Income Tax Appellate Tribunal - Mumbai
Krishna Kaveri Cooperative Housing ... vs The Income Tax Officer Ward 24(1)(1), ... on 3 April, 2023
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "SMC", MUMBAI
BEFORE SHRI KULDIP SINGH, HON'BLE JUDICIAL MEMBER AND
SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER
ITA NO.2881/MUM/2022 (A.Y: 2018-19)
Krishna Kaveri Cooperative v. Income Tax Officer-24(1)(1)
Housing Society Limited Piramal Chamber
Krishna Kaveri, Off Link Road Dr SS Rao Marg, Parel
Yamuna Nagar, Andheri (W) Mumbai- 400012
Mumbai-400053
PAN: AAAAK2142C
(Appellant) (Respondent)
Assessee Represented by : Shri. Piyush Chhajed &
Shri Sumit Mantri
Department Represented by : Shri. Saurabh Kumar Rai
Date of Hearing : 09.01.2023
Date of Pronouncement : 03.04.2023
PER S. RIFAUR RAHMAN (AM)
1. This appeal is filed by the assessee against the order of the Learned
Commissioner of Income Tax (Appeals), National Faceless Appeal Centre,
Delhi [hereinafter in short "Ld.CIT(A)"] dated 25.08.2022 for the
A.Y.2018-19.
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Krishna Kaveri Cooperative Housing Society Limited
2. Brief facts of the case are, assessee is a cooperative housing society
filed its return of income for the A.Y. 2018-19 on 24.10.2018 declaring
income from the head "business and professions" at ₹.6,16,535/-. The
assessee claimed deduction u/s. 80P(2)(d) and claimed the same under
Part C of Chapter VIA i.e. interest / dividend from investment in other
cooperative society. Subsequently the above return was revised on
22.02.2019 due to the reason income wrongly disclosed in "business and
professional" head instead of "income from other sources". In the revised
return assessee has declared exempt income in Schedule BP of ITR Form
as under: -
Members Contribution ₹.46,26,855/-
Misc. Receipts & Rebate Received ₹. 1,86,146/-
Dividend from MDCC Bank ₹. 61/-
Total ₹.48,13,062/-
3. However, while declaring the same in Schedule EI assessee failed
to disclose the same as exempt income. The return was processed
u/s.143(1) of the Act wherein Centralized Processing Centre has made the
addition of ₹.48,13,001/ as income of the assessee. The assessee filed
rectification application before Centralized Processing Centre and the
same was rejected.
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Krishna Kaveri Cooperative Housing Society Limited
4. Aggrieved assessee preferred an appeal before the Ld.CIT(A) and
filed detailed submissions and in the submissions assessee has submitted
as under: -
"Contribution from members exempt on mutuality concept:
During the year under consideration, the appellant had received
contributions from the members of the cooperative society. The said
contribution was received as reimbursement the expenses. The
Cooperative society as a whole paid some expenses like society
Maintenance charges, service charges, sweeper charges, security
changes etc., which are for the members of the society.
Subsequently, the said expenses was reimburses from the society
members.
The main source that runs the society is the pooling together of the
members' financial contributions to pay for the service and
amenities. This includes a gambit of charges paid by members such
as maintenance expenses, water, electricity, service staff charges,
lift charges, etc. All these are simply collected by the managing
committee who acts as a collector and then pays it forward to the
relevant parties. These are not taxable under the income tax Act.
Even after the charges have been paid by the society and there
remains some surplus, it is not taxable and is categorised as an
exemption under the 'concept of mutuality'. It means that one
cannot profit from one's own contributions. The members towards a
common fund, which is not considered as an individual's income, pay
all the expenses.
Thus, we pray kindly delete the said addition and oblige us."
5. After considering the submissions of the assessee, Ld.CIT(A) briefly
explained the facts in his order and dismissed the appeal filed by the
assessee with the following observations: -
"4.4. The issue that the appellant has raised in appeal is regarding
the contribution received from its members and other receipts which
was shown under the head "Business" in the original return filed on
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Krishna Kaveri Cooperative Housing Society Limited
30.09.2018 and according to the appellant these items were later on
shown under the head BP and claimed as exempt income by filing a
revised return on 22.02.2019. It is claimed by the appellant that it
forgot to fill in the details of these items in Schedule El-Exempt
Income.
4.5. Now, based on the details filled in by the- the amount shown
as business income in Schedule BP in the Return of Income has been
processed as such without any adjustment by CPC. As there was no
claim of exempt income made by the appellant in Schedule El-
Exempt Income, the income shown under the head "Business" was
treated as such in the intimation issued u/s.143(1).
4.6. Therefore, this is not a case of any mistake apparent from
record which can be rectified under section 154. The claim that the
receipts shown under Business Income was incorrect and that it
ought to be treated as exempt income is outside the scope of section
154. This claim involves admission of new facts which were not on
the records at the time of processing the return and also needs a
long-drawn process of verification, which is not permissible under
section 154. This is not a claim which can be considered on the basis
of facts as available on records. Appellant's grounds therefore, do
not have any basis and hence does not merit any consideration on
facts and in law.
4.7. It is a trite law as laid down by Hon'ble Supreme Court, in the
case of Chandra Kishore Jha v. Mahavir Prasad [1999] 8 SCC 266,
that "if a statute provides for a thing to be done in a particular
manner, then it has to be done in that manner and in no other
manner". This proposition has been earlier laid down by Hon'ble
Apex Court in the case of State of Uttar Pradesh v. Singhara Singh
AIR 1964 SC 358. It is the appellant who claims that a particular
income/receipt is exempt and therefore, the primary onus was on
the appellant to comply with the statutory requirements of making a
valid claim under the Act, as held by the Hon'ble Bombay High Court
in the case of Commissioner of Income-tax v. Shivanand Electronics
209 ITR 63 extracted hereunder:
"When the Legislature casts a duty on the assessee
claiming certain benefit, to comply with requirements
which are associated with such benefit, the assessee
cannot get the benefit without doing his part of the duty.
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Krishna Kaveri Cooperative Housing Society Limited
He cannot be allowed to say that it was for the ITO to ask
him to do so. If the assessee does not do his part of the
statutory duty, the ITO may proceed to decide the
allowability or otherwise of the relief on the basis of the
facts and material available before him"
4.7. In view of the above facts and provisions of law, claim of
exempt income now being made by the appellant is not based on
facts on records and therefore, there being no mistake apparent from
records in the intimation issued u/s.143(1), the order passed u/s.
154 reaffirming the same does not warrant any interference on the
issue. Appellant's Ground No.1 is dismissed accordingly.'
6. Aggrieved assessee is in appeal before us raising following grounds
in its appeal: - .
"1. On the facts and circumstances of the case, the Learned
Commissioner of Income Tax (Appeals) NFAC erred in appreciating
the facts of the case and sustained the disallowance of exempt
income claimed in the computation of income which was wrongly
processed u/s 143(1) and therefore the same been a mistake
apparent from the record.
2. On the facts and circumstances of the case, the Learned
Commissioner of Income Tax (Appeals) NFAC erred in confirming the
order passed u/s 154 by CPC without appreciating that non- granting
of a claim made in computation of income is a mistake apparent from
record and therefore CPC ought to have rectified in response to an
application made under 154.
3. On the facts and circumstances of the case, the Learned
Commissioner of Income Tax (Appeals) NFAC failed to appreciate
that the appellant is a Co-operative Housing Society and governed
by the concept of mutuality and therefore amount received from the
members of the appellant are exempt and not taxable and therefore,
the claim under computation of income ought to have been allowed.
4. The Appellant craves the leave to add, amend, alter and/or
delete any of the above grounds of appeal at/or before the time of
hearing."
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Krishna Kaveri Cooperative Housing Society Limited
7. At the time of hearing, Ld. AR submitted that the issue under
consideration is receipt of contribution from members of the housing
society and this contribution is collected for mutual benefits of the society.
Therefore, the concept of mutuality is applicable and he argued that since
the issue involved is involving mutuality concept, therefore it does not fall
to assess the same u/s. 143(1) of the Act. In this regard he relied on the
following case laws: -
S/No Particulars
1. The ITAT Bangalore, Bench "A" in Goodwill Management Pvt
Ltd ITANo.670/Bang/2020
2. The ITAT Rajkot in Rupam Impex [2016] 66 taxman.com 181
3. The ITAT Mumbai "SMC" Bench in M/s Shrikant Real Estate
Pvt Ltd ITA No. 4304/MUM/2012
4. The Supreme Court of India in Venkatesh Premises Co-
operative Society Ltd [20181 91 taxman.com 137 (SC")
8. On the other hand, Ld.DR relied on the orders passed by the lower
authorities.
9. Considered the rival submissions and material placed on record, we
observe that the assessee is a cooperative housing society and it collects
the contribution from members of the society and initially assessee has
filed the return of income with the wrong head of income i.e. "business
income" and subsequently it has revised the return of income by declaring
the same and claimed it as exempt income. However, in schedule EI
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assessee failed to inform the same while filing the revised return of
income. Therefore, the Centralized Processing Centre has considered the
same as not exempt income and brought to tax. Assessee also filed
rectification application u/s. 154 of the Act before Centralized Processing
Centre, however, the Centralized Processing Centre has rejected the
same. This fact was brought to notice of the Ld.CIT(A) and by observing
the whole facts on record, however, he proceeded to dismiss the appeal
on technical ground that assessee claimed exempt income which is not
based on the facts on record i.e. not filling proper details in revised return
of income. Therefore, there being no mistake apparent from records in
the intimation u/s. 143(1) of the Act, the order passed u/s. 154 reaffirming
the same does not warrant any inference on this issue. We find it difficult to
comprehend that Ld.CIT(A) has perused the whole facts on record and
also observed that assessee is a cooperative housing society and the
receipts are only from the members for the maintenance of the society.
In the similar situation the ITAT Bangalore bench in the case of Goodwill
Managemnet Pvt. Ltd., v. DCIT in ITA.No. 670/Bang/2020 dated
15.01.2021 has decided as under: -
"6. I heard the rival contentions and perused the record. I
noticed that the assessee has mentioned that the dividend income
of Rs.13.37 lakhs is exempt in "Schedule BP" relating to computation
of business income. However, the details of exempt income were
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Krishna Kaveri Cooperative Housing Society Limited
mentioned in the schedule EI of the return of income. In view of the
same, the CPC has not granted exemption to the assessee. The
question that arises is whether the inadvertent error committed by
the assessee while filling up the return of income filed through
electronic mode would be fatal and would disentitle the assessee
from exemption, which is otherwise allowable as per the provisions
of the Act. An identical issue was examined by the Mumbai bench
of Tribunal in the case of Suman Chandra G. Mehta (supra).
Following observations made by the Tribunal in the above said case
are relevant here:
"4. When this matter was agitated before the Ld. CIT(A),
the CIT(A) was of the opinion that it was a incorrect claim
on account of the assessee, failing to reflect the correct
details in the return of income, as per computerized
processing programme, the A.O. has rightly made
adjustments for this incorrect claim for deduction and
held that there is no mistake in the processing of return
and further concluded that no appeal lies against such
processing where adjustments have been correctly made
during processing as per Sec.143(1)(a)(ii) of the Act.
...........................
7. The present case is a perfect example of such
ignorance. The assessee has shown interest income
earned as well as interest paid under the head "income
from other sources". Not realizing the negative figure is
not accepted by the server and therefore the interest paid
shown as Rs.2,33,535/- was rejected by the server while
processing the return.
8. No doubt the CBDT has the powers to frame the rules
but, at the same time, it cannot benefit from the
ignorance of the taxpayers using the latest technology.
We do not find any reason why such error should not be
rectified by the AA.O. This is not ignorance of law but
ignorance of the usage of the latest technology.
9. Therefore in the interest of justice and fair play to the
taxpayer, we restore this issue back to the files of A.O.
The A.O. is directed to examine the claim of the assessee
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Krishna Kaveri Cooperative Housing Society Limited
of interest paid at Rs.2,33,535/- and if satisfied with the
claim, the A.O. is directed to deduct the same from the
positive interest figure of Rs.3,38,345/- meaning thereby
that only Rs.1,04,810/- should be added to the taxable
income.
10 Before parting, a similar issue came up for hearing
before the Tribunal in the case of Srikant Real Estate Pvt.
Ltd. 140 ITD 155 wherein one of us (AM) is the author of
the decision where also the Tribunal has taken a similar
view and directed the A.O. to rectify the error. Drawing
support from the findings given in the aforesaid case, this
appeal is also restored back to the files of the A.O. with
the above direction."
7. The facts in the present case are identical. The assessee, out
of ignorance or inadvertence has omitted to mention the details of
exempt income in the relevant "Schedule EI". So, the ignorance of
the assessee or inadvertent mistake committed by the assessee
should not come in his way in claiming exemption, which is otherwise
allowable under the Act. It is also not a case that the assessee did
not respond to the notice issued by CPC. The assessee has duly
responded to the same, but it is the submission of revenue that the
assessee should have filed a revised return of income. There is no
dispute with regard to the fact that the assessee is entitled for
exemption of dividend income. The object of assessment is to
determine correct total income of the assessee. Accordingly, I am
of the view that the right of the assessee could not be denied merely
on accounting of technical errors. Hence there is a mistake apparent
from record in not granting exemption claimed by the assessee.
Accordingly, I am of the view that the said mistake deserves to be
rectified.
8. Accordingly, I set aside the order passed by Ld. CIT(A) on this
issue and direct the A.O. to allow the exemption claimed by the
assessee."
10. Respectfully following the above said decision, we are inclined to
decide the issue in favour of the assessee and delete the addition made
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Krishna Kaveri Cooperative Housing Society Limited
by the Centralized Processing Centre u/s. 143(1) of the Act and observe
that mere technical mistake does not change the facts on record and
justice has to be prevailed over such technical mistakes. Accordingly,
ground raised by the assessee is allowed.
11. In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 03rd April, 2023
Sd/- Sd/-
(KULDIP SINGH) (S. RIFAUR RAHMAN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai / Dated 03/04/2023
Giridhar, Sr.PS
Copy of the Order forwarded to:
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
//True Copy//
BY ORDER
(Asstt. Registrar) ITAT, Mum