HAD ITS OWN BYELAWS PROVIDING FOR VARIOUS TYPES OF CHARGES AND FEES ETC. DURING THE YEAR THE ASSESSEE RECEIVED RS. 11 LAKHS FROM ASHOK M. BAJAJ ON 10.04.2008 IN RESPECT OF FLAT NO.3-D BY WAY OF TRAN SFER FEE / CONTRIBUTION TO AMENITIES FUND WHICH WAS CREDITED TO THE COMMON AMENITIES FUN D. DURING THE COURSE OF SCRUTINY PROCEEDINGS AO ADDED THE SAME TO THE INCO ME OF THE ASSESSEE ON THE GROUND THAT THE SAME WAS NOT COVERED BY THE PRINCIPLE OF MUTUALITY. THE FIRST APPELLATE AUTHORITY ALSO CONFIRMED THE ADDITION BY HOLDING TH AT THE TRANSFER FEE RECEIVED WAS MORE THAN WHAT HAS BEEN PRESCRIBED UNDER GOVERNMENT NOTIFICATION. 2.1. THE LD. AUTHORIZED REPRESENTATIVE BROUGHT TO OUR NOTICE THAT ISSUE RAISED IN THE GROUND NO. 1 & 2 QUA TRANSFER FEE IS COVERED I N FAVOUR OF ASSESSEE BY ITS SHOWN 4 ITA NO.3566/MUM/2014 LANDS END CO-OPERATIVE HOUSING SOCIETY LTD VS. I.T. O. ORDER IN ITA NO.6866/MUM/2007 ASSESSMENT YEAR 2004- 05 VIDE ORDER DATED 27-09- 2013 AND ALSO BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S DARBHANGA MANSION CHS LTD IN ITA NO.1474 OF 2012 DA TED 18-12-2014 AND THEREFORE THE GROUND NO.1 & 2 SHOULD BE ALLOWED. ON THE OTHER HAND THE LD. DR RELIED ON THE AUTHORITIES BELOW. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD. WE NOTE THAT IDENTICAL ISSUE HAS BEEN DECIDED IN FA VOUR OF ASSESSEE IN IT ITS OWN CASE IN ITA NO.6866/MUM/2007 ASSESSMENT YEAR 2004-05 VID E ORDER DATED 27/09/2013.THE RELEVANT PARAGRAPHS 3 & 4 OF THE SA ID ORDER ARE REPRODUCED AS UNDER:- WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CON SIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. AR HAS POINTED OUT THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY THIS TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2003-04 VIDE ORDER DATED 10.01.2011 IN ITA NO. 6066/M/2006. THUS, THE LD. AR HAS SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. THE LD. DR HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. TH E AO MADE THE ADDITION WITH RESPECT TO THE AMOUNT RECEIVED BY THE ASSESSEE TOWA RDS TRANSFER FEE OF RS.500/- FROM OUTGOING MEMBERS, ENTRANCE FEE FOR RS.100/- FROM IN COMING MEMBERS, SHARE PREMIUM AND CONTRIBUTION TO COMMON AMENITIES FUND. THE CIT( A) DELETED THE TRANSFER FEE OF RS.500/- EACH ON THE PRINCIPLES OF MUTUALITY BUT CO NFIRM THE ADDITION TOWARDS THE RECEIPT OF ENTRANCE FEE OF RS.100/- EACH AND THE RE IPTS OF CONTRIBUTION TO COOMON AMENITIES FUND TOTAL AMOUNTING TO RS.17,01,200/- . THIS TRIBUNAL IN ASSESSEEES OWN 5 ITA NO.3566/MUM/2014 LANDS END CO-OPERATIVE HOUSING SOCIETY LTD VS. I.T. O. CASE FOR THE ASSESSMENT YEAR 2003-04 HAS CONSIDERED AND ADJUDICATED THE ISSUE OF CONTRIBUTION TO COMMON AMENITIES IN PARA 4 AS UNDER : WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. CASE OF THE ASESSEE IS THAT THOUGH THE AMOUNT WAS R ECEIVED IN THE FORM OF CONTRIBUTION TO COMMON AMENITIES FUND IT IS ESSENTIALLY UTILIZED FOR THE BENEFIT OF COMMON MEMBERS AND THUS PRINCIPLES OF MUTUALITY ARE ATTRACTED. FAC TS NOT BEING IN DISPUTE, IN THE LIGHT OF THE DECISION OF THE ITAT (SUPRA), WE ACCEPT THE PLEA OF THE ASSESSEE AND HOLD THAT THE IMPUGNED AMOUNT RECEIVED IN THE FORM OF CONTRIB UTION TO COMMON AMENITIES FUND IS EXEMPT FROM TAX SINCE PRINCIPLES OF MUTUALITY AP PLIED TO THE INSTANT RECEIPTS. UNDER THE CIRCUMSTANCES, APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON THE DATE OF HEARING I.E. ON 10.1. 2011. IN VIEW OF THE EARLIER ORDER OF THIS TRIBUNAL THE AMOUNT OF RS.16,50,000/- TOWARDS COMMON AMENITIES FUND IS NOT TAXABLE ON THE PRINCIPLE OF MUTUALITY AS DECIDED BY THIS TRIBUNAL IS THE ASSESSEES OWN CASE . AS REGARDS THE RECEIPT TOWARDS SHARE PREMIUM AND ENTRANCE FEE FROM INCOMING MEMBER S IF THE SAID AMOUNT IS RECEIVED FOR THE PRUPOSE OF UTILIZING FOR THE COMMO N AMENITIES OF THE SOCIETY THEN THE SAME FALLS UNDER THE CATEGORY OF THE CONTRIBUTION O F COMMON AMENITIES FUND AND THE CONEPT OF MUTUALITY WILL BE APPLICABLE. ACCORDINGLY , THE AO TO VERIFY THE SAME AND THEN DECIDE AS PER OUR OBSERVATION. WE ALSO FIND THAT JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT V/S DARBHANGA MANSION CHS LTD IN ITA NO. 1474/MUM/2012 VIDE ORDER DATED 18-12-2014 HAS DECIDED A SIMILAR ISSUE ON IDENTICAL FACTS IN FAVOU R OF THE SOCIETY. WE, THEREFORE, 6 ITA NO.3566/MUM/2014 LANDS END CO-OPERATIVE HOUSING SOCIETY LTD VS. I.T. O. RESPECTFULLY FOLLOWING THE ABOVE DECISION, DELETE T HE ADDITION OF RS. 11,00,000/- BY ALLOWING THE APPEAL OF THE ASSESSEE ON THIS POINT. THE AO IS DIRECTED ACCORDINGLY. 4. THE ISSUE RAISED IN THE GROUND NO.3 IS REGARDING THE CONFIRMATION OF ADDITION OF RS.6,04,500/- RECEIVED DURING THE YEAR ON ACCOUNT O F NON-OCCUPANCY CHARGES FROM THE MEMBERS OF THE SOCIETY. THE NON-OCCUPANCY CHARG ES ARE RECEIVED FROM THOSE MEMBERS WHO DO NOT OCCUPY THEIR FLATS AND LET OUT T HE SAME TO NON-MEMBERS. AS PER BYELAWS OF THE SOCIETY, A VERY NOMINAL FEE IS RECEI VED WHICH IS DESCRIBED AS NON- OCCUPANCY CHARGES AND SPENT ON THE BUILDING MAINTEN ANCE. 4.1. THE LD. ASSESSING OFFICER ADDED THE SAME TO T HE INCOME OF THE ASSESSEE ON THE PLEA THAT SAME WAS NOT CHARGED AS PRESCRIBED AND AS PER GOVERNMENT NOTIFICATION AND SUCH CHARGES WERE COLLECTED WITH PROFIT MOTIVE AND THEREFORE WAS NOT COVERED BY PRINCIPLE OF MUTUALITY BY NOT FOLLOWING THE DECISIO N OF HONBLE BOMBAY HIGH COURT ON THIS ISSUE IN THE CASE OF MITTAL COURT PREMISES CO-OPERATIVE SOCIETY LTD. V/S INCOME TAX OFFICER 320 ITR 414 AND ALSO STATED THAT DEPARTMENT HAS NOT ACCEPTED THE DECISION IN PRINCIPLE AND APPEAL STANDS PREFERRED IN THE HONBLE SUPREME COURT. THE LD. AR SUBMITTED THAT THE NON-OCCUPANCY CHARGES REC EIVED FROM MEMBERS WERE SPENT FOR THE MUTUAL BENEFITS OF THE MEMBERS AND THE AO ADDED THE SAME TO THE INCOME OF THE ASSESSEE IN UTTER DISREGARDS TO THE PRINCIPLE O F MUTUALITY. THE LD. COUNSEL PLACED 7 ITA NO.3566/MUM/2014 LANDS END CO-OPERATIVE HOUSING SOCIETY LTD VS. I.T. O. RELIANCE ON MITTAL COURT PREMISES CO-OPERATIVE SOCI ETY LTD. V/S INCOME TAX OFFICER (SUPRA) AND PRAYED THAT THE ADDITION OF RS.6,04,500 /-MADE BY THE ASSESSING OFFICER BE DELETED BY REVERSING THE ORDER OF CIT(A) ON THIS IS SUE. ON THE OTHER HAND THE LD. AR RELIED ON THE ORDER OF THE AUTHORITIES BELOW. 4.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD AND FIND THAT THE ASSESSEE RECEIVED NON-OCCUPANCY CHARG ES FROM THOSE MEMBERS WHO LET OUT THEIR FLATS. THE CHARGES ARE RECEIVED AT THE PR ESCRIBED RATES AS PER THE BYELAWS OF THE SOCIETY AND ARE SPENT FOR THE COMMON PURPOSES O F THE SOCIETY FOR THE BENEFIT OF THE MEMBERS. IN THE CASE OF MITTAL COURT PREMISES CO-OP ERATIVE SOCIETY LTD. V/S INCOME TAX OFFICER 320 ITR 414 THE HONBLE HIGH COURT HELD THAT THE BYE-LAWS THEMS ELVES PROVIDED FOR NON-OCCUPATION CHARGES. THE CONTRIBUTI ON, THEREFORE, WAS BY THE MEMBERS FOR THE PURPOSE OF MUTUAL BENEFIT. THE OBJE CT OF THE CONTRIBUTION WAS THE PURPOSE OF INCREASING THE SOCIETYS FUNDS, WHICH CO ULD BE USED FOR FULFILLING THE OBJECTS OF THE SOCIETY. THE OBJECT OF THE SOCIETY W AS TO PROVIDE SERVICE, AMENITIES AND FACILITIES TO ITS MEMBERS. IN THESE CIRCUMSTANCES, THE PRINCIPLE OF MUTUALITY WOULD APPLY AND THEREFORE NON-OCCUPANCY CHARGES WERE NOT TAXABLE. IN OUR OPINION THE CASE OF THE ASSESSEE CASE IS SQUARELY COVERED BY THE AFO RESAID DECISION. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE JURIDICT IONAL HIGH COURT DELETE THE ADDITION 8 ITA NO.3566/MUM/2014 LANDS END CO-OPERATIVE HOUSING SOCIETY LTD VS. I.T. O. OF RS.6,04,500/- ON ACCOUNT OF NON-OCCUPANCY CHARGE S. THE AO IS DIRECTED ACCORDINGLY. 8. GROUND NO. 5 IS AGAINST THE ENHANCEMENT OF ASSES SMENT BY THE CIT(A) BY REJECTING THE CLAIM OF THE ASSESSEE U/S 80(P)(2)(D) OF THE ACT OF RS. 14,88,107/- BEING INTEREST ON DEPOSITS WITH OTHER COOP. SOCIETI ES BEING COOP. BANKS. 8.1 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE HAD CLAIMED DEDUCTION U/S 80P(2)(D) OF THE ACT IN RESPECT OF INTEREST OF RS. 14,88,107/- ON FIXED DEPOSITS WITH COOP. BANKS. THE AO ALLOWED THE SAID DEDUCTION AS C LAIMED BY THE ASSESSEE HOWEVER THE CIT(A) ENHANCED THE ASSESSMENT BY REJECTING TH E CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE COORDINATE MUMBAI BEN CH IN THE CASE OF SHIV SAMRUDHI CO-OPERATIVE HOUSING SOCIETY IN ITA NO 1073/MUM/201 2. 8.2. THE LD AR SUBMITTED BEFORE US THAT IF THE GRO SS TOTAL INCOME OF CO-OPERATIVE SOCIETY INCOME INCLUDES ANY INCOME BY WAY INTERES T AND DIVIDEND ON DEPOSITS EOYH OTHER COOP. SOCIETIES INCLUDING CO-OPERATIVE BANKS , THEN THE SAID CO-OPERATIVE SOCIETY WOULD BE ENTITLED TO DEDUCTION U/S 80P(2)( D) OF THE ACT OF THE WHOLE AMOUNT RECEIVED AS INTEREST/DIVIDEND. THE LD. COUNSEL SUB MITTED THAT THE ASSESSEE IS A CO- OPERATIVE SOCIETY AND DURING THE YEAR IT EARNED INT EREST ON DEPOSITS WITH CO-OPERATIVE 9 ITA NO.3566/MUM/2014 LANDS END CO-OPERATIVE HOUSING SOCIETY LTD VS. I.T. O. BANKS AND THEREFORE SAME WAS RIGHTY CLAIMED AS EXEM PT U/S 80(P)(2)(D) OF THE ACT. THE LD. COUNSEL DISTINGUISHED THE FACTS OF ITS CASE FROM THAT OF SHIV SAMRUDHI CO- OPERATIVE HOUSING SOCIETY IN ITA NO 1073/MUM/2012 RELIED UPON BY THE CIT(A) BY SUBMITTING THAT THE TRIBUNAL WHILE PASSING THE SAI D ORDER RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTAGARS CO-O PERATIVE SALE SOCIETY LTD VS ITO 322 ITR 283 AND HELD THAT THE INTEREST INCOME FROM THE SHORT TERM DEPOSITS AND SECURITIES NOT IMMEDIATELY REQUIRED IN THE BUSINESS OF THE ASSESSEE IS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND NO DEDUCTI ON U/S 80P(2)(A)(I) OF THE ACT IS ALLOWABLE. THUS THE SAID DECISION WAS DELIVERED BY THE HON,BLE APEX COURT ON THE PROVISIONS OF SECTION 80(P)(2)(A)(I) OF THE ACT . THE LD. AR ALSO ARGUED THAT THE CRITERIA OF CLAIMING DEDUCTION U/S 80(P)(2)(A)(I) I S TOTALLY DIFFERENT FROM THAT OF PROVISIONS OF SECTION 80(P)(2)(D) OF THE ACT. THE L D. COUNSEL DREW DISTINCTION BETWEEN TWO PROVISIONS OF THE ACT BY SUBMITTING THAT PROVIS IONS OF SECTION 80(P)(2)(A)(I) ARE APPLICABLE TO A ASSESSEE CARRYING ON THE BUSINESS O F BANKING OR CREDIT FACILITIES TO ITS MEMBERS. THE LD COUNSEL FOR THE ASSESSEE FURTHER SU BMITTED THAT THE HONBLE SUPREME COURT HAD SPECIFICALLY MENTIONED THAT THE DECISION IN THE PRESENT CASE CONFINED TO THE FACTS OF THE SAID CASE. WHEREAS ,ON THE OTHER HAND, IN ORDER TO CLAIM DEDUCTION U/S 80(P)(2)(D) OF THE ACT THE ONLY CONDITION IS THAT T HE ASSESEE SHOULD BE CO-OPERATIVE SOCIETY AND IT HAS INTEREST INCOME ACCRUED FROM TH E INVESTMENT WITH OTHER CO- OPERATIVE SOCIETY INCLUDING CO-OPERATIVE BANK WHIC H IS INCLUDED IN OR PART OF THE 10 ITA NO.3566/MUM/2014 LANDS END CO-OPERATIVE HOUSING SOCIETY LTD VS. I.T. O. GROSS TOTAL INCOME. IT WAS ARGUED THAT THE PRE-CO NDITION FOR CLAIMING AND ALLOWING DEDUCTION U/S 80P(2)(A)(I) IS THAT IT SHOULD BE AS SESSABLE UNDER THE HEAD INCOME FROM BUSINESS AND NOT AS INCOME ASSESSABLE UNDER THE H EAD INCOME FROM OTHER SOURCES WHEREAS THE POSITION IS DIFFERENT FOR THE PURPOS E OF 80(P)(2)(D) OF THE ACT I.E THE ASSESSEE SHOULD BE COOP. SOCIETY AND IT SHOULD HAV E INCOME BY WAY OF DIVIDEND AND INTEREST ON DEPOSITS WITH OTHER COOP. SOCIETIES INC LUDING BANKS AND THE HEADS OF INCOME UNDER WHICH THE INCOME IS ASSESSABLE ARE IMM ATERIAL FOR THE PURPOSE OF CLAIMING THE DEDUCTION UNDER THIS SECTION. THE LD A R SUBMITTED THAT, THEREFORE, THE PRINCIPLE LAID DOWN BY THE HONBLE SUPREME COURT IN THE ABOVE DECISION IS NOT APPLICABLE TO THE ASSESSEES CASE AS THE SAID DECIS ION WAS ON DIFFERENT PROVISIONS AND THEREFORE, THE SAID JUDGEMENT IS DISTINGUISHABLE O N FACTS AND NOT APPLICABLE TO THE ASSESSEE. THE LD. COUNSEL STRONGLY RELIED ON THE DE CISION OF THE HONBLE HIGH COURT OF HIMACHAL PRADESH IN THE CASE OF CIT VS. KANGRA CO-O PERATIVE BANK LTD. (309 ITR 106) IN WHICH AND THE COUNSEL FURTHER SUBMITTED THA T THE DECISION RELIED UPON BY THE TRIBUNAL IS DISTINGUISHABLE ON THE FACTS AND CIRCUM STANCES AND NOT APPLICABLE TO THE ASSESSEE. THE COUNSEL FINALLY PRAYED THAT IN VIEW T HESE ARGUMENTS THE INCOME FROM OTHER CO-OPERATIVE BANKS MAY KINDLY ALLOWED BY REVE RSING THE ORDER OF CIT(A). THE LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF THE AUTHORITIES BELOW. 11 ITA NO.3566/MUM/2014 LANDS END CO-OPERATIVE HOUSING SOCIETY LTD VS. I.T. O. 8.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. WE FIND THAT THE CIT(A) ENHANCED THE INCOME OF THE ASS ESSEE BY REJECTING THE DEDUCTION U/S 80P(2)(D) OF THE ACT OF RS.14,88,107/- BEING IN TEREST ON INVESTMENT WITH OTHER COOP. BANKS BY FOLLOWING THE DECISION IN THE CASE O F 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 SALE 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 INCOME FROM OTH ER SOURCES WHERE THE CO- OPERATIVE SOCIETY IS ENGAGED IN CARRYING ON BUSINES S OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND CONSEQUENTLY NO DEDUC TION 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 COOPERA TIVE 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 ON INVESTMENTS MADE WITH OTHER COOPERATIVE SOCIETY. FOR THE PURPOSES OF BETTER PROPER UNDERSTANDING OF THESE TWO PROVISIONS THE RELEVANT EXTRACT OF THE S ECTION ARE REPRODUCED BELOW: 80P: DEDUCTION IN RESPECT OF INCOME OF CO-OPERATIVE SOCIETIES. 12 ITA NO.3566/MUM/2014 LANDS END CO-OPERATIVE HOUSING SOCIETY LTD VS. I.T. O. 1. WHERE, IN THE CASE OF AN ASSESSSEE BEING A CO-OPERA TIVE SOCIETY, THE GROSS TOTAL INCOME, INCLUDES ANY INCOME REFERRED TO IN SU B-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. 2. THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL BE TH E FOLLOWING, NAMELY:- (A) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED IN- (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDING C REDIT FACILITIES TO ITS MEMBERS. THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUS INESS ATTRIBUTABLE TO ANY ONE OR MORE OF MUCH ATTRIBUTES. (D)IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR D IVIDENDS DERIVED BY THE CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER 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 RESPE CT OF PROFITS AND GAIN OF BUSINESS IN CASE OF THE CO-OPERATIVE SOCIETY CARRYING ON BUSINE SS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS IF THE SAID INCOME IS ASS ESSABLE AS INCOME FROM BUSINESS WHEREAS LATTER PROVIDES FOR DEDUCTION IN RESPECT O F INCOME BY WAY INTEREST AND DIVIDEND DERIVED BY ASSESSEE FROM ITS INVESTMENTS WITH OTHER COOPERATIVE SOCIETY. THUS IT IS AMPLY CLEAR THAT A COOPERATIVE SOCIETY C AN 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 T HE BANKING OR PROVIDING CREDIT 13 ITA NO.3566/MUM/2014 LANDS END CO-OPERATIVE HOUSING SOCIETY LTD VS. I.T. O. 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 I NTEREST AND DIVIDEND ON INVESTMENTS WITH OTHER CO-OPERATIVE SOCIETY MAY OR MAY NOT BE ENGAGED IN THE BANKING FOR PROVIDING CREDIT FACILITIES TO ITS MEMB ERS 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 HONBLE SUPREME COURT. THE HONBLE SUPREME COURT IN THE CAS E OF TOTAGARS CO-OPERATIVE SALE SOCIETY LTD.(SUPRA) HELD THAT A SOCIETY HAS S URPLUS FUNDS WHICH ARE INVESTED IN SHORT TERM DEPOSITS WHERE THE SOCIETY IS ENGAGED IN THE BUSINESS OF BAN KING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS IN THAT CASE THE SAID INCOME FROM SHORT TERM DEPOSITS SHALL BE TREATED AND ASSESSED AS INCO ME 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 AVAILABLE ONLY IN RESPECT OF INCOME WHICH IS ASSESSABLE AS BUSINESS INCOME AND NOT AS INCOME FROM OTHER SOURC ES. 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 INTER EST 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 FACT S AND CIRCUMSTANCES WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ENTITLED T O THE DEDUCTION OF RS. 14,88,107/- IN RESPECT OF INTEREST RECEIVED/DERIVED BY IT ON DE POSITS WITH COOP. BANKS AND 14 ITA NO.3566/MUM/2014 LANDS END CO-OPERATIVE HOUSING SOCIETY LTD VS. I.T. O. THEREFORE THE APPEAL OF THE ASSESSEE IS ALLOWED BY REVERSING THE ORDER OF THE CIT(A). THE AO IS DIRECTED ACCORDINGLY. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2016 SD/- SD/- (SHAILENDRA KUMAR YADAV) (RAJESH KUMAR) &' $ / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER ( ) MUMBAI; *$ DATED : 15.01.2016 PS. ASHWINI GAJAKOSH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI
