M/s Ideal Homes Co-Operative Building Society Ltd., Bangalore V. ACIT, Bangalore

ITA 526/BANG/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5353 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BIJU M K
• Assessee Lawyers: C R NULVI
• Keywords: Tax effect; Revised return
• Section: 10AA; 234B; 10B; 154

Judgement Text

ITA NO.526 OF 2013 IDEAL HOMES COOP.BUILDING SOCIET Y LTD BANGALORE PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE CBENCH, BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.526/BANG/2013 (ASSESSMENT YEAR: 2009-10) M/S. IDEAL HOMES COOPERATIVE BUILDING SOCIETY LTD, MYSORE ROAD, BANGALORE 560098 PAN: AAAAI 3937 R VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 2(1) BANGALORE (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI C.R. NULVI, CA DEPARTMENT BY: SHRI BIJU M.K. (DR) DATE OF HEARING: 04/03/2014 DATE OF PRONOUNCEMENT: 07/03/2014 O R D E R PER GEORGE GEORGE K. J.M. THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIR ECTED AGAINST THE ORDER OF THE CIT (A) DATED 15/03/2013. THE RELEVANT ASSESSMENT YEAR IS 2009-10. 2. THE ASSESSEE HAS RAISED SEVEN GROUNDS IN THE APP EAL. GROUND NOS. 1, 2 AND 7 ARE GENERAL IN NATURE, AND NO SPECIFIC ADJUDICATION IS CALLED FOR, HENCE THE SAME ARE DISM ISSED. GROUND NO.3 WAS NOT PRESSED IN THE COURSE OF HEARING, HENC E GROUND NO.3 IS ALSO DISMISSED. THE REMAINING SURVIVING GRO UNDS NAMELY GROUNDS 4 TO 6 ARE AS FOLLOWS: 4. THE CIT (A) FAILED TO APPRECIATE THAT THE INTER EST RECEIPTS WERE EARNED FROM DEPOSITS WITH OTHER COOPERATIVE SOCIETIES AND THEREFORE ELIGIBLE FOR DEDUCTION US 80P(2)(D) OF THE ACT. ITA NO.526 OF 2013 IDEAL HOMES COOP.BUILDING SOCIET Y LTD BANGALORE PAGE 2 OF 7 5. WITHOUT PREJUDICE, THE CIT (A) FAILED TO NOTE TH E ESTABLISHED LEGAL POSITION THAT THE NATURE AND TREA TMENT OF RECEIPTS IS NOT ALTERED BY THE DEPICTION OF THE SAME IN THE BOOKS OF ACCOUNTS OR IN THE RETURN OF INCOME AN D THAT A LEGITIMATE CLAIM CANNOT BE REJECTED BECAUSE OF A MISTAKE OR OMISSION ON THE PART OF THE ASSESSEE WHI CH WOULD RESULT IN UN-LAWFUL ENRICHMENT OF THE STATE W HICH IS NOT PERMITTED IN LAW. 6. WITHOUT PREJUDICE, THE ACTION OF THE CIT (A) IN WITHDRAWING THE DEDUCTION GRANTED BY HIM U/S 80P(2)(D) OF THE ACT IS CONTRARY TO HIS OWN FINDING THAT THE INTEREST RECEIPTS ARE CLEARLY ENTITLED FOR DEDU CTION U/S 80P(2)(D) OF THE ACT AND FURTHER GROSSLY ERRED IN HOLDING THAT THE COMPUTATION FILED BEFORE HIM IS NO N-EST IN LAW. 3. BRIEF FACTS OF THE CASE ARE AS FOLLOWS. THE ASSESSEE IS A CO-OPERATIVE SOCIETY. FOR THE AS SESSMENT YEAR 2009-10, THE ASSESSEE FILED THE RETURN OF INCO ME ON 29.09.2009 DECLARING NIL INCOME. THE CASE WAS SELEC TED FOR SCRUTINY. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THE INTEREST INCOME AMOUNTING TO RS.1,51,31,155/- WAS NOT CREDITED TO P&L A/C, HOWEV ER SAME WAS REFLECTED IN BALANCE SHEET FILED FOR THE SAID A SSESSMENT YEAR. THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDING S, PREPARED THE REVISED RETURN ON 29.11.2012 ADDING INTEREST IN COME OF RS.1,51,31,155/- AND CLAIMED THE SAME AMOUNT AS DED UCTION U/S 80P(2). BUT THE SAID REVISED RETURN WAS NOT ACC EPTED BY THE ASSESSING OFFICER, AS THE RETURN WAS OUTSIDE THE AM BIT OF SECTION 139(5). THE ASSESSING OFFICER CONCLUDED THE ASSESSM ENT VIDE ORDER DATED 26.12.2011, WHEREIN HE ADDED INTEREST I NCOME OF RS.1,51,31,155/- AND ALSO DENIED THE BENEFIT OF DED UCTION U/S 80P(2)(D), IN VIEW OF PROVISIONS OF SECTION 80A(5) OF THE ACT. THE RELEVANT FINDING OF THE ASSESSING OFFICER READS AS FOLLOWS: ITA NO.526 OF 2013 IDEAL HOMES COOP.BUILDING SOCIET Y LTD BANGALORE PAGE 3 OF 7 IT IS SEEN FROM THE ABOVE REPLY THAT THE ASSESSEE HAS FAILED TO SATISFACTORY REPLY AS TO WHY THE INTEREST OF RS.1,51,31,155/- WAS NOT REFLECTED TO P&L ACCOUNT A ND WHY DEDUCTION U/S 80P(2)(D) SHOULD BE EXTENDED TO T HIS ADDITIONAL INCOME NOT REFLECTED IN P&L ACCOUNT, IN VIEW OF SECTION 80A(5) WHICH READS AS WHERE THE ASSESSEE F AILS TO MAKE A CLAIM IN HIS RETURN OF INCOME FOR ANY DED UCTION U/S 10A OR SECTION 10AA OR SECTION 10B OR SECTION 1 0BA OR UNDER ANY PROVISION OF THE CHAPTER UNDER THE HEA DING C DEDUCTION IN RESPECT OF CERTAIN INCOMES, NO DEDUCTION SHALL BE ALLOWED TO HIM THEREUNDER. IN VIEW OF THE ABOVE THE ADDITIONAL INTEREST OF RS.1,51,31,155/- WHICH IS NOT REFLECTED IN THE P&L ACCOUNT AND ON WHICH NO DEDUCTION U/S 80P(2)(D) IS CLAIMED BY THE ASSESSEE IN RETURN OF INCOME FILED B Y HIM, IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE A ND THE ASSESSMENT IS COMPLETED AS UNDER: TOTAL INCOME RETURNED RS. NIL ADDITION RS.1,51,31,155/- ASSESSED INCOME RS.1,51,31,155/- TAX THEREON RS. 45,39,347/- ADD: SURCHARGE RS. 4,53,934/- ADD: EDUCATION CESS RS. 1,49,800/- TOTAL RS. 49,93,282/- ADD: INTEREST U/S 234B RS. 16,97,217/- TOTAL PAYABLE RS. 66,90,499/- 4. AGAINST THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A). THE CIT (A) ORIGINALLY ALLOWED THE APPEAL OF THE ASSESSEE VIDE HIS ORDER D ATED 29.12.2012. THE CIT (A) ALLOWED THE APPEAL ON THE M ISTAKEN ASSUMPTION THAT THE REVISED RETURN WAS FILED WITHIN THE PRESCRIBED TIME LIMIT. AFTER THE RECEIPT OF THE ORD ER OF THE CIT (A), THE ASSESSING OFFICER MOVED AN APPLICATION U/S 154 FOR RECTIFYING THE ORDER OF THE CIT (A) AS THERE WAS NO REVISED RE TURN FILED BEFORE HIM. THE CIT (A) PASSED AN ORDER U/S 154 ON 15.03. 2013 BY RESTORING THE ASSESSING OFFICERS ORDER DATED 26.12 .2011. ITA NO.526 OF 2013 IDEAL HOMES COOP.BUILDING SOCIET Y LTD BANGALORE PAGE 4 OF 7 5. AGGRIEVED BY THE ORDER OF THE CIT (A), THE ASSES SEE IS IN APPEAL BEFORE US. IT WAS SUBMITTED THAT THE ASSESSE E HAS NOT DECLARED THAT INTEREST INCOME OF RS.1,51,31,155/- I N THE P&L A/C AND THUS COULD NOT HAVE CLAIMED DEDUCTION U/S 80P(2 )(D). IT WAS CONTENDED THAT IF THE SAID INTEREST INCOME WAS CRED ITED IN P&L A/C, THE SAME COULD HAVE BEEN ALLOWED AS DEDUCTION U/S 80P(2)(D) AND THE TAX EFFECT WOULD BE NIL. THE HON' BLE SUPREME COURT IN THE CASE OF CIT VS. MAHENDRA MILLS 243 ITR 56 HELD THAT DEPARTMENT SHOULD NOT TAKE ADVANTAGE OF IGNORANCE O F AN ASSESSEE AND EVERY ASSESSEE SHOULD BE MADE KNOWN OF HIS/ITS TAX LIABILITY AS WELL AS BENEFITS, RELIEF AND DEDUC TION AVAILABLE UNDER THE STATUTE. 5.1 FURTHER, IT WAS SUBMITTED THAT THE ASSESSING OF FICER COULD HAVE BEEN ALLOWED THE ASSESSEE TO FILE A REVISED CO MPUTATION STATEMENT DURING THE COURSE OF THE ASSESSMENT AS TH E TAX EFFECT IS NIL AND ALSO LEGALLY THE INTEREST EARNED FROM CO OPERATIVE SOCIETY AMOUNTING TO RS.1,51,31,115/- IS EXEMPT U/S 80P(2)( D). ONLY BECAUSE OF MISTAKE COMMITTED BY THE ASSESSEE BY NOT OFFERING SUCH INCOME AND CLAIMING DEDUCTION U/S 80P(2)(D), T HE TAX CANNOT BE LEVIED. IN THIS CONNECTION ASSESSEE DREW OUR ATTENTION TO THE BANGALORE BENCH DECISION IN THE CASE OF JAMK ANDI URBAN COOPERATIVE BANK LTD VS. ACIT CIRCLE-1, BIJAPUR IN ITA NO.809/BANG/2011 WHEREIN IT WAS HELD THAT THE TRIBU NAL CAN DIRECT THE ASSESSING OFFICER TO EXAMINE A CLAIM OF DEDUCTION, THOUGH THE SAME WAS NOT CLAIMED IN THE RETURN OF IN COME NOR IN THE REVISED RETURN. IT WAS SUBMITTED THAT THE JUDGM ENT OF THE HON'BLE SUPREME COURT IN THE CASE OF GOTZE INDIA LT D REPORTED IN 284 ITR 323 (S.C) RESTRICTED ONLY THE POWER OF THE ASSESSING ITA NO.526 OF 2013 IDEAL HOMES COOP.BUILDING SOCIET Y LTD BANGALORE PAGE 5 OF 7 AUTHORITY TO ENTERTAIN A NEW CLAIM FOR DEDUCTION OT HERWISE THAN BY WAY OF FILING A REVISED RETURN. HOWEVER, THIS RE STRICTION DOES NOT IMPINGE ON THE POWER OF THE APPELLATE TRIBUNAL U/S 254 OF THE ACT. IT WAS SUBMITTED THAT THE CRUX OF THE ABOV E ORDER IS SQUARELY APPLICABLE TO THE FACTS OF THIS CASE. IT W AS SUBMITTED THAT THOUGH NO CLAIM WAS MADE IN THE RETURN AND THE RE WAS NO VALID REVISED RETURN FILED UNDER THE PROVISIONS OF THE LAW, THE ASSESSEE WAS LEGALLY ENTITLED TO DEDUCTION U/S 80P( 2) AND THEREFORE, TRIBUNAL HAS POWER TO DIRECT THE ASSESSI NG OFFICER TO EXAMINE WHETHER THE DEDUCTION U/S 80P(2) IS LEGALLY JUSTIFIED, WHEN INTEREST INCOME IS ROPED IN FOR TAXATION. 6. THE LEARNED DR PRESENT SUPPORTED THE ORDERS OF T HE INCOME TAX AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IN THE INSTANT CASE, THE ASSESS EE HAS NEITHER OFFERED TO TAX THE INTEREST INCOME AND THEREFORE, T HERE IS NO QUESTION OF THE ASSESSEE CLAIMING DEDUCTION U/S 80P (2). IF INTEREST INCOME IS OFFERED FOR TAXATION AND THEN DE DUCTION IS NOT CLAIMED, SECTION 80A(5) WOULD HAVE APPLICATION. THE ASSESSING OFFICER HAD ADDED THE INTEREST INCOME WHICH OTHERWI SE WOULD HAVE BEEN ALLOWED AS A DEDUCTION. THEREFORE, ON TH E PRINCIPLES OF EQUITY, THE ASSESSING OFFICER WAS DUTY BOUND TO GIV E THE ASSESSEE A CHANGE TO CLAIM DEDUCTION U/S 80P(2). 7.1 THE HON'BLE APEX COURT IN THE CASE OF CIT VS. M AHINDRA MILLS 243 ITR 56 HELD THAT THE DEPARTMENT SHOULD NO T TAKE ADVANTAGE OF IGNORANCE OF AN ASSESSEE AND EVERY ASS ESSEE SHOULD ITA NO.526 OF 2013 IDEAL HOMES COOP.BUILDING SOCIET Y LTD BANGALORE PAGE 6 OF 7 BE MADE KNOWN OF HIS/ITS TAX LIABILITY AS WELL AS B ENEFITS, RELIEFS AND DEDUCTION AVAILABLE UNDER THE STATUTE. 7.2 THE CBDT VIDE CIRCULAR DATED 11 TH APRIL, 1955 HAS DIRECTED THE ASSESSING OFFICER NOT TO TAKE ADVANTAGE OF THE ASSESSEES IGNORANCE AND/OR MISTAKE. THE RELEVANT EXTRACT OF T HE CIRCULAR IS REPRODUCED BELOW: 3. OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVANTAGE OF IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS. IT IS ONE OF THEIR DUTIES TO ASSIST A TAXPA YER IN EVERY REASONABLE WAY, PARTICULARLY IN THE MATTER OF CLAIMING AND SECURING RELIEFS AND IN THIS REGARD TH E OFFICERS SHOULD TAKE THE INITIATIVE IN GUIDING A TAXPAYER WHERE PROCEEDINGS OR OTHER PARTICULARS BEF ORE THEM INDICATE THAT SOME REFUND OR RELIEF IS DUE TO HIM. THIS ATTITUDE WOULD, IN THE LONG RUN, BENEFIT THE DEPARTMENT FOR IT WOULD INSPIRE CONFIDENCE IN HIM T HAT HE MAY BE SURE OF GETTING A SQUARE DEAL FROM THE DEPARTMENT. ALTHOUGH, THEREFORE, THE RESPONSIBILITY FOR CLAIMING REFUNDS AND RELIEFS RESTS WITH THE ASSESSE E ON WHOM IT IS IMPOSED BY LAW, OFFICERS SHOULD: (A) DRAW THEIR ATTENTION TO ANY REFUNDS OR RELIEFS TO WHICH THEY APPEAR TO BE CLEARLY ENTITLED BUT WHICH THEY HAVE OMITTED TO CLAIM FOR SOME REASON OR OTHER; (B) FREELY ADVISE THEM WHEN APPROACHED BY THEM AS TO THEIR RIGHTS AND LIABILITIES AND AS TO THE PROCEDUR E TO BE ADOPTED FOR CLAIMING REFUNDS AND RELIEFS. 7.3. AS MENTIONED EARLIER THE ASSESSEE HAS NOT OFFE RED THE INTEREST INCOME FOR TAXATION, HENCE THE ASSESSEE WA S NOT IN A POSITION TO CLAIM DEDUCTION U/S 80P(2). WHEN THE A SSESSING OFFICER ROPED IN THE INTEREST INCOME FOR TAXATION, HE WAS DUTY BOUND IN VIEW OF THE ABOVE MENTIONED CIRCULAR AND O N THE PRINCIPLES OF EQUITY AND JUSTICE TO EXAMINE THE CLA IM OF DEDUCTION U/S 80P(2). ITA NO.526 OF 2013 IDEAL HOMES COOP.BUILDING SOCIET Y LTD BANGALORE PAGE 7 OF 7 7.4. THE HON'BLE SUPREME COURT IN THE CASE OF GOETZ E INDIA LTD 284 ITR 323 HELD THAT PROVISION OF INCOME TAX A CT, 1962 RESTRICTED THE POWER OF THE ASSESSING AUTHORITY TO ENTERTAIN A CLAIM OF DEDUCTION OTHERWISE THAN BY WAY OF FILING A REVISED RETURN. HOWEVER, SUCH RESTRICTION DID NOT EXTEND/IM PINGE ON THE POWER OF THE APPELLATE TRIBUNAL U/S 254 OF THE ACT. THEREFORE, FOR SUBSTANTIAL CAUSE OF JUSTICE AND EQUITY, WE RESTORE THE MATTER TO THE ASSESSING OFFICER TO EXAMINE WHETHER THE ASSESS EE IS LEGALLY ENTITLED TO DEDUCTION U/S 80P(2) ON MERITS. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH MARCH, 2014. SD/- SD/- (JASON P. BOAZ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED 7 TH MARCH, 2014. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCHES, BANGALORE