Appeal details
Counselvise Citation
[2016] 131 COUNSELVISE.COM (IT) 3169 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 8 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
24-08-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
16-08-2016
Assessment Year
2010-2011
Appeal Filed On
10-12-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI B BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO.7203 & 7204/MUM/2013 (ASSESSMENT YEARS: 2009-10 & 2010-11) NUTAN LAXMI CO-OPERATIVE APPELLANT HOUSING SOCIETY LTD., PLOT NO.51, JAIHIND RECREATION CLUB, N.S. ROAD NO.11,, JVPD SCHEME, JUHU, MUMBAI VS. ITO 19(2)(4) RESPONDENT WARD-21(1)(3), R.N. 605, C-10, 6 TH FLOOR, B.K. COMPLEX, BANDRA (E), MUMBAI. PAN: AAAT 1208J /BY APPELLANT : SMT. AARTI VISSANJI, & SHRI SHAVIN S. DIVATIA, A.R. /BY RESPONDENT: SHRI CHANDRA VIJAY, D.R. /DATE OF HEARING : 16.08.2016 /DATE OF PRONOUNCEMENT : 24.08.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: BOTH APPEALS HAVE BEEN FILED BY ASSESSEE AGAINST TH E ORDERS OF COMMISSIONER OF INCOME-TAX (APPEALS)-32, MUMBAI, DATED 14.10.2013 & 15.10.2013 FOR A.YS. I.E. 2009-1 0 & 2010- ITA NO.7203 & 7204/MUM/13 A.Y. 2009-10 & 2010-11 [N UTAN LAXMI CHS LTD. VS. ITO] PAGE 2 11 RESPECTIVELY. SINCE, THESE APPEALS PERTAIN TO S AME ASSESSEE AND ON SIMILAR ISSUE, SO THEY ARE BEING DISPOSED OF BY COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO.7203/MUM/2013 FOR A.Y. 2009-10, ASSESS EE HAS FILED APPEAL ON FOLLOWING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 32 ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER CH ARGING TO TAX CONTRIBUTION RECEIVED FROM MEMBERS AGGREGATING TO RS.64,00,000/- INCIDENTAL TO SALE OF PLOT ['TRANSFE R FEES'] WHICH WAS EXEMPT ON THE PRINCIPLE OF MUTUALITY. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 32 ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER CH ARGING TO TAX RS.25,20,000/- BEING CONTRIBUTION RECEIVED BY T HE SOCIETY FROM A MEMBER ON THE OCCASION OF THE USE OF TDR BY THE MEMBER AND WHICH WAS EXEMPT ON THE PRINCIPLE OF MUT UALITY 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-32 ERRED NOT FOLLOWING THE ORDER OF THE JURISDICTIONAL BOMBAY HI GH COURT IN THE CASE OF SIND CO-OPERATIVE HOUSING SOCIETY VS. ITO, PUNE, 317 ITR 47 (BOM). 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-32 ERRED IN NOT ALLOWING FURTHER DEDUCTION U/S 80P(2)(D) UP TO THE GROSS TOTAL INCOME IN THE MANNER LAID DOWN IN CHAPTER VI- A OF THE INCOME TAX ACT, 1961 CONSEQUENT TO THE ADDITIONS MA DE TO TOTAL INCOME 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY OF THE GROUNDS OF APPEAL AND SUBMIT A DETAILED STATEMENT O F FACTS AND CASE LAWS RELIED UPON AT THE TIME OF THE HEARIN G . 3. FIRST ISSUE IN ASSESSEES APPEAL IS WITH REGARD TO THE CONFIRMATION OF THE ORDER OF THE ASSESSING OFFICER CHARGING TO TAX CONTRIBUTION RECEIVED FROM MEMBERS AGGREGATING TO RS.64,00,000/- INCIDENTAL TO SALE OF PLOT [TRANSFER FEES] WHICH WAS EXEMPT ON THE PRINCIPLE OF MUTUALITY. NEXT ISSU E IS WITH REGARD TO ALLOWABILITY OF DEDUCTION U/S.80P(2)(D). ITA NO.7203 & 7204/MUM/13 A.Y. 2009-10 & 2010-11 [N UTAN LAXMI CHS LTD. VS. ITO] PAGE 3 3.1 LEARNED AUTHORIZED REPRESENTATIVE POINTED OUT T HAT ALL THESE APPEALS ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF ITAT A BENCH MUMBAI IN THE CASE OF LAND END CO- OPERATIVE HOUSING SOCIETY LTD. V/S. ITO MUMBAI IN I TA NO.3566/M/2014 A.Y.2009-10 ORDER DATED 15.01.2016 WHEREIN THIS ISSUE OF MUTUALITY IS DECIDED IN FAVOU R OF THE ASSESSEE BY HOLDING AS UNDER: 8.3 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE CIT(A) ENHANCE D THE INCOME OF THE ASSESSEE BY REJECTING THE DEDUCTION U /S. 80P(2)(D) OF THE ACT OF RS. 14,88,107/- BEING INTER EST ON INVESTMENT WITH OTHER COOP. BANKS BY FOLLOWING THE DECISION IN THE CASE OF BANCIRA SAMRUDDIHI CO-OPERA TIVE HOUSING SOCIETY LTD.(SUPRA) WHICH WAS PASSED ON THE BASIS OF THE DECISION PASSED BY THE HON'B!E SUPREME COURT IN THE CASE OF TOTAGAR'S CO-OPERATIVE SALE SO CIETY LTD. IN THE CASE OF TOTAGAR'S CO-OPERATIVE SALE SOC IETY LTD V/S. ITAT (SUPRA) THE HON'BLE SUPREME COURT WHI LE INTERPRETING THE SECTION 80P(2)(A)(1) OF THE ACT HE LD THAT SURPLUS FUNDS NOT IMMEDIATELY REQUIRED IN THE BUSIN ESS AND INVESTED IN THE SHORT TERM DEPOSIT WOULD BE ASSESSABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES' WHERE THE COOPERATIVE SOCIETY IS ENGAGED I N CARRYING ON BUSINESS 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 I N THE CASE BEFORE US THE ISSUE IS WHETHER A CO-OPERATIVE SOCIETY WHICH HAS DERIVED INCOME ON INVESTMENT WITH COOPERATIVE BANKS IS ENTITLED TO DEDUCTION U/S 80P(2)(D). THE PROVISIONS OF SECTION 80P(2)(D) OF T HE 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 PRO PER UNDERSTANDING OF THESE TWO PROVISIONS THE RELEVANT EXTRACT OF THE SECTION ARE REPRODUCED BELOW: 8OP: DEDUCTION IN RESPECT OF INCOME OF CO-OPERATIVE SOCIETIES. WHERE, IN THE CASE OF AN ASSESSSEE BEING A CO-OPERA TIVE ITA NO.7203 & 7204/MUM/13 A.Y. 2009-10 & 2010-11 [N UTAN LAXMI CHS LTD. VS. ITO] PAGE 4 SOCIETY, THE GROSS TOTAL INCOME, INCLUDES ANY INCOM E REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDU CTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL BE TH E FOLLOWING, NAMELY. (A) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGE D IN- (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS. THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO ANY ONE OR MORE OF MUCH ATTRIBUTES. (D) IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS 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 FOR MER DEALS WITH DEDUCTION IN RESPECT OF PROFITS AND GAIN OF BU SINESS IN CASE OF THE CO-OPERATIVE SOCIETY CARRYING ON BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS IF THE SAID INCOME IS ASSESSABLE AS INC OME FROM BUSINESS WHEREAS LATTER PROVIDES FOR DEDUCTION IN RESPECT OF 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 CAN 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 THE BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND HAS INCOME ASS ESSABLE UNDER THE HEAD BUSINESS WHEREAS FOR CLAIMING U/S 80P(2)(D) IT MUST HAVE INCOME OF INTEREST AND DIVID END ON INVESTMENTS WITH OTHER CO-OPERATIVE SOCIETY MAY OR MAY NOT BE ENGAGED IN THE BANKING FOR PROVIDING CRE DIT FACILITIES TO ITS MEMBERS AND THE HEAD UNDER WHICH THE INCOME IS ASSESSABLE IS NOT MATERIAL FOR THE CLAIM OF DEDUCTION UNDER THIS SECTION. NOW WILL EVALUATE THE ASSESSEE'S CASE IN THE LIGHT OF THE DECISION OF THE HON'BLE SUPREME COURT. THE HONBIE SUPREME COURT IN THE CASE OF ITA NO.7203 & 7204/MUM/13 A.Y. 2009-10 & 2010-11 [N UTAN LAXMI CHS LTD. VS. ITO] PAGE 5 TOTAGAR'S CO-OPERATIVE SALE SOCIETY LTD.(SUPRA) HEL D THAT A SOCIETY HAS SURPLUS FUNDS WHICH ARE INVESTED IN SHO RT TERM DEPOSITS WHERE THE SOCIETY IS ENGAGED IN THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS IN THAT CASE THE SAID INCOME FROM SHORT TER M DEPOSITS SHALL BE TREATED AND ASSESSED AS INCOME FR OM OTHER SOURCES AND DEDUCTION U/S 80(P)(2)(A)(1) WOUL D NOT BE AVAILABLE MEANING THEREBY THAT DEDUCTION U/S 80(P)(2)(A)(1) IS AVAILABLE ONLY IN RESPECT OF INCO ME WHICH IS ASSESSABLE AS BUSINESS INCOME AND NOT AS INCOME FROM OTHER SOURCES. WHEREAS IN DISTINCTION T O THIS , THE PROVISIONS OF SECTION 80(P)(2)(D) OF THE ACT PROVIDES FOR DEDUCTION IN RESPECT OF INCOME OF A COOP SOCIET Y BY WAY OF INTEREST OR DIVIDEND FROM ITS INVESTMENTS WI TH OTHER COOP SOCIETY IF SUCH INCOME IS INCLUDED IN TH E GROSS TOTAL NEOME OF THE SUCH COOP SOCIETY. IN VIEW THESE FACTS AND CIRCUMSTANCES WE ARE OF THE CONSIDERED VIEW THA T THE ASSESSEE IS ENTITLED TO THE DEDUCTION OF RS. 14,88, 107/- IN RESPECT OF INTEREST RECEIVED/DERIVED BY IT ON DEPOS ITS WITH COOP. BANKS AND THEREFORE THE APPEAL OF THE ASSESSE E IS ALLOWED BY REVERSING THE ORDER OF THE CIT(A). THE A O IS DIRECTED ACCORDINGLY. 3.2 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE O N BEHALF OF REVENUE. FACTS BEING SIMILAR, SO, FOLLOWING SAM E REASONING, WE ARE NOT INCLINED TO CONCUR WITH THE FINDING OF C IT(A) AND ASSESSING OFFICER IS DIRECTED TO ALLOW ASSESSEES C LAIM ACCORDINGLY. IN VIEW OF ABOVE DISCUSSIONS, ISSUE RE GARDING CONTRIBUTION BY THE MEMBERS AND ALLOWABILITY DEDUCT ION U/S.80P(2)(D) IS ALSO DECIDED IN FAVOUR OF THE ASSE SSEE BECAUSE SAME IS EXEMPT ON PRINCIPLES OF MUTUALITY. 4. THE OTHER ISSUE IS WITH REGARD TO THE CONTRIBUTI ON RECEIVED BY THE SOCIETY FROM A MEMBER ON THE OCCASION OF THE USE OF TDR BY THE MEMBER AND WHICH WAS EXEMPT ON THE PRINC IPLE OF MUTUALITY. THE SIMILAR ISSUE IS DECIDED IN FAVOUR O F THE ITA NO.7203 & 7204/MUM/13 A.Y. 2009-10 & 2010-11 [N UTAN LAXMI CHS LTD. VS. ITO] PAGE 6 ASSESSEE BY THE ORDER OF ITAT A BENCH MUMBAI IN T HE CASE OF LAND END CO-OPERATIVE HOUSING SOCIETY LTD. V/S. ITO MUMBAI IN ITA NO.3566/M/2014 A.Y.2009-10 ORDER DATED 15.01 .2016 WHEREIN THE ISSUE OF NON OCCUPANCY CHARGES FROM THE MEMBERS OF THE SOCIETY HAS HELD AS UNDER. 4.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND FIND THAT THE ASSESSEE RECEIVED NON-OCCUPANCY CHARGES FROM THOSE MEMBERS WHO LET OUT THEIR FLATS. THE CHARGES ARE RECEIVED AT THE PRESCRIBED 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-OPERATIVE SOCIETY LTD. V/S INCOME TAX OFFICER 320 ITR 414 THE HON'BLE HIGH COU RT HELD THAT THE BYE-LAWS THEMSELVES PROVIDED FOR NON- OCCUPATION CHARGES. THE CONTRIBUTION, THEREFORE, WA S BY THE MEMBERS FOR THE PURPOSE OF MUTUAL BENEFIT. T HE OBJECT OF THE CONTRIBUTION WAS THE PURPOSE OF INCREASING THE SOCIETY'S FUNDS, WHICH COULD BE USED FOR FULFILLING THE OBJECTS OF THE SOCIETY. THE OBJE CT OF THE SOCIETY WAS TO PROVIDE SERVICE, AMENITIES AND FACIL ITIES TO ITS MEMBERS. IN THESE CIRCUMSTANCES, THE PRINCIP LE OF MUTUALITY WOULD APPLY AND THEREFORE NON-OCCUPANC Y CHARGES WERE NOT TAXABLE. IN OUR OPINION THE CASE O F THE ASSESSEE CASE IS SQUARELY COVERED BY THE AFORESAID DECISION. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT DELETE TH E ADDITION OF RS.6,04,500/- ON ACCOUNT OF NON-OCCUPANCY CHARGE S. THE AO IS DIRECTED ACCORDINGLY. 4.1. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF THE REVENUE. THIS ISSUE IS ALSO FALLS ON THE SAM E LINES SO FOLLOWING SAME REASONING, WE ARE NOT INCLINED TO CO NCUR WITH THE FINDING OF CIT(A) AND ASSESSING OFFICER IS DIR ECTED TO ALLOW THE SAME AS EXEMPT ON PRINCIPLES OF MUTUALITY. ITA NO.7203 & 7204/MUM/13 A.Y. 2009-10 & 2010-11 [N UTAN LAXMI CHS LTD. VS. ITO] PAGE 7 4.2 SIMILAR ISSUES AROSE IN A.Y. 2010-11. FACTS BE ING SIMILAR, SO, FOLLOWING THE SAME REASONING, THESE IS SUES IN A.Y. 2010-11 ARE ALSO DECIDED IN FAVOUR OF ASSESSEE. 5. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF AUGUST, 2016. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 24/08/2016 TRUE COPY PRABHAT KESARWANI / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. %&%'( ) / CONCERNED CIT 4. )- / CIT (A) 5. -./ 00'(, '(, %& / DR, ITAT, MUMBAI 6. /45 67 / GUARD FILE. BY ORDER / , / %, '(, %&
