REGENCY MEADOWS CO-PERATIVE HOUSING LIMITED,PUNE V. ITO WARD 7(3), PUNE

ITA 1008/PUN/2025

AI Insights

The case involves Regency Meadows Cooperative Housing Society Limited, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2015-16. The primary contention was the treatment of a surplus of Rs. 10,18,128 as business income, which the assessee argued should be exempt under the Principle of Mutuality, as supported by a Supreme Court judgment. Additionally, the assessee contested the denial of a deduction under section 80P(2)(d) for interest income received from other cooperative societies. The Tribunal dismissed the second ground as not pressed and focused on the first ground, which was a legal issue regarding the Principle of Mutuality.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 652933 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Other Referred Cases: ITO Vs. Venkatesh Premises Cooperative Society Ltd. (2018) 91 taxmann.com 137 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DAYANAND JAWALIKAR
• Assessee Lawyers: PRAMOD S. SHINGTE
• Keywords: Business income; Principle of natural justice

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.1008/PUN/2025 Assessment Year : 2015-16 Regency Meadows Cooperative Housing Society Limited, Sr.No.14, Near PMC Water Tank, Dhanori, Pune 411015 Maharashtra PAN : AABAR6545B Vs. Income Tax Officer, Ward-7(3), Pune Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : This appeal filed by the assessee pertaining to the assessment year 2015-16 is directed against the order dated 24.02.2025 of the National Faceless Appeal Centre (NFAC), Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) which inturn is arising out of the Assessment Order dated 30.06.2017 passed u/s.143(3) of the Act. 2. Assessee has raised following grounds of appeal : “1. On the facts and in the circumstances of case and law, lower authorities erred in treating the surplus arising out of income expenditure account, a sum of Rs. 10,18,128 as business income of the assesse society and further erred in not applying the principal of mutuality without appreciating the fact that appellant society is housing co-operative society. 2. On the facts and in the circumstances of case and law, lower authorities have erred in denying the deduction under section 80P (2)(d) for sum of Rs. 5,50,370/- without appreciating the fact that said sum is Assessee by : Shri Pramod S. Shingte Revenue by : Shri Dayanand Jawalikar Date of hearing : 09.06.2025 Date of pronouncement : 16.06.2025 ITA No.1008 /PUN/2025 Regency Meadows Coop. Housing Limited 2 received as an interest from other co-operative societies and appellant society is entitled for the deduction under section 80(P)(2)(d) of the IT Act 1961. Your appellant prays for deletion of entire addition. Your appellant craves for to add, alter amend, modify, delete any or all grounds of appeal before or during the course of hearing in the interest of natural justice.” 3. At the outset, Ld. Counsel for the assessee requested for not pressing Ground No.2 as the necessary relief has already been granted by ld.CIT(A) and this ground has been raised inadvertently. Accordingly, we dismiss this ground as ‘Not pressed’ and also held to be infructuous. 4. Apropos to Ground No.1, ld. Counsel for the assessee submitted that this is a legal issue based on the Principle of Mutuality for giving the benefit of mutuality against the total income of Rs.10,18,128/- earned from the Members of the society. He submitted that apart from the interest income, assessee receives the amount from Members towards Annual Maintenance Charges, Parking fees etc. and the expenditures are incurred for the Members towards Electricity, Security services, Garden maintenance, Lift maintenance, Gymnasium and Club House Expenses etc and therefore in light of judgment of Hon'ble Supreme Court in the case of ITO Vs. Venkatesh Premises Cooperative Society Ltd. (2018) 91 taxmann.com 137 (SC) assessee deserves relief of Rs.10,18,128/- being the income earned from the activity carried out by the assessee for its Members on the Principle of Mutuality. 5. On the other hand, Ld. Departmental Representative submitted that this is the second round of proceedings and stated that this issue has been raised for the first time before this Tribunal. 6. We have heard the rival contentions and perused the record placed before us. We observe that the assessee is a Cooperative ITA No.1008 /PUN/2025 Regency Meadows Coop. Housing Limited 3 Housing Society and declared gross total income of Rs.15,65,984/- in the e-return for A.Y. 2015-16 filed on 10.02.2016 and after claiming deduction u/s.80P of the Act has shown total income of Rs.65,890/-. After the case been selected for Limited Scrutiny under CASS, assessment proceedings were carried out and ld. AO granted relief u/s.80P(2)(c) of the Act at only Rs.50,000/- and assessed the income at Rs.15,18,450/-. Thereafter, assessee preferred appeal before ld.CIT(A) but the only issue raised was against the disallowance of interest income of Rs.5,50,370/- which was claimed to have been earned from deposits with Cooperative Banks/Societies which is eligible for deduction u/s.80P(2)(d) of the Act. Ld. CIT(A) allowed the claim of deduction u/s.80P(2)(d) of the Act. Before us, Ld. Counsel for the assessee has raised a new legal ground on the Principle of Mutuality stating that the gross receipts of the society are from its Members and to the extent of the activity carried out for its Members and having incurred the expenditure for Members thereof, the surplus, if any, need not be taxed in view of Principle of Mutuality and in support placed reliance on the decision of Hon'ble Supreme Court in the case of Venkatesh Premises Cooperative Society Ltd. (supra). 7. It is not in dispute that assessee has raised this ground for the first time. It is also observed that in the Income and Expenditure Account assessee has made a provision of income-tax at Rs.3,25,000/- which shows that the present claim before us regarding the Principle of Mutuality was never in the mind of the assessee. Even in the return of income, deduction has been claimed u/s.80P but then ld. AO has curtailed it to deduction u/s.80P(2)(c) and further ld.CIT(A) gave benefit of deduction u/s.80P(2)(d). Since this is a legal ground raised for the first time and goes to the root cause of the issue and facts already available ITA No.1008 /PUN/2025 Regency Meadows Coop. Housing Limited 4 on record, we admit the legal ground but since ld.CIT(A) had no occasion to deal with this legal issue, the same needs to be examined by ld.CIT(A) in the light of the facts of the case with regard to the receipt from the Members and the expenditure incurred against the same. We therefore restore this legal issue to the file of ld.CIT(A) for necessary adjudication and if required ld.CIT(A) may call for a remand report from the Jurisdictional Assessing Officer. Needless to say that ld.CIT(A) shall afford reasonable opportunity of hearing to the assessee and then decide in accordance with law. Ground No.1 raised by the assessee is allowed for statistical purposes. 8. In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced on this 16th day of June, 2025. Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे / Pune; \u0001दनांक / Dated : 16th June, 2025. Satish आदेश क\u0002 \u0003ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. \u000eयथ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “SMC” ब\u0014च, पुणे / DR, ITAT, “SMC” Bench, Pune. 5. गाड\u0004 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune "