CCI CHAMBERS CO OP HSG SOC. LTD, MUMBAI V. ITO 17(1)(3), MUMBAI

ITA 4807/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9500 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 10-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Assessee Lawyers: MRUGANSHI JOSHI
• Keywords: Opportunity of being heard
• Section: 80P; 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI PAWAN SINGH (JM) I.T.A. NO. 4807 /MUM/ 201 8 (ASSESSMENT YEAR 20 12 - 1 3 ) CCI CHAMBERS COOPERATIVE HOUSING SOCIETY LIMITED GROUND FLOOR CCI CHAMBERS DINSHAW WACHHA MARG CHURCHGATE MUMBAI - 400 020. PAN : AAAJC0006E V S . ITO - 17(1)(3) AAYAKAR BHAVAN ROOM NO. 116 M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY MS. MRUGANSHI JOSHI DEPARTMENT BY SHRI CHAITANYA ANJARIA DATE OF HEARING 17.01 . 2 0 20 DATE OF PRONOUNCEMENT 16 . 0 3 . 20 20 O R D E R PER SHAMIM YAHYA (AM) : - THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LEARNED CIT - A DATED 12.6.2018 PERTAINS TO ASSESSMENT YEAR 2012 - 13. 2. THE GROUNDS OF APPEAL READ AS UNDER : - ON THE F ACTS ARID IN THE CIRCUMSTANCES OF THE CASE AND IN LAW : - 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DENIAL OF DEDUCTION U/S. SOP, WITH RESPECT TO INTEREST INCOME OF RS. 1,39,0827 - EARNED FROM APPELLANT'S INVESTMENT WITH CO - OPERATIVE BANK, ON THE GROUN D THAT THE PRINCIPLES OF MUTUALITY WERE NOT SATISFIED. 2. THE LEARNED C1T(A) FAILED TO T AKE INTO CONSIDERATION THAT THE PROVISIONS OF SECTION 80P(D) DOES NOT EMPHASIS ON PRINCIPAL OF MUTUALITY AS LONG AS INCOME IS RECEIV ED FROM THE INVESTMENTS MADE, WITH A CO - OPERATIVE SOCIETY. THE LEARNED CIT(A) FAILED TO CONSIDER THE PROVISIONS OF SECTION SOP CLAUSE (D) WHICH READS AS UNDER: - 'IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO OPERATIVE SOCIET Y FROM ITS INVESTMENTS WITH ANY OTHER CO - OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME.' ........... CCI CHAMBERS COOPERATIVE HOUSING SOCIETY LIMITED 2 3. THE LEARNED CIT(A) ERRED IN NOT GRANTING THE EXEMPTION O F INTEREST EARNED FROM FD IN CO OPERATIVE BANK ON THE GROUND THAT CONTRIBUTION COLLECTED WAS FROM A NON - MEMBER. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A COOPERATIVE SOCIETY. DURING THE COURSE OF ASSESSMENT THE ASSESSING OFFICER OBSERVED O N PERUSAL OF THE DETAILS OF FDRS, IT IS OBSERVED THAT IN THE YEAR UNDER ASSESSMENT, THE ASSESSEE MADE INV ESTMENT OF HUGE AMOUNT OF RS.54,89,600 IN FRESH FOR. THE ASSESSEE WAS ASKED TO FURNISH COMPLETE DETAILS OF THE AMOUNT AND THE CORRESPONDING AMOUNT OF INTEREST ACCRUED ON THE SAME. THE ASSESSEE FURNISHED THE REQUISITE DETAILS OF FDRS VIDE LETTER DATED 03 - 09 - 2014. FROM THIS DETAILS, IT IS SEEN THAT IN SEPTEMBER 2011, THE ASSESSEE RECEIVED RS. 55,4,600 / - (RS.54,89,600+ RS.25,000) FROM ONE MRS.SANJUKTA GHOSH, WIFE OF MR.ASIM GHOSH, WHO WAS SUPPOSED TO PURCHASE FLAT HO 24. THIS AMOUNT WAS RECEIVED TOWARDS 'BUILD ING REPAIR FUND' AND 'TRANSFER CHARGES'. THE ASSESSEE MADE SHORT - TERM FOR OF THE AMOUNT SO RECEIVED FROM MRS.SANJUKTA GHOSH AND DURING THE YEAR ENDING 31 . 03 . 2012 THESE FDRS WERE RENEWED ON THREE OCCASIONS. FOR THE YEAR ENDING 31 . 03 . 2012, THE AMOUNT OF INTE REST RECEIVED BY THE ASSESSEE ON THE FDRS FOR RS.54,89,600, WORKED OUT TO RS. 1,39,082. HOWEVER, DUE TO PENDING LITIGATION, THE TRANSACTION WAS CANCELLED AND AFTER PREMATURE REDEMPTION OF THE FDRS ON 28 - 05 - 2013, THE ASSESSEE REFUNDED THE AMOUNT TO MR.ASIM GHOSH ON 29 . 05 . 2013. THE ASSESSEE PROVIDED COPIES OF RELEVANT VOUCHERS AND TWO CHEQUES DATED 29 .05. 2013 FOR RS.54,89,600 AND RS.25,000 RESPECTIVELY, EVIDENCING REFUND OF AMOUNT TO MR. ASIM GHOSH. THE AMOUNT OF INTEREST EARNED ON THESE FDRS WAS HOWEVER RETA INED BY THE ASSESSEE . 4. THEREAFTER THE ASSESSING OFFICER REFERRED TO THE DECISION OF HON'BLE M.P. HIGH COURT IN THE CASE OF DEVI AHILYA NEW CLOTH MARKET VS. CIT (222 CTR 583). THE ASSESSING OFFICER THEREAFTER CONCLUDED AS UNDER : - FIRSTLY, THE ASSESSEE RECEIVED RS.54,89,600 FROM MRS.SANJUKTA GHOSH, WHO WAS NEVER A MEMBER OF THE SOCIETY. .AS ADMITTED BY THE ASSESSEE ITSELF, MRS.SANJUKTA GHOSH INTENDED TO PURCHASE A FLAT IN THEIR SOCIETY BUT WHEN THE DEAL DID NOT MATERIALIZE THE AMOUNT RECEIVED FROM MRS.S ANJUKTA GHOSH IN SEPTEMBER 2011 WAS REFUNDED IN MAY 2013. HENCE, THE P RINCIPLE OF CCI CHAMBERS COOPERATIVE HOUSING SOCIETY LIMITED 3 MUTUALITY IS MISSING IN THIS TRANSACTION. SECONDLY, THE ASSESSEE MADE SHORT - TERM FDRS OF THE AMOUNT RECEIVED FROM A NON - MEMBER HENCE THE INTEREST EARNED THEREON ALSO CANNOT B E SAID TO BE COVERED BY THE PRINCIPLE OF MUTUALITY. FURTHER, WHERE ASSESSEE DEPOSITS THE MONEY IN BANK FOR EARNING INTEREST, THEIR RELATIONS ARE NOT BASED ON MUTUALITY BUT THEY ARE OF CUSTOMER AND THE BANKER. IN SUCH TRANSACTION ALSO, THE PRINCIPLE OF MUTU ALITY IS MISSING. 5 . AGAINST THE ORDER ASSESSEE APPEAL BEFORE THE LEARNED CIT(APPEALS). LEARNED CIT(A) UPHE L D THE ACTION OF ASSESSING OFFICER BY OBSERVING AS UNDER : - I HAVE GONE THROUGH THE ASSESSING OFFICERS OBSERVATION AND APPELLANTS SUBMISSION. TH E ONLY ISSUE TO BE ADJUDICATED HERE IS WHETHER THE SUM RECEIVED BY THE SOCIETY FROM A NON MEMBER KEPT IN BANK AND INTEREST RECEIVED OUT OF IT CAN BE ALLOWED DEDUCTION U/S. 80P(D). T HE APPELLANT HAS CONCLUDED THAT THE PROVISIONS OF SECTION 80P(D) DOES NOT E MPHASISE ON PRINCIPAL OF MUTUALITY AS LONG AS INCOME IS RECEIVED FROM THE INVESTMENT MADE WITH A COOPERATIVE SOCIETY. BUT I DO NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AS THE WHOLE SCHEME OF COOPERATIVE SOCIETIES NON TAXABILITY RESTS ON THE PRINCIPAL OF MUTUALITY. CONCEPT OF MUTUALITY IS BASED ON THE FACT THAT ONE CANNOT TRADE WITH ONESELF AND CANNOT MAKE PROFIT OUT OF ONESELF IN THE CASE OF COOPERATIVE SOCIETIES CONTRIBUTIONS COLLECTED FROM NON - MEMBERS ARE INCOME CHARGEABLE TO TAX. IN THE INSTANT CASE THE CONTRIBUTION COLLECTED WAS FROM NON - MEMBER AND SO THE INTEREST EARNED FROM THAT AMOUNT OF MONEY WHICH WAS KEPT AS FD CANNOT BE CLAIMED AS EXEMPT FROM TAX. HENCE, IN ABSENCE OF MUTUALITY THE ASSESSING OFFICER IS RIGHT IN CONCLUDING THAT INTEREST INCOME CANNOT AVAIL BENEFIT OF SECTION 80P(D). MOREOVER, I FIND THAT CASE LAWS REFERRED BY APPELLANT ARE ON DIFFERENT FACTS AND NOT APPLICABLE TO THE PRESENT CASE. HENCE, APPELLANTS GROUND OF APPEAL IS DISMISSED. 6 . AGAINST THE ORDER ASSESSEE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LEARNED COUNSEL OF THE ASSESSEE IN HER SUBMISSIONS BROUGHT FOLLOWING FURTHER FACTS TO OUR NOTICE. MORESOEVER, IT IS PERTINENT TO NOTE THAT ALTHOUGH MR. AZIM GHOSH CANCELLED THE TRANSACTION PERTAINING TO FLAT NO. 24 HE PURCHASED FLAT NO. 32 AND THEREFORE EVENTUALLY ACQUIRED MEMBERSHIP IN THE APPELLANT SOCIETY AND TILL DATE IS THE MEMBER OF THE SOCIETY AND ENJOYS ALL THE BENEFITS AND PRIVILEGES AS A MEMBER OF THE ASSESSEE - SOCIET Y. THUS THE PRINCIPLES OF MUTUALITY ARE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THIS CASE. THE ASSESSEE - SOCIETY HAS SATISFIED ALL THE CONDITIONS STATED IN SECTION 80P(2)(D) AND THERE IS NO REASON FOR DENYING THE DEDUCTION. HOWEVER, THE AO DENIED SUCH DEDUCTION U/S 80P OF THE ACT ON A GROUND OF NON - APPLICABILITY OF PRINCIPAL OF MUTUALITY AND HAS ADDED THE SAME UNDER THE HEAD 'INCOME FROM OTHER SOURCES. CCI CHAMBERS COOPERATIVE HOUSING SOCIETY LIMITED 4 8. WE FIND THAT IN OF THE ORDERS OF THE AUTHORITIES BELOW THE ABOVE FACT ARE ABSENT . IF THE ABOVE SUB MISSIONS ARE CORRECT AND THE SAID PERSON FROM WHOM THE ADVANCED WAS RECEIVED HAS BEEN ADMITTED AS A MEMBER SUBSEQUENTLY THE SUBMISSION OF THE ASSESSEE WILL HAVE TO BE ACCEPTED THAT THIS FUND CANNOT BE SAID TO HAVE BEEN CONTRIBUTED BY NONMEMBER. IN SUCH CIR CUMSTANCES THE DENIAL OF BENEFIT OF PRINCIPLE OF MUTUALITY WILL NOT SURVIVE. ACCORDINGLY IN THE INTEREST OF JUSTICE WE REMIT THIS ASPECT OF THE ASSESSEES SUBMISSION TO THE FILE OF ASSESSING OFFICER. ASSESSING OFFICER SHALL EXAMINE THE VERACITY OF ASSESSEE S SUBMISSION AS ABOVE AND THEREAFTER DECIDE AS PER OUR OBSERVATIONS AS ABOVE. NEEDLESS, TO ADD THE ASSESSEE SHALL BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 9. IN THE RESULT, THIS APPEAL BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 16 . 0 3 . 20 20 . SD/ - SD/ - ( PAWAN SINGH ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 16 / 0 3 / 20 20 COPY OF T HE 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 ) PS ITAT, MUMBAI