VARDAYINI CO-OPERATIVE HOUSING SOCIETY LIMITED,PUNE V. INCOME TAX OFFICER, WARD-2(2), PUNE, PUNE

ITA 1991/PUN/2024

AI Insights

The case involves the Vardayini Co-operative Housing Society Limited, which appealed against the order of the CIT(A)/NFAC for the assessment year 2020-21. The primary contention was regarding the incorrect assessment of gross total income and the denial of deductions under section 80P of the IT Act. The Assessing Officer had disallowed a deduction of Rs.97,09,055 claimed under section 80P, which included interest income and income covered by the principle of mutuality. The CIT(A) upheld this decision, leading to the appeal before the Income Tax Appellate Tribunal. The Tribunal found merit in the assessee's arguments regarding the principle of mutuality and the specific deduction under section 80P(2)(d), but also noted the procedural issue of the late filing of the return, which could affect the eligibility for deductions under section 80P.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 397102 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2020-2021
• Other Referred Cases: ITO vs. Venkatesh Premises Co-operative Society Ltd. (2018) 91 taxmann.com 137 (SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND DESAI
• Assessee Lawyers: PRAMOD S. SHINGTE
• Keywords: Condonation of delay; Opportunity of being heard; Principle of natural justice
• Section: 144; 142(1); 139; 119(2)(b)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1991/PUN/2024 िनधाᭅरण वषᭅ / Assessment Year : 2020-21 Vardayini Co-operative Housing Society Limited, Plot No.96, Vardayini Sangruh Marva, Pashan Sus Road, Pune- 411021. PAN : AABAV3603Q Vs. ITO, Ward-2(2), Pune. Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 25.07.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2020-21. 2. The appellant has raised the following grounds of appeal :- “1. On the facts and in the circumstances of the case and in law, lower authorities have erred in considering the gross total income of Rs. 6,32,09,055/- as assessed income of the appellant, without appreciating the fact that out of this Rs. 5,35,00,000/- is already offered for taxation and taxes due thereon are fully paid Assessee by : Shri Pramod S. Shingte Revenue by : Shri Arvind Desai Date of hearing : 05.03.2025 Date of pronouncement : 29.05.2025 ITA No.1991/PUN/2024 2 and further erred in not granting the credit for taxes paid. Your appellant prays for the relief. 2. On the facts and in the circumstances of the case and in law, lower authorities have erred in not appreciating the fact that appellant is a co-operative housing society and principles of mutuality applies in appellant's case and the eligible amount for deduction u/s 80P(2)(d) was only Rs. 13,88,673/- and balance amount of Rs. 83,20,382/- was covered by principle of mutuality which was inadvertently claimed as deduction u/s 80P. Your appellant prays for appropriate relief 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. Facts of the case, in brief, are that the assessee is a housing co- operative society and furnished its return of income on 31.03.2021 declaring total income of Rs.5,35,00,000/- after claiming deduction u/s 80P of the IT Act of Rs.97,09,055/-. Return was selected for scrutiny and statutory notices u/s 143(2) and 142(1) were issued and served to the assessee but the assessee did not comply any of the notices, accordingly the assessment was completed u/s 144 of the IT Act by determining total income of Rs.6,32,09,060/- as against the income returned by the assessee at Rs.5,35,00,000/-. The above assessed income includes disallowance of Rs.97,09,055/- claimed by the assessee u/s 80P of the IT Act. ITA No.1991/PUN/2024 3 4. After considering the reply of the assessee Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee by observing as under :- “9. xxxxx xxxxx Accordingly in the appellant's case it ought to have filed the ROI on 15th Feb 2021 but it had filed the ROI on 31.03.2021 u/s 139(4) belatedly. Therefore, as per Section 80AC it is not eligible for claiming deduction u/s 80P. Hence, the appellant's claim of Rs.97,09,055/- as deduction u/s 80P is not allowable. The decision of AO in disallowing the appellant claim of Rs.97,09,055/- as deduction u/s 80P and adding the same to the total income of the appellant is upheld. 10. Thus, appeal filed by the appellant stands dismissed.” 5. It is this order against which the assessee is in appeal before this Tribunal. 6. Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A)/NFAC is unjustified. Ld. AR submitted before us that out of total disallowance of Rs.97,09,055/- an amount of Rs.13,88,673/- pertains to interest income earned from other co-operative bank namely The Saraswat Co-op Bank Ltd. which is deductible u/s 80P(2)(d) of the IT Act, and rest of the amount Rs.83,20,382/- was covered by principle of mutuality which was inadvertently claimed as a deduction u/s 80P of the IT Act. In support of its contention, Ld. AR relied on the order passed in the case of ITO vs. Venkatesh Premises Co- ITA No.1991/PUN/2024 4 operative Society Ltd. (2018) 91 taxmann.com 137 (SC). Ld. AR accordingly requested before the bench to set-aside the order passed by Ld. CIT(A)/NFAC and further requested to remand the matter back to the Assessing Officer to decide the issue afresh in the light of judgement passed by Hon’ble Supreme Court in the case of Venkatesh Premises Co-operative Society Ltd. (supra). 7. Ld. DR appearing from the side of the Revenue relied on the orders passed by subordinate authorities and requested to confirm the same. 8. We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book and case law furnished by the counsel of the assessee. In this regard, we find that the assessee co-operative society has furnished its return of income belatedly. The extended last date for furnishing return of income for assessment year 2020-21 was 15.02.2021 whereas the assessee co-operative society has furnished its return of income on 31.03.2021. Ld. CIT(A)/NFAC in the light of section 80AC held that if the return is not furnished u/s 139(1) of the IT Act the assessee is not entitled to claim deduction u/s 80P of the IT Act. Accordingly, Ld. CIT(A)/NFAC dismissed the appeal filed by the ITA No.1991/PUN/2024 5 assessee. In this regard, we find that the assessee before us has claimed that interest income from other co-operative society is only Rs.13,88,673/- which was claimed as deductible u/s 80P(2)(d) of the IT Act. Admittedly, the return of income was not furnished u/s 139(1) of the IT Act and therefore, we do not find any error in the order passed by Ld. CIT(A)/NFAC wherein he disallowed the claim made by the assessee u/s 80P(2)(d) of the IT Act. However, we also find that CBDT has issued Circular No.13/2023 [F. NO. 173/21/2023-ITA-I] wherein liberty was given to the assessee to pray for condonation of delay in filing of return of income, which reads as under :- “CIRCULAR NO. 13/2023 [F. NO. 173/21/2023-ITA-I], DATED 26-7-2023 Section 80P of the Income-tax Act, 1961 (hereafter referred to as 'Act') provides for deduction in respect of income of co-operative societies under Chapter VIA-Part-C (\"Deductions in respect of certain incomes\") of the Act. 2. In so far as section 80P of the Act is concerned, Finance Act, 2018 substituted section 80AC of the Act w.e.f. 1-4-2018 which provides as under - Deduction not to be allowed unless return furnished. 80AC. Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after— (i) the 1st day of April. 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-1A or section 80-1AB or section 80-IB or section 80- 1C or section 80-ID or section 80-IE; (ii) the 1st day of April, 2018, any deduction is admissible under any ITA No.1991/PUN/2024 6 provision of this Chapter under the heading \"C—Deduct ions in respect of certain incomes\", no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139. 3. Applications have been received in the Central Board of Direct Taxes (hereafter referred to as \"the Board') from co-operative societies claiming deduction u/s 80P of the Act for various assessment years from AY 2018-19 to AY 2022-23, regarding condonation of delay in furnishing return of income and to treat such returns as 'returns furnished within the due date under sub-section (1) of section 139 of the Act stating that delay in furnishing return of income was caused due to delay in getting the accounts audited under respective State Laws. 4. In order to mitigate genuine hardship in cases referred to in para 3, the Board, in exercise of the powers conferred under section 119 of the Act, hereby directs that the Chief Commissioners of Income-tax (CCsIT)/Directors General of Income-tax (DGsIT) are authorised to deal with such applications of condonation of delay pending before the Board, upon transfer of such applications by the Board, and decide such applications on merits, in accordance with the law. 5. The Board hereby further directs that the CCsIT/DGsIT, henceforth, shall admit all pending as well as new applications for condonation of delay in furnishing returns of income claiming deduction u/s 80P of the Act, filed either in the Board or in field formation for the assessment years 2018-19 to 2022-23 and decide such applications on merits in accordance with the law where such person is required to get his accounts audited under respective State Laws. 6. In the context of para-5 above, the CCsIT/DGsIT white deciding such applications for condonation of delay in furnishing return of income, shall satisfy themselves that the applicant's case is a fit case for condonation under the existing provisions of the Act. The CCsIT/DGsIT shall examine the following while deciding such applications - (i) the delay in furnishing the return of income within the due date under sub-section (1) of section 139 of the Act was caused due to circumstances beyond the control of the assessee with appropriate documentary evidence/s; (ii) where delay in furnishing return of income was caused due to delay in getting the accounts audited by statutory auditors appointed under the respective State Law under which such person is required to get ITA No.1991/PUN/2024 7 his accounts audited, the date of completion of audit vis-a-vis the due date of furnishing the return of income under sub-section (I) of section 139 of the Act; and (iii) any other issue indicating towards tax avoidance or tax evasion specific to the case, which comes into the light in the course of verification and having bearing either in the relevant assessment year or establishing connection of relevant assessment year with other assessment year/s. 6.1 The cases falling under para 6(iii) above, would require further necessary action as per law. 7. The CCsIT/DGsIT shall preferably dispose the application within three months from the end of the month in which such application is received from the applicant or transferred by the Board. No order rejecting the application under section 119(2)(b) of the Act shall be passed without providing the applicant an opportunity of being heard. Vikas Singh, Director (ITA-1)” However Ld. AR of the assessee could not furnish any such information that the assessee has applied in the light of above circular for condonation of delay in filing the return of income for the period under consideration or not. Considering the totality of the facts of the case and in the interest of justice, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC in this regard and remand the matter back to the file of the Assessing Officer to decide the issue of deduction u/s 80P(2)(d) of the IT Act afresh if the assessee furnishes any order condoning the delay in filing of return of income in the light of CBDT circular for the period under consideration. ITA No.1991/PUN/2024 8 9. With regard to disallowance of deduction of Rs.83,20,832, it was the contention of Ld. AR that principle of mutuality covers the amount of Rs.83,20,832/-. In this regard, we find that the assessee has furnished a revised computation of income before the bench wherein the income received on account of service charges from the members of the society of Rs.83,20,832/- was claimed to be exempt / not part of total income on account of mutuality since no one can claim income from himself. In this regard, Ld. AR of the assessee relied on the judgement passed by Hon’ble Supreme Court in the case of Venkatesh Premises Co-operative Society Ltd. (supra). It was also contended by Ld. AR that the amount of Rs.83,20,832/- was in advertently claimed as deduction u/s 80P(2) of the IT Act since it was covered by principle of mutuality the same was not required to be included in the total income of the assessee. Considering the above arguments of Ld. counsel of the assessee, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC on this ground and remand the issue back to the file of the Assessing Officer to verify the claim of the assessee in this regard and to decide the issue a fresh as per fact & law after ITA No.1991/PUN/2024 9 providing reasonable opportunity of hearing to the assessee. Thus the grounds of appeal raised by the assessee are partly allowed. 10. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on this 29th day of May, 2025. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 29th May, 2025. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “B” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "