SAFAL TWINS CO OPERATIVE HOUSING SOCIETY LIMITED,MUMBAI V. ITO WARD 27(3)(2), MUMBAI

ITA 6881/MUM/2024

AI Insights

The case involves Safal Twins Cooperative Housing Society Ltd. appealing against the decisions of the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)], which denied them deductions under section 80P(2)(d) of the Income Tax Act for interest income from cooperative banks and other sources. The Tribunal examined the applicability of section 80P(2)(d) to interest income from cooperative banks, referencing the Supreme Court's decision in Totgar's Cooperative Sale Society and various other Tribunal decisions. The Tribunal found that the interest income from cooperative banks should be exempt under section 80P(2)(d), contrary to the lower authorities' decisions. Additionally, the Tribunal addressed other grounds related to the taxation of interest from sinking fund deposits and members, remitting these issues back to the CIT(A) for further consideration.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471278 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Other Referred Cases: Totgar's Cooperative Sale Society vs. ITO, Kaliandas Udyog Bhavan Premises Society Ltd. vs. ITO, Palm Court Premises Cooperative Society Ltd. vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL GUPTA
• Assessee Lawyers: GIRIDHAR DHELIA
• Keywords: Set aside; Additional evidence
• Section: 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “SMC” Bench, Mumbai. Before Shri Pawan Singh (JM) & Shri Omkareshwar Chidara (AM) ITA No. 6881/MUM/2024 (Assessment Year : 2014-15) Safal Twins Cooperative Housing Society Ltd. CTS No. 396, 396/1, 397 397/Safal Twins Saras Baug ST Road, Deonar Mumbai-400 088. Vs. ITO Ward-27(3)(2) Tower No. 6, Vashi Station Complex Vashi, Navi Mumbai-400 703. PAN : AAEAS0103R Appellant Respondent Assessee by : Shri Giridhar Dhelia (Virtually) Revenue by : Shri Anil Gupta Date of Hearing : 27/02/2025 Date of pronouncement : 18/03/2025 ORDER U/S. 254(1) OF THE I.T. ACT Per Omkareshwar Chidara (AM) :- The following grounds of appeal are raised before the ITAT by the appellant :- 1) For that the Ld. Assessing Officer (hereinafter referred to as \"Ld. AO\") erred in disallowing deduction u/s 80P(2)(d) of the Act of Rs. 14,10,932/-. 2) For that the Ld. AO erred in holding that interest received from other co-operative societies which are also co-operative banks are not eligible for deduction u/s 80P(2)(d). 3) For that the Ld. AO erred in taxing the interest received / credited of Rs. 1,82,887/- on sinking fund deposits, despite the fact that the same were never credited to the income and expenditure account and the same was required to be created as per the statutory provisions of the co- operative law. 4) For that the Ld. AO erred in adding interest received from members of Rs. 2,96,101/-ignoring the fact that the same were exempt based on mutuality. 5) For that the Ld. CIT (Appeals) erred in confirming the addition made by Ld. AO due to non-response without considering the submission in support of the assessee already available on record. Hence order so passed Safal Twins Cooperative Housing Society Ltd. 2 dismissing the appeal of the Appellant is bad in law hence such order be set aside. 6) For that the learned CIT (Appeals) erred in confirming the interest u/s 234A and 234B of the Act, the same was unjustified and hence the same be deleted. 7) The appellant craves leave to produce additional evidences in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules 1963. v_ 8) That the appellant company craves leave to adduce additional grounds and/or amend or withdraw any of the aforesaid grounds before, or at the time of hearing of appeal. 2. From the assessment order and the order of Ld. CIT(A), it is observed that they held the appellant society is not entitled for deduction under section 90P(2)(d) of the I.T. Act, on the interest income earned from the cooperative banks. Reliance was placed by them on the decision of Hon'ble Supreme Court in the case of Totgar’s Cooperative Sale Society 322 ITR 283 (SC), where it was held that income from utilisation of surplus funds was taxable under the head ‘income from other sources’ and hence not eligible for deduction under section 80P(2)(d) of the Act. 3. During the appellate proceedings before the Bench, the Ld. AR of the appellant filed a paper book containing the several decisions rendered by various Tribunals on this issue, viz., Kaliandas Udyog Bhavan Premises Society Ltd. (94 taxmann.com 15)(Mum), Palm Court Premises Cooperative Society Ltd. (145 taxmann.com 415)(Mum) and decisions of Pune, Chennai and Bangalore Tribunals on this issue where the Tribunals have held that interest income received from the Cooperative Banks are exempt from 80P(2)(d) of the Act. 4. The Ld. DR relied on the orders of Ld. AO and Ld. CIT(A). 5. After hearing both parties, it is decided that the appellant society is entitled for deduction under section 80P(2)(d) of the Act on the interest income earned from the cooperative banks in view of the decisions rendered by the Coordinate Benches (supra). In these decisions, the coordinate Safal Twins Cooperative Housing Society Ltd. 3 Benches have considered and distinguished the decision of Hon'ble Supreme Court in the case of Totgar’s Cooperative Sale Society (supra) and held that the cooperative societies are entitled for deduction as above. Respectfully following the decisions, it is held that the appellant society is entitled for deduction under section 80P(2)(d) of the Act on the interest income earned from the cooperative banks. 6. As far as the grounds of appeal raised by the appellant in serial No. 2 and 3 are concerned, viz., interest received from sinking fund deposits of Rs. 1,82,887/- and interest received from members of Rs. 2,96,101/- the same are not borne out of the order of Ld. AO and Ld. CIT(A) has not adjudicated these issues despite the same were raised before Ld. CIT(A). In fact, the Ld. AO made an addition of Rs. 76,881/- towards miscellaneous charges received by the appellant as there was no explanation from them. (para 4.1 of assessment order). The Ld. CIT(A) has confirmed this addition of Rs. 76,881/- as there is no nexus with the business activity of appellant society and hence not entitled for deduction u/s. 80P(2)(d) of the Act. (para 5.3 of the order of Ld. CIT(A). 7. The appellant has raised an additional ground of appeal stating that on the basis of principle of mutuality, the contribution received from members towards “miscellaneous charges” are not taxable. 8. Since the facts are not clear from the orders of lower authorities/not adjudicated by Ld. CIT(A), on these grounds raised by the appellant in serial No. 3&4, the same are remitted to the file of Ld. CIT(A) for adjudication after giving an effective opportunity to the appellant. 9. Thus, as far as the interest received from the cooperative banks, the appellant is entitled for deduction under section 80P(2)(d) of the Act and other issues are remitted to the file of Ld. CIT(A). Safal Twins Cooperative Housing Society Ltd. 4 10. Appeal of the appellant is partly allowed as above. Order pronounced in the open Court on 18/03/2025. Sd/- Sd/- (PAWAN SINGH) (OMKARESHWAR CHIDARA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: /03/2025 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai PS "