PALM COURT M PREMISES CO OPERATIVE SOCIETY LIMITED ,MUMBAI V. ITO WARD 30(2)(5), MUMBAI

ITA 6115/MUM/2024

AI Insights

The case involves Palm Court M Premises Co Operative Society Ltd., which appealed against the order of the Commissioner of Income-tax (Appeals) regarding the denial of deduction under section 80P(2)(d) for the assessment year 2017-18. The society argued that it was entitled to deductions for interest income earned from fixed deposits with banks, including co-operative banks. The Assessing Officer initially disallowed the deduction, leading to an appeal. The CIT(A) upheld the disallowance, referencing a Supreme Court decision. However, the Tribunal found procedural lapses in the CIT(A)'s handling of additional evidence and restored the matter to the Assessing Officer for a detailed examination of the sources of interest income and its classification.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 24070 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2017-2018
• Other Referred Cases: Totgars Co-op. Society Ltd. [2010] 188 Taxman 282 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAVIN SALUNKHE
• Assessee Lawyers: SUNIL RAMANI
• Keywords: Business income; Additional evidence; Revision of order
• Section: 263

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H (SMC)” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) ITA No. 6115/MUM/2024 Assessment Year: 2017-18 Palm Court M Premises Co Operative Society Ltd., Ground Floor, Palm Court Co-op. HSG, Link Road, Malad (West), Mumbai-400064. Vs. ITO Ward 30(2)(5), Room No. 519, 5th floor, Kautilya Bhavan, C-41 to C-43, G Block Bandra Kurla Complex, Bandra (East), Mumbai-400051. PAN NO. AAAAP 8738 K Appellant Respondent Assessee by : Mr. Sunil Ramani, Adv. Revenue by : Mr. Pravin Salunkhe, Sr. DR Date of Hearing : 13/01/2025 Date of pronouncement : 21/01/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 06.11.2024 passed by the Ld. Commissioner of Income-tax (Appeals) [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds: 1. On the facts and circumstances of the case and in law, the order passed by the Ld. Addl/JCIT (A) is bad in law. 2. On the facts and circumstances of the case and in law, the Ld. Commissioner of Income accepting the contention of the appellant that it is entitled to deduction u/s 80P(2)(d) of the Income Co-operative Society and as per law the same is available as a deduction. 2. Briefly stated facts of the case are that the assessee is a co operative housing society providing various services The assessee is having income by way of subscription service charges etc. from its members deposits maintained with various banks. For the year under consideration, the assessee filed return of income on 28. declaring total income at Rs.10,91,950/ u/s 80P(2)(d) of the Act amounting to Rs.18,52,375/ income filed by the assessee was selected for scrutiny and statutory notices under the Act were issued and served The assessee was specifically asked to justify deduction claimed u/s 80P(2)(d) of the Act. Despite providing more than three opportunities from August, 2018 to November, 2019 compliance on the part of the assessee. The Ass that the interest income was earned from fixed deposits with Axis Bank and therefore it the Act. Accordingly he made addition in the assessment order passed on 03.12.2019. Palm Court M Premises Co Operative On the facts and circumstances of the case and in law, the order passed by the Ld. Commissioner of Income-tax, Appeal Addl/JCIT (A) is bad in law. On the facts and circumstances of the case and in law, the Ld. Commissioner of Income-tax, Appeal Addl/JCIT (A) erred in not accepting the contention of the appellant that it is entitled to duction u/s 80P(2)(d) of the Income-tax Act, 1961, as it is a operative Society and as per law the same is available as a deduction. Briefly stated facts of the case are that the assessee is a co operative housing society providing various services The assessee is having income by way of subscription service charges etc. from its members and interest on saving and fixed deposits maintained with various banks. For the year under consideration, the assessee filed return of income on 28. declaring total income at Rs.10,91,950/- after claiming deduction u/s 80P(2)(d) of the Act amounting to Rs.18,52,375/ income filed by the assessee was selected for scrutiny and statutory notices under the Act were issued and served upon the assessee. The assessee was specifically asked to justify deduction claimed u/s 80P(2)(d) of the Act. Despite providing more than three opportunities from August, 2018 to November, 2019 compliance on the part of the assessee. The Assessing Officer noted that the interest income was earned from fixed deposits with Axis therefore it was not entitled for deduction u/s 80P(2)(d) of the Act. Accordingly he made addition in the assessment order passed on 03.12.2019. Palm Court M Premises Co Operative Society Ltd. 2 ITA No. 6115/MUM/2024 On the facts and circumstances of the case and in law, the tax, Appeal On the facts and circumstances of the case and in law, the Ld. tax, Appeal Addl/JCIT (A) erred in not accepting the contention of the appellant that it is entitled to tax Act, 1961, as it is a operative Society and as per law the same is available as a Briefly stated facts of the case are that the assessee is a co- operative housing society providing various services to its members. The assessee is having income by way of subscription service interest on saving and fixed deposits maintained with various banks. For the year under consideration, the assessee filed return of income on 28.10.2017 after claiming deduction u/s 80P(2)(d) of the Act amounting to Rs.18,52,375/-. The return of income filed by the assessee was selected for scrutiny and statutory upon the assessee. The assessee was specifically asked to justify deduction claimed u/s 80P(2)(d) of the Act. Despite providing more than three opportunities from August, 2018 to November, 2019 , there was no essing Officer noted that the interest income was earned from fixed deposits with Axis deduction u/s 80P(2)(d) of the Act. Accordingly he made addition in the assessment order 3. On further appeal, the assessee filed break earned from co-operative bank as well as non before the Ld. CIT(A). The Ld. CIT(A) after verification, following the decision of the Hon’ble Supreme Court in the case of Totgars Co Sale Society Ltd. [2010] 188 Taxman 282 (SC) rejected the claim of the deduction of the assessee. Aggrieved the assessee is in appeal before the Income-tax Appellate Tribunal (in short ‘the Tribunal’) raising the grounds as reproduced above. 4. We have heard ri the relevant material on record. assessee relied on the decision of the Co Tribunal in the assessee’s own case for assessment year 2015 wherein the Tribunal de passed by the PCIT deduction u/s 80P(2)(d) of the Act from the interest earned from investment made with the co before the Assessing Officer no detail in respect of banks from whom interest was earned of the view that interest was earned from the Axis Bank which be not a co-operative society, h u/s 80P(2)(d) of the Act. But before the Ld. CIT(A), the assessee has provided a chart of the interest earned from co co-operative banks. But the Ld. CIT(A) did not follow the procedure provided under Rule 46A of the Income Palm Court M Premises Co Operative appeal, the assessee filed break operative bank as well as non-co- before the Ld. CIT(A). The Ld. CIT(A) after verification, following the decision of the Hon’ble Supreme Court in the case of Totgars Co Society Ltd. [2010] 188 Taxman 282 (SC) rejected the claim of the deduction of the assessee. Aggrieved the assessee is in appeal tax Appellate Tribunal (in short ‘the Tribunal’) raising the grounds as reproduced above. We have heard rival submissions of the parties and perused the relevant material on record. Before us, the Ld. counsel for the assessee relied on the decision of the Co-ordinate Bench of the Tribunal in the assessee’s own case for assessment year 2015 Tribunal decided the issue of revision order u/s 263 passed by the PCIT and observed that assessee was entitled deduction u/s 80P(2)(d) of the Act from the interest earned from investment made with the co-operative societies. In the instant case the Assessing Officer no detail in respect of banks from interest was earned, was provided. The Assessing Officer was of the view that interest was earned from the Axis Bank which be operative society, he disallowed the deduction of the c u/s 80P(2)(d) of the Act. But before the Ld. CIT(A), the assessee has provided a chart of the interest earned from co-operatives and non operative banks. But the Ld. CIT(A) did not follow the procedure provided under Rule 46A of the Income-tax Rule Palm Court M Premises Co Operative Society Ltd. 3 ITA No. 6115/MUM/2024 appeal, the assessee filed break-up of interest -operative bank before the Ld. CIT(A). The Ld. CIT(A) after verification, following the decision of the Hon’ble Supreme Court in the case of Totgars Co-op. Society Ltd. [2010] 188 Taxman 282 (SC) rejected the claim of the deduction of the assessee. Aggrieved the assessee is in appeal tax Appellate Tribunal (in short ‘the Tribunal’) val submissions of the parties and perused Before us, the Ld. counsel for the ordinate Bench of the Tribunal in the assessee’s own case for assessment year 2015-16 issue of revision order u/s 263 observed that assessee was entitled for deduction u/s 80P(2)(d) of the Act from the interest earned from operative societies. In the instant case the Assessing Officer no detail in respect of banks from he Assessing Officer was of the view that interest was earned from the Axis Bank which being e disallowed the deduction of the claim u/s 80P(2)(d) of the Act. But before the Ld. CIT(A), the assessee has operatives and non- operative banks. But the Ld. CIT(A) did not follow the procedure tax Rules, 1962 for admitting the documentary evidence as additional evidence. Further, the Ld. counsel for the assessee asked to provide computation of the income to substantiate whether the interest income earned by the assessee is declared as ‘income from other sources available with the Ld. counsel for the assessee inability in submitting and in the interest of substantial justice restore this issue back to the file of the Assessing Officer for deciding on following issues (i) the Assessing Officer to verify the quantum of the interest earned from co operative bank carrying out business or ba of the Banking Regulation Act, (ii) the Assessing Officer to verify whether the interest income shown by the assessee has been shown as ‘business income’ income filed for the above, the Assessing Officer accordance with law. 4.1 Accordingly, the grounds of the appeal of the assessee are allowed for statistical purposes. Palm Court M Premises Co Operative admitting the documentary evidence as additional evidence. Further, the Ld. counsel for the assessee asked to provide computation of the income to substantiate whether the interest income earned by the assessee is declared as ‘business income income from other sources’. The said information available with the Ld. counsel for the assessee inability in submitting. In view of the above facts and circumstances and in the interest of substantial justice, we feel it restore this issue back to the file of the Assessing Officer for deciding on following issues (i) the Assessing Officer to verify the quantum of the interest earned from co-operative societies or co operative bank carrying out business or banking as defined u/s 5(6) Banking Regulation Act, (ii) the Assessing Officer to verify whether the interest income shown by the assessee has been shown or ‘income from other sources’ income filed for the year under consideration. After above, the Assessing Officer is directed to decide the issue in accordance with law. Accordingly, the grounds of the appeal of the assessee are allowed for statistical purposes. Palm Court M Premises Co Operative Society Ltd. 4 ITA No. 6115/MUM/2024 admitting the documentary evidence as additional evidence. Further, the Ld. counsel for the assessee asked to provide computation of the income to substantiate whether the interest business income’ or ’. The said information was not readily and expressed . In view of the above facts and circumstances , we feel it appropriate to restore this issue back to the file of the Assessing Officer for deciding on following issues (i) the Assessing Officer to verify the operative societies or co- nking as defined u/s 5(6) Banking Regulation Act, (ii) the Assessing Officer to verify whether the interest income shown by the assessee has been shown in the return of der consideration. After verifying the is directed to decide the issue in Accordingly, the grounds of the appeal of the assessee are 5. In the result, the appeal of statistical purposes. Order pronounced in the open Court on 21 Sd/ (RAHUL CHAUDHARY JUDICIAL MEMBER Mumbai; Dated: 21/01/2025 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Palm Court M Premises Co Operative In the result, the appeal of the assessee is allowed for nounced in the open Court on 21/01/2025. Sd/- Sd/ RAHUL CHAUDHARY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Palm Court M Premises Co Operative Society Ltd. 5 ITA No. 6115/MUM/2024 the assessee is allowed for /01/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai "