M/S METROPOLITAN PREMISES CO-OP SOCIETY LTD ,MUMBAI V. INCOMET TAX OFFICER, WARD 23(2)(1), MUMBAI

ITA 5298/MUM/2024

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The case involves M/s. The Metropolitan Premises Co-op. Society Ltd., which appealed against the order of the Commissioner of Income-tax (Appeals) for the assessment year 2021-22. The primary issue was the denial of deduction under Section 80P(2)(d) of the Income Tax Act concerning interest income received from a cooperative bank, amounting to Rs. 61,53,757. The Income Tax Department had initially disallowed this deduction based on the processing of the return by the Central Processing Centre (CPC), which led to an adjustment in the claimed deduction. The CIT(A) upheld this adjustment, leading to the present appeal before the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 30281 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2021-2022
• Other Referred Cases: CHS Ltd., ITA No. 786/Mum/2019, Amore Commercial Premises Co-Op Society Ltd. Vs. CPC, Bangalore
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KANUPRIYA DAMOR
• Assessee Lawyers: RUPAL SHAH
• Keywords: Principle of natural justice; Procedural lapse
• Section: 143(3); 143(1)

Judgement Text

"0IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER) ITA No. 5298/MUM/2024 Assessment Year: 2021-22 M/s. The Metropolitan Premises Co- op. Society Ltd., C-26/27, Block-E, The Metropolitan Prem. Co. Op. Bandra Kurla Complex, Bandra (East), Mumbai-400051. Vs. ITO, Ward 23(2)(1), Piramal Chamber, Mumbai-400012. PAN NO. AAAAT 8898 E Appellant Respondent Assessee by : Ms. Rupal Shah Revenue by : Ms. Kanupriya Damor, Sr. DR Date of Hearing : 02/01/2025 Date of pronouncement : 23/01/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 14.08.2024 passed by the Ld. Commissioner of Income-tax (Appeals) [in short ‘the Ld. CIT(A)’] for assessment year 2021-22, raising following grounds: 1. The order of the Commissioner of Income hereinafter referred to as the facts and in the law. On the facts and in the circumstances in the present case he ought to allow the appeal on the merits of the case. 2. On facts and circumstances of the case and in law and on the merits of the case, the CIT the deduction u/s 80P(2)(d) in respect of interest income received from Co 61,53,757/ 3. CIT(A) erred in denying the deduction solely based on incorrect filing of the income tax return, despite appellant being legally entitled to the deduction under the provisions of the Income Tax Act, 1961. 4. Your appellant further submits that the denial of the deduction based on a mere procedural lapse contravenes the principles of natural justice and the substantial justice. Courts and appellate authorities have held time and again that tax benefits cannot be denied for technical or minor procedural errors if the taxpayer has fulfilled the substantive conditions required by the law. 2. Briefly stated, facts of the case are that assessee operative premises socie charges, sinking funds, per bye laws of society security charges and general assessee filed original return of income on 31.12.2021 which was further revised on 29.03.2022 declaring total income Rs.13,75,000/-. The return of income filed by the assessee was processed by the Central Processing Centre (CPC), Banguluru and adjustment was proposed for disallowing the deduction claimed u/s 80P(2)(d) of the Income to Rs.61,53,751/-. In response to the intimation proposed assessee submitted that interest income M/s. The Metropolitan Premises Co ITA No. The order of the Commissioner of Income-tax (Appeals), hereinafter referred to as the \"CIT (A)\" is erroneous on the facts and in the law. On the facts and in the circumstances in the present case he ought to allow the appeal on the merits of the case. On facts and circumstances of the case and in law and on the merits of the case, the CIT (A) has erred in not allowing the deduction u/s 80P(2)(d) in respect of interest income received from Co-operative Bank to the tune of Rs. 61,53,757/-. CIT(A) erred in denying the deduction solely based on incorrect filing of the income tax return, despite appellant being legally entitled to the deduction under the provisions of the Income Tax Act, 1961. Your appellant further submits that the denial of the deduction based on a mere procedural lapse contravenes the principles of natural justice and the substantial justice. Courts and appellate authorities have held time and again that tax benefits cannot be denied for technical or minor procedural errors if the taxpayer has fulfilled the substantive conditions required by the law. stated, facts of the case are that assessee operative premises society, is engaged in collection of sinking funds, and repair funds etc. from its members of society for various expenses such as housekeeping, ity charges and general upkeep of the society premises. The assessee filed original return of income on 31.12.2021 which was further revised on 29.03.2022 declaring total income . The return of income filed by the assessee was the Central Processing Centre (CPC), Banguluru and adjustment was proposed for disallowing the deduction claimed u/s 80P(2)(d) of the Income-tax Act, 1961 (in short ‘the Act’) amounting . In response to the intimation proposed ee submitted that interest income was earned from M/s. The Metropolitan Premises Co-op. Society Ltd. 2 ITA No. 5298/MUM/2024 tax (Appeals), \"CIT (A)\" is erroneous on the facts and in the law. On the facts and in the circumstances in the present case he ought to allow the appeal on the On facts and circumstances of the case and in law and on (A) has erred in not allowing the deduction u/s 80P(2)(d) in respect of interest income operative Bank to the tune of Rs. CIT(A) erred in denying the deduction solely based on incorrect filing of the income tax return, despite the appellant being legally entitled to the deduction under the Your appellant further submits that the denial of the deduction based on a mere procedural lapse contravenes the principles of natural justice and the doctrine of substantial justice. Courts and appellate authorities have held time and again that tax benefits cannot be denied for technical or minor procedural errors if the taxpayer has fulfilled the substantive conditions required by the law. stated, facts of the case are that assessee, a co- ty, is engaged in collection of maintenance from its members as for various expenses such as housekeeping, of the society premises. The assessee filed original return of income on 31.12.2021 which was further revised on 29.03.2022 declaring total income at . The return of income filed by the assessee was the Central Processing Centre (CPC), Banguluru and adjustment was proposed for disallowing the deduction claimed u/s tax Act, 1961 (in short ‘the Act’) amounting . In response to the intimation proposed, the earned from deposit made with the co-operative bank income earned from the co deduction u/s 80P(2)(d) of the Act relying on the decision of the Co ordinate Bench of the Tribunal in the case of CHS Ltd., ITA No. 786/Mum/2019. order passed u/s 143(1) of the Act dated 03.11.2022, the claim of the assessee was rejected and adjustment of Rs.61,53,751/ made. 3. On further appeal, the Ld. CIT(A) upheld the adjustment observing as under: “4.1.5 The above case laws have been gone through resp On perusal of each order, it is noticed that all the case laws deal with the issue raised in the assessment proceedings undertaken u/s. 143(3) of the Act except one case viz. Amore Commercial Premises Co-Op Society Ltd. Vs. CPC, Bangalore mention No. 2 of above case laws. Therefore, all the case laws except Amore Commercial Premises Co inapplicable to the instant case as the appellant has filed instant appea against intimation passed u/s.143(1) and not or 143(3) of the Act. Therefore, the only case remains to be dealt with is of Amore Commercial Premises Co with the impugned issue raised u/s. 143(1) of the Act. The aforesaid case law has been perused. It is noticed that to the order dtd. 17 matter in respect of availability of deduction u/s. 80P(2)(d) regarding income from investment of surplus funds in other co operative bank. For the ease of reference and better screenshot of relevant portion of the aforementioned order is reproduced hereunder: 4. Aggrieved, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. M/s. The Metropolitan Premises Co ITA No. operative bank, which is deemed to be interest income earned from the co-operative societies and eligible for deduction u/s 80P(2)(d) of the Act relying on the decision of the Co dinate Bench of the Tribunal in the case of ITO v. Oberoi Spring CHS Ltd., ITA No. 786/Mum/2019. However, in the intimation u/s 143(1) of the Act dated 03.11.2022, the claim of the assessee was rejected and adjustment of Rs.61,53,751/ On further appeal, the Ld. CIT(A) upheld the adjustment 4.1.5 The above case laws have been gone through resp On perusal of each order, it is noticed that all the case laws deal with the issue raised in the assessment proceedings undertaken u/s. 143(3) of the Act except one case viz. Amore Commercial Op Society Ltd. Vs. CPC, Bangalore mention No. 2 of above case laws. Therefore, all the case laws except Amore Commercial Premises Co-Op Society Ltd. are considered as inapplicable to the instant case as the appellant has filed instant appea against intimation passed u/s.143(1) and not or 143(3) of the Act. Therefore, the only case remains to be dealt with is of Amore Commercial Premises Co-Op Society Ltd which deals with the impugned issue raised u/s. 143(1) of the Act. The aforesaid case law has been perused. It is noticed that to the order dtd. 17-1-2023, the Hon'ble ITAT has adjudicated the matter in respect of availability of deduction u/s. 80P(2)(d) regarding income from investment of surplus funds in other co operative bank. For the ease of reference and better screenshot of relevant portion of the aforementioned order is reproduced hereunder:” Aggrieved, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. M/s. The Metropolitan Premises Co-op. Society Ltd. 3 ITA No. 5298/MUM/2024 deemed to be interest operative societies and eligible for deduction u/s 80P(2)(d) of the Act relying on the decision of the Co- ITO v. Oberoi Spring However, in the intimation u/s 143(1) of the Act dated 03.11.2022, the claim of the assessee was rejected and adjustment of Rs.61,53,751/- was On further appeal, the Ld. CIT(A) upheld the adjustment 4.1.5 The above case laws have been gone through respectfully. On perusal of each order, it is noticed that all the case laws deal with the issue raised in the assessment proceedings undertaken u/s. 143(3) of the Act except one case viz. Amore Commercial Op Society Ltd. Vs. CPC, Bangalore mentioned at Sr. No. 2 of above case laws. Therefore, all the case laws except Op Society Ltd. are considered as inapplicable to the instant case as the appellant has filed instant appea against intimation passed u/s.143(1) and not order passed 143(3) of the Act. Therefore, the only case remains to be dealt with Op Society Ltd which deals with the impugned issue raised u/s. 143(1) of the Act. The aforesaid case law has been perused. It is noticed that vide para 9 2023, the Hon'ble ITAT has adjudicated the matter in respect of availability of deduction u/s. 80P(2)(d) regarding income from investment of surplus funds in other co- operative bank. For the ease of reference and better clarity, the screenshot of relevant portion of the aforementioned order is Aggrieved, the assessee is in appeal before the Tribunal raising 5. We have heard the rival submissions of both parties a perused the material placed on record. The matter pertains to the adjustment proposed by the Central Processing Centre (CPC) under Section 143(1)(a) of the Act income filed by the assessee, observed discrepancies reporting of interest and dividend income. Specifically, the CPC noted that no income was offered under Serial Nos. 14(iii) and 14(iv) of the profit and loss account, while the gross total income of ₹75,28,657/- was reflected under Serial No. xiii Based on its analysis, the CPC concluded that the gross total income did not include interest or dividend income and, therefore, disallowed the deduction claimed under Section 80P(2)(d) of the Act in its intimation order under Section 143 contended that the disallowance arose due to an inadvertent mistake in presenting the interest and dividend income in its return of income. It was argued CPC failed to consider the factual posi assessee to claim a legitimate deduction. We have carefully examined the matter and are of the opinion that the claim of the assessee cannot be summarily rejected merely due to incorrect reporting of interest and dividend income The intent and substance of the claim, as well as the supporting evidence, need to be examined in detail. It is well settled that procedural errors in reporting should not override the substantive M/s. The Metropolitan Premises Co ITA No. We have heard the rival submissions of both parties a perused the material placed on record. The matter pertains to the adjustment proposed by the Central Processing Centre (CPC) under Section 143(1)(a) of the Act. The CPC, while processing the return of income filed by the assessee, observed discrepancies reporting of interest and dividend income. Specifically, the CPC noted that no income was offered under Serial Nos. 14(iii) and 14(iv) of the profit and loss account, while the gross total income of was reflected under Serial No. xiii of Schedule DFLA. Based on its analysis, the CPC concluded that the gross total income did not include interest or dividend income and, therefore, disallowed the deduction claimed under Section 80P(2)(d) of the Act in its intimation order under Section 143(1)(a). The assessee contended that the disallowance arose due to an inadvertent mistake in presenting the interest and dividend income in its return of income. It was argued before us that the adjustment made by the CPC failed to consider the factual position and the intent of the assessee to claim a legitimate deduction. We have carefully examined the matter and are of the opinion that the claim of the assessee cannot be summarily rejected merely due to incorrect reporting of interest and dividend income in the return of income. The intent and substance of the claim, as well as the supporting evidence, need to be examined in detail. It is well settled that procedural errors in reporting should not override the substantive M/s. The Metropolitan Premises Co-op. Society Ltd. 4 ITA No. 5298/MUM/2024 We have heard the rival submissions of both parties and perused the material placed on record. The matter pertains to the adjustment proposed by the Central Processing Centre (CPC) under The CPC, while processing the return of income filed by the assessee, observed discrepancies in the reporting of interest and dividend income. Specifically, the CPC noted that no income was offered under Serial Nos. 14(iii) and 14(iv) of the profit and loss account, while the gross total income of of Schedule DFLA. Based on its analysis, the CPC concluded that the gross total income did not include interest or dividend income and, therefore, disallowed the deduction claimed under Section 80P(2)(d) of the Act (1)(a). The assessee contended that the disallowance arose due to an inadvertent mistake in presenting the interest and dividend income in its return that the adjustment made by the tion and the intent of the assessee to claim a legitimate deduction. We have carefully examined the matter and are of the opinion that the claim of the assessee cannot be summarily rejected merely due to incorrect in the return of income. The intent and substance of the claim, as well as the supporting evidence, need to be examined in detail. It is well settled that procedural errors in reporting should not override the substantive rights of the taxpayer. The princi the claim of the assessee be duly considered by the Assessing Officer (AO) after providing a reasonable opportunity to the assessee to clarify and substantiate its claim. In view of the above, we restore the matter to the file of the AO for fresh adjudication. The AO is directed to: (i) Examine the claim of interest and dividend income in detail, ensuring that all relevant evidence and explanations provided by the assessee are taken into account. (ii) Examine the eligibility of th 80P(2)(d) of the Act in accordance with the law. 5.1 The AO is accordingly earned from cooperative banks after duly considering the provisions of the Act and judicial precedents, if assessee are allowed for statistical purposes. 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on Sd/- (RAJ KUMAR CHAUHAN JUDICIAL MEMBER Mumbai; Dated: 23/01/2025 Rahul Sharma, Sr. P.S. M/s. The Metropolitan Premises Co ITA No. rights of the taxpayer. The principle of natural justice demands that the claim of the assessee be duly considered by the Assessing Officer (AO) after providing a reasonable opportunity to the assessee to clarify and substantiate its claim. In view of the above, we restore e file of the AO for fresh adjudication. The AO is Examine the claim of interest and dividend income in detail, ensuring that all relevant evidence and explanations provided by the assessee are taken into account. the eligibility of the deduction claimed under Section 80P(2)(d) of the Act in accordance with the law. accordingly directed to decide the issue of interest earned from cooperative banks after duly considering the provisions of the Act and judicial precedents, if any. The grounds raised by the assessee are allowed for statistical purposes. In the result, the appeal of the assessee is allowed for nounced in the open Court on 23/01/2025. Sd/ (RAJ KUMAR CHAUHAN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER M/s. The Metropolitan Premises Co-op. Society Ltd. 5 ITA No. 5298/MUM/2024 ple of natural justice demands that the claim of the assessee be duly considered by the Assessing Officer (AO) after providing a reasonable opportunity to the assessee to clarify and substantiate its claim. In view of the above, we restore e file of the AO for fresh adjudication. The AO is Examine the claim of interest and dividend income in detail, ensuring that all relevant evidence and explanations provided e deduction claimed under Section 80P(2)(d) of the Act in accordance with the law. directed to decide the issue of interest earned from cooperative banks after duly considering the provisions The grounds raised by the In the result, the appeal of the assessee is allowed for /01/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// M/s. The Metropolitan Premises Co ITA No. Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai M/s. The Metropolitan Premises Co-op. Society Ltd. 6 ITA No. 5298/MUM/2024 BY ORDER, (Assistant Registrar) ITAT, Mumbai "