ITO WARD-41(3)(1), MUMBAI V. BHOOMI CLASSIC CO-OP HSG.SOC.LTD., MUMBAI

MA 63/MUM/2024

AI Insights

The case revolves around a miscellaneous application filed by the revenue seeking rectification of an earlier Tribunal order concerning the eligibility of cooperative societies to claim deductions under section 80P(2)(d) of the Income Tax Act. The revenue contended that the Tribunal had incorrectly relied on a decision in a similar case, which was based on different legal questions than those addressed in the cited cases. The assessee defended the Tribunal's original decision, citing consistent favorable rulings in similar cases and arguing that the revenue's application was essentially a request for a review, which is not permissible under section 254(2). The Tribunal, after considering the submissions and precedents, dismissed the revenue's application, emphasizing the principle that the construction of a taxing provision which favors the assessee should be adopted when reasonable constructions are possible.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 652787 (ITAT-MUMBAI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-06-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: Amore Commercial Premises Co-op Society Ltd. Vs CPC, PCIT vs Totagars Cooperative Sale Society, Surat Vankar Sahakari Sangh Ltd. vs ACIT, CIT vs Reliance Telecom Ltd, Vegetable Products vs ITR
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN SALUNKHE
• Assessee Lawyers: NEELAM JADHAV
• Keywords: Question of law

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER MA No. 63/MUM/2024 (AY : 2017-18) (Arising out of ITA No. 981/Mum/2023) (Physical hearing) ITO, Ward – 41(3)(1), Room No. 753, 7th Floor, Kautilya Bhawan, Bandra Kurla Complex, Bandra (East) Mumbai-400051 Vs Bhoomi Classic Co-op HSG. Soc. Ltd. CTS No. 1406, Link Road, Opp. Sabkuch Market, Malad (W), Mumbai-400064. PAN: [AAAAB4452G] Appellant / Revenue Respondent / Assessee Assessee by Ms. Neelam Jadhav, Advocate Revenue by Shri Pravin Salunkhe, Sr. DR Date of hearing 20.06.2025 Date of pronouncement 20.06.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER; 1. This miscellaneous application is filed by revenue for seeking rectification in the order dated 14.06.2023 passed in ITA No. No. 981/M/2023 for assessment year (AY) 2017-18. The learned senior departmental representative (ld. Sr. DR) for the revenue submits that Tribunal while deciding the appeal wrongly relied on the decision in Amore Commercial Premises Co-op Society Ltd. Vs CPC in ITA No. No. 2873 & 2874/Mum/2022 dated 17.01.2023 since two Totagars Cooperative Society cases have been decided on different question of law. The question before Karnataka High Court in PCIT vs Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karnataka) was whether for purpose of section 80P(2)(d) a cooperative bank should be considered as cooperatives society and the court answered in affirmative. Another case in PCIT Vs Totagars Cooperative Sale Society MA No. 63/Mum/2024 Bhoomi Classic Co-op HSG. SOC. Ltd. 2 (2017) 395 ITR 611 (Karnataka), the High Court held that a cooperative society would not be entitled to claim a deduction under section 80P(2)(d) when interest income is not arising from business operations of assessee. The Tribunal wrongly relied on the basis of Amore Commercial Premises Co- operative Society Ltd. vs CPC (supra), wherein is wrongly relied in view of the clear finding/ratio Karnataka High Court in Totagars Cooperative Sale Society 395 ITR 611. Thus, there is mistake in the order which is apparent and the order may be recalled for deciding it afresh. 2. On the other hand, the learned Authorised Representative (ld. AR) of the assessee supported the order of Tribunal. The ld. AR of the assessee submits that in assessee’s own case similar relief was allowed by Tribunal in appeal for AY 2013-14, in ITA No. 1845/M/2018 dated 14.08.2018 wherein neither the revenue has filed any miscellaneous application nor challenged such order before High Court, copy of such decision was filed at the time of hearing of this appeal. Even otherwise, in a series of decision by Tribunal, it has been consistently held that cooperative banks are primarily cooperative society and interest earned from cooperative bank is eligible for deduction under section 80_(2)(d). There is a favourable decision of Gujarat High Court in Surat Vankar Sahakari Sangh Ltd. vs ACIT 76 taxmann.com 169 (Guj) 421 ITR 134 (Guj), wherein similar view was taken that cooperative societies are eligible for deduction on account of interest earned from cooperative bank. 3. In other alternative submission, the ld. AR submits that revenue is seeking review of the order which is not permissible under the scope of application under section 254(2) of Income Tax Act. The power of Tribunal under section MA No. 63/Mum/2024 Bhoomi Classic Co-op HSG. SOC. Ltd. 3 254(2) is only to rectify or correct any mistake apparent from the record as has been held by Hon’ble Supreme Court in CIT vs Reliance Telecom Ltd. (2021) 133 taxmann.com 41 (SC). The revenue in the present appeal is seeking for complete recall of the order which is beyond the scope of application under section 254(2). 4. I have considered the rival submissions of both the parties and perused the order of my predecessor dated 14.06.2023 passed in ITA No. 981/M/2023. I find that my predecessor while deciding the appeal after recorded the facts of the case, grounds of appeal raised and submission of the parties and adjudicated the appeal by following the decision of co-ordinate bench in Amore Commercial Premises Cooperative Society (supra). Admittedly, no appeal is filed by revenue against the order passed by my predecessor. In the present application, the applicant / revenue is seeking recall of the order which is beyond the scope of application under section 254(2) as has been held by Hon’ble Apex Court in CIT vs Reliance Telecom Ltd. Even otherwise on fact as well as I find that my predecessor has taken a consistent view on the basis of decision of Mumbai Tribunal on similar issue. Further otherwise, the grounds of appeal raised by assessee is covered in favour of the assessee by a series of decisions of Tribunal, wherein it has been consistently held by various Tribunal as well as Higher Courts that for the purpose of deduction under section 80P(2)(d) cooperative banks are cooperative society. 5. I further find that it is a settled legal proposition in taxation law that when there are decisions of different High Court, the ratio favourable to the assessee may be adopted as has been held by Hon’ble Apex court in MA No. 63/Mum/2024 Bhoomi Classic Co-op HSG. SOC. Ltd. 4 Vegetable Products (1973) 88 ITR 192-SC that if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. 6. In the result, the appeal of revenueis dismissed. Order pronounced in the open Court on 20/06/2025 at the time of hearing. Sd/- PAWAN SINGH JUDICIAL MEMBER MUMBAI, Dated:20/06/2025 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai "