Income Tax Appellate Tribunal - Mumbai
D.S.K. Madhuban (Wing A&B) Co-Op ... vs Ito 41(1)(1), Mumbai on 18 February, 2025
IN THE INCOME TAX APPELLATE TRIBUNAL
"SMC" BENCH MUMBAI
BEFORE HON'BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER
ITA No. 6382 & 6383/Mum/2024
(Assessment Years: 2020-21 & 2023-24)
DSK Madhuban (Wing Vs. ITO - 41(1)(1)
A&B) Co-op Housing Kautilya Bhavan, BKC
Society Ltd., Bandra Mumbai.
DSK Madhuban CHSL,
Mehra Industrial Estate,
Andheri - Kurla Road,
Sakinaka, Andheri East
PAN/GIR No. AABAD1133D
(Applicant) (Respondent)
Assessee by Shri Shri Haridas Bhat
Revenue by Shri Sunil Agawane, Sr. DR
Date of Hearing 29.01.2025
Date of Pronouncement 18.02.2025
आदे श / ORDER
PER SANDEEP GOSAIN, JM:
The present appeals have been filed by the assessee challenging the different impugned orders dated 14.10.2024 & 10.10.2024, passed u/s 250 of the Income Tax Act, 1961 ('the Act'), by the National Faceless Appeal Centre, Delhi ('Ld. CIT(A)') for the assessment year 2020-21 & 2023-24.
Since all the issues involved in these appeals are common and identical, therefore, they have been clubbed, heard together and consolidated order is being passed for the sake 2 ITA No. 6382 & 6383/Mum/2024 DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai of convenience and brevity. We shall take ITA No. 6382/Mum/2024, A.Y 2020-21 as lead case and facts narrated therein
3. As per the facts of the case, the assessee is a cooperative housing Society Limited. The return of income for the year under consideration i.e. A.Y 2020-21 was filed in accordance with the provisions of the act. Since the assessee is an entity whose accounts are required to be audited under Maharashtra Cooperative Society Act, 1960, therefore, the due date for filing the return of income was 15/02/2021.
4. However, while processing the ITR under section 143(1) of the Act, the following additions were made in the income of the assessee.
i) addition of Rs.31,50,654/- u/s 43B of the Act.
ii) deduction claimed u/s 80(P)(2)(d) was denied.
5. Aggrieved by the said additions, assessee preferred appeal, but the same was dismissed by Ld.CIT(A).
6. Aggrieved by the order of Ld. CIT(A) assessee has preferred the present appeal before me on the grounds mentioned hereinabove.
3 ITA No. 6382 & 6383/Mum/2024DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai
a) On the facts and circumstances of the case, and in Law, the CITA erred in confirming the addition made u/s 43B of the act amounting to Rs. 31,50,654/- of the amount of property tax not paid during the year till the date of filing of return.
b) On the facts and circumstances of the case and in law the CITA failed to appreciate that: The assesse is co-operative housing society not providing any service to non-member f ii The assesse is covered under the concept of mutuality. Only the income which is earned outside the mutuality is taxed.
The assessee only collects contribution from members for managing the society. Accordingly, the assessee does not prepare profit and loss account instead they prepare income and expenditure account iv. Section 43B reads as "a deduction otherwise allowable", in this case since the assessee income from member's contribution is not taxable under the concept of mutuality, the assessee has not claimed the said expenses as deduction in its return.
c) The appellant, therefore, prays that the disallowance made u/s 143(1) of the Act is bad at law and shall be deleted.
7. This ground raised by the assessee relates to challenging the order of Ld. CIT(A) in upholding the disallowance u/s 43B of the Act.
8. In this regard, Ld AR reiterated the same arguments as were raised by him before the revenue authorities, and also relied upon his submissions which are reproduced here below:
4 ITA No. 6382 & 6383/Mum/2024DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai Note on Ground 1 pertaining to disallowance u/s 43B With regards 43b disallowance by CPC while processing the ITR u/s 143(1) of the Act, towards the property tax debited to income and expenditure account not paid till the due date for filing of ITR. CPC made the disallowance based on tax audit filed the assessee.
We submit that since the assessee is not having any business and covered under mutuality, the tax Audit was not required. The assessee has filed the Tax audit report based on advice of an consultant eventhough it was not required, and the auditor in the tax audit report showed the amount of property tax debited to Profit and loss but not paid till the due date of filing of return.
Due to COVID19 the tax payment due date was extened by the BMC and thus the tax was not paid before filing of return of income.
We further submit that the assessee is co-operative society and neither has business nor has any business income. All the income and expenses are solely for the purpose of members only and accordingly any excess of income over expenditure is not taxable under the concept of mutuality.
In line with the same we submit that the assessee maintains income and expenditure account and not profit and loss account. Return. In the ITR as well, the assessee has neither offered any income, nor claimed any expenditure, leave alone the municipal taxes, under the head income from business profession.
Thus, we submit that disallowance U/s 43B is bad at law and the disallowance may please be deleted.
9. On the other hand, Ld. DR appearing on behalf of the department relied upon the orders passed by the revenue authorities.
5 ITA No. 6382 & 6383/Mum/2024DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai
10. I have heard the counsels for both the parties and have also gone through the material placed on record, orders passed by the revenue authority and the legal proposition put forth before me.
11. From the records, I noticed that with regard to disallowance u/s 43B of the Act, it was observed by the revenue from income and expenditure statement that assessee has claimed "property tax" paid as expenses in income and expenditure statement. Since the said amount was not remitted to the concerned authority on or before the due date of filing of return of income, therefore, the said expenses were disallowed u/s 43B of the Act.
12. Whereas on the contrary, assessee specifically contended that assessee is not having any business and covered under the concept of mutuality, the tax audit was not required. It was further submitted that assessee has filed the tax audit report based on advice of an consultant even though it was not required, and the auditor in the tax audit report showed the amount of property tax debited to profit and loss account, but not paid till the due date of filing of return. It was further contended that since the assessee is a cooperative society and neither has any business nor has any business income. Therefore, all the income and expenses are 6 ITA No. 6382 & 6383/Mum/2024 DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai solely for the purpose of members only and accordingly any excess of income over expenditure is not taxable under the concept of mutuality.
13. Therefore, assessee has neither offered any income nor claimed any expenditure; leave alone the municipal taxes, under the head income from business profession.
14. In my view, specific contentions raised by the assessee have not been adjudicated by Ld.CIT(A) while passing the impugned order. Since all the submissions raised before me were also raised before Ld.CIT(A), therefore CIT(A) was under
legal obligation to adjudicate the grounds raised before him, while taking into consideration the specific Averment's raised by the assessee.
15. Since the specific Averment's raised by the assessee have not been adjudicated by passing speaking orders, therefore, I restore this issue back to the file of CIT(A) with a direction to adjudicate this ground afresh after taking into consideration the specific Averment raised by the assessee. Thus, keeping in view the above factual position, this ground is restored to the file of CIT(A) for deciding it afresh on merits by providing opportunity of hearing to the parties. The assessee shall not seek any adjournment on frivolous 7 ITA No. 6382 & 6383/Mum/2024 DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai grounds and remain cooperative during the course of proceedings.
16. Before parting, I make it clear that my decision to restore the matter back to the file of the CIT(A) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the CIT(A) independently in accordance with law.
GROUND 2
a) On the facts and circumstances of the case, and in Law, the CITA and Income Tax Officer Ward 41(1)(1), Mumbai erred in making disallowance u/s 143(1) of the Act which is bad at law.
b) On the facts and circumstances of the case and in law the AO failed to appreciate that:
1. There is no discrepancy either clerical or technical in the return filed.
ii. No addition can be made u/s 143(1) unless there is some clerical or technical discrepancies in the return.
CPC processed the return without considering the amount of deduction u/s 80P of the Act.
iv. In this case, the amount disallowed from the eligible deduction of the assesse is a disallowance that cannot be made without assessment proceedings u/s 143(3) of the Act.
c) The appellant, therefore, prays that the disallowance made u/s 143(1) of the Act is bad at law and shall be deleted.
GROUND 3 8 ITA No. 6382 & 6383/Mum/2024 DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai
a) On the f acts and circumstances of the case, and in Law, CITA erred in confirming the disallowance made by the Income Tax Officer Ward 41(1)(1), Mumbai towards the deduction claimed on Interest earned of Rs. 13,47,644/- from cooperative banks u/s 80P(2)(d) of the Act.
b) On the facts and circumstances of the case and in law the CITA and AO f ailed to appreciate that:
1. The assessee is cooperative society eligible to claim deduction u/s 80P(2)(d) of the Act.
ii. Cooperative Banks are also Cooperative societies as per the Income Tax Act.
Denying the deduction benefit available to the assessee is bad at law.
c) Thus, the appellant therefore prays that addition of Rs. 13,47,644/-may please be deleted.
17. The ground Nos 2 & 3 raised by the assessee are interrelated and interconnected and relates to challenging the order of Ld. CIT(A) in upholding the disallowance u/s 80(P)(2)(d) of the Act. Therefore, I have decided to take up both the grounds together and to adjudicate the same through the present consolidated order.
18. Ld AR appearing on behalf of the assessee relied upon his written submissions and the same or reproduced here in below:
Note on Ground 2 pertaining to disallowance u/s 80P(2)(d) 9 ITA No. 6382 & 6383/Mum/2024 DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai The assessee has filed its return claiming deduction u/s 80P(2)(d) amounting to Rs. 13,47,644/- towards interest income of Rs. 7,55,704/- from Saraswat Co-operative Bank and Rs.5,32,147/- from SVC Co-operative bank. CPC while processing the ITR disallowed the deduction claimed u/s 809(2)(d) of the act. The assessee filed an appeal against the same. CITA confirmed the disallowance.
CITA referred to the case of Totagars Cooperative Sale Society Ltd and held that Saraswat Co-operative Bank and SVC Co- operative bank function at par with Commercial Banks and accordingly interest earned from the said banks are not eligible for deduction u/s 80P(2) (d) of the act.
We submit that the assessee rely on the case of PRINCIPAL COMMISSIONER OF INCOME TAX vs. SAHYADRI CO-OPERATIVE CREDIT SOCIETY LTD, Source (2024) 8 NYPCTR 1475 (Ker):
(2024) 301 Taxman 36 (Ker) wherein Totgars Co-operative Sale Society Ltd. vs. ITO (2010) 229 CTR (SC) 209: (2010) 35 DTR (SC) 25: (2010) 322 ITR 283 (SC): (2010) 188 Taxman 282 (SC), is distinguished by pointing out that in the said case, the Supreme Court had to consider the case of a society that had appropriated amounts forming surplus receipts which were due to its members, and invested the same to earn interest during the period when the surplus receipts were in its hands. It is his submission that the factual situation in the instant cases is entirely different and the investment was of amounts that had already attained the character of surplus profits in the hands of the assessee.
We further rely on ASHOK TOWER "D" CO-OP. HOUSING SOCIETY LTD. vs. INCOME TAX OFFICER Source (2024) 38 NYPTTJ 474 (Mumbai) where it was held that Hon'ble High Court of Karnataka in the case of Principal CIT vs. Totagars Co-operative Sale Society (2017) 297 CTR (Kar) 158: (2017) 154 DTR (Kar) 25:
(2017) 395 ITR 611 (Kar), the High Court had concluded that a co-operative society would not be entitled to claim of deduction under s. 80P(2)(d). We however find that as held by the Hon'ble 10 ITA No. 6382 & 6383/Mum/2024 DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai High Court of Bombay in the case of K. Subramanian & Anr. vs. Siemens India Ltd. & Anr (1983) 36 CTR (Bom) 197: (1985) 156 ITR 11 (Bom), where there is a conflict between the decisions of non-jurisdictional High Court's, then a view which is in favour of the assessee is to be preferred as against that taken against him. Thus, taking support from the aforesaid judicial pronouncement of the Hon'ble High Court of jurisdiction, we respectfully follow the view taken by the Hon'ble High Court of Karnataka in the case of Principal CIT & Anr. vs. Totagars Co-operative Sale Society (supra) and Hon'ble High Court of Gujarat in the case of State Bank of India vs. CIT (supra), wherein it was observed that the interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under s. 80P(2)(d) of the Act."
In case of PATHARE PRABHU CO-OPERATIVE HOUSING SOCIETY LTD, vs. INCOME TAX OFFICER Source (2023) 37 NYPTTJ 1401 (Mumbai): (2023) 202 ITD 464 (Mumbai) deduction u/s 80P(2)(d) was allowed af ter considering Supreme Court's decision in Totgar's Co-operative Sales Society Ltd.
Some more case laws 1 KERALA STATE CO OPERAT IVE Assessee being a c operative credit socie ty AGR ICULTURA I & RURAL wh ose primary object is to provide f inancial DEVELOPMENT BANK LTD. acco mmo dation to its members who are all (KSCARDB) vs. A SSESS ING other co-operative s ocie ties and no t OFF ICER & ORS., SUPREME me mbers of the public, it is no t a co- COURT OF INDIA operative bank within the me aning of s. Date of decision 14th Septe mber, 5(b) r/ w s. 56 of the BR Act, 1949 and, 2023 theref ore, s. 80P(4) is not applicable and Source: (2023) 334 CTR (SC) 601: consequently, assessee is entitled to (2023) 230 DTR (SC) 1 deduction under s . 80P 2 RESERVE BANK STAFF & ssessee is a ci operative socie ty and c OFF ICERS OF CREDIT SOCIETY operative ban ks are also co-operative LTD. vs. INCOME TAX OFFCIER , societies-Provisions of s. 80P(4) specif ically ITAT, MUMBA I 'D' BENCH, ITA denies deduction only to co-operative Nos. 3114 to 3118/Mu m/2023; banks-Assessee is admittedly no t a co- Asst. yrs . 2013-14, 2014-15, operative bank-AO ins te ad of tre ating the 2017-18, 2018-19 & 2020-21, assessee as credit co-operative socie ty Date of Decision 22nd Janu ary, considered the assessee as primary co- 2024, Source (2024) 38 NYPTTJ operative bank withou t an y basis-In vie w 11 ITA No. 6382 & 6383/Mum/2024 DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai 85 (Mu mbai) of the above f acts , th at in teres t inco me e arned by the assessee on f ixed deposits wi th the co-operative banks are eligible f or deduction under s . 80P(2)(d) 3 MAKER TOWER A&B C During this ye ar, ass essee has claime d OPERAT IVE HOUSING SOCIETY deduction uder s. 80P in respect of the LTD. vs. ASSISTANT in teres t inco me e arned f rom the three co COMMISSIONER OF INCOME TAX, operative ban ks-Thus, co-operative banks ITAT, MUMBA I "E" BENCH, ITA in which assessee h ad inves ted are Nos. 1057 to 1060/Mu m/2022; regis tered as co-operative socie ties and Asst. yrs. 2014- 15 to 2018-19, theref ore these banks are ci operative Date of Decision 18th October, society as per the provisions of s 2(19)-AO 2022, Source (2022) 36 NYPTTJ is directed to allo w deduction under s.
1233 (Mu mbai) 80P(2)(d) of the Act. 4 PATHARE PRABHU CO he assessee kept the de posits in Coperative OPERAT IVE HOUSING SOCIETY Banks regis tered under the Mah arash tra LTD. vs. INCOME TAX OFF ICER , Co-operative Socie ties Act and e arned ITAT, MUMBA I 'C BENCH, ITA in teres t, which was claimed as a deduction Nos. 1346 & 1347/Mu m/2023; under s. 80P(2)(d)- View th at s. 80P(4) is Asst. yr. 2017-18 and 2018- 19 applicable to the ass essee who is co- Date of Decision 27th July, 2023, operative bank claims deduction under s. Source (2023) 37 ΝΥΡTTJ 1401 80P-Hence s. 80P(4) n ot attracted in this (Mu mbai): (2023) 202 ITD 464 case as the assessee is co-operative socie ty (Mu mbai) 5 JANSEVAK CO OPERAT IVE Assessee is a c operative society, which is SOCIETY LTD. vs INCOME TAX engaged in providing credit f acilities to its OFF ICER, ITAT, MUMBA I 'F' me mbers-Thus, if an y income as ref erred to BENCH ITA No. 637/Mu m/2023; in sub-s. (2) to s. 80P is included in the Asst. yr. 2017-18 Date of Decision gross to tal inco me of the assessee, the 26th May, 2023, Source (2023) s ame sh all be allo wed as a deduction-It is
pertinen t to no te th at s ince the assessee is 37 NYPTTJ 739 (Mu mbai) regis tered under the Mah arash tra Co-
operative Socie ties Act, 1960, it is required to inves t or deposit its f unds in one of the modes provided in s. 70 of the af oresaid Act, which includes investmen t or deposit of f unds in the Dis trict Cen tral Co-operative Bank or the State Co- operative Bank-
Accordingly, the assessee kept the deposits in Dis trict Cen tral Co-operative Ban k and e arned in teres t, which was claimed as a deduction under s. 80P-CIT (A) denied the deduction under s . 80P(2)(d) on the basis th at the co-operative bank is covered under the provisions of s. 80P(4)-No t correct-Sec. 80P(4) is of relevance only in a case where the assessee, who is a co-operative ban k, claims a deduction unde r s.80P 12 ITA No. 6382 & 6383/Mum/2024 DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai
19. On the contrary, Ld DR relied upon the orders, passed by the revenue authorities
20. I have heard the counsel for both the parties, perused the material placed on record, judgements cited before me and also the orders passed by the revenue authorities.
21. From the records, I noticed that assessee claimed deduction u/s 80(P)(2)(d) of the Act on account of interest received from Saraswat Co-operative Bank and SVC Cooperative Bank. However, the said amount of interest received by the assessee was denied as deduction u/s 80(P)(2)(d) of the Act by holding that both the cooperative banks are functioning at par with commercial banks.
22. However, I noticed that number of coordinate benches of ITAT Mumbai had allowed the claim of respective assessee where the facts were exactly the same. In the case of Sangeet Plaza Vs DCIT in ITA No.5541/MUM/2024 decided on 30/12/2024, the coordinate bench has dealt with exactly same situation and allowed the deduction claimed by the assessee on account of interest received from Saraswat Co- operative Bank and SVC Cooperative Bank. The operative portion of the order of the coordinate bench of ITAT in the case of Sangeet Plaza (Supra) is reproduced here in below 13 ITA No. 6382 & 6383/Mum/2024 DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai
6. We have considered the submissions of both sides and perused the material available on record. In the present case, the assesseeearned interest on FDR and savings account maintained with Co-operative Banks, viz. Saraswat Co-operative Bank, Shamrao Vitthal Co-operative Bank, Maharashtra State Co- operative Bank and NKGSB cooperative bank.
6.1 It may be stated here that the co-ordinate bench of ITAT, Mumbai in large number of cases allowed claims of the assesseewhere the facts were exactly the same. In ITA NO.2850/MUM/2022 (Α.Υ: 2020-21) in the case of Hilla Heights Co-operative Housing Society Limitedalso the CPC had disallowed the claim of the assessee u/s 143(1) of the Act and the subsequent appeal before the ld.CIT(A) also went against the assessee. Relevant paras of the order are reproduced below for ready reference:
"1. This appeal is filed by the assessee against order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter in short "Ld.CIT(A)"] dated 30.09.2022 for the A.Y.2020-21.Brief facts of the case are, assessee is a cooperative housing society and filed its return of income on 21.10.2020 within the extended due date applicable to Cooperative Society u/s. 139(1) of Income-tax Act, 1961 (in short "Act").
2. During this assessment year assessee earned interest and dividend income from investments in cooperative banks for the year under consideration. Accordingly, assessee claimed deduction u/s. 80P(2)(d) in respect of the above said income earned from cooperative banks while filing the return of income. While processing the assessment u/s. 143(1) of the Act, Centralized Processing Centre, Bangalore disallowed the claim of the assessee u/s. 80P(2)(d) and has not assigned any reasons while processing the return of income u/s. 143(1) of the Act. Aggrieved, assessee filed an application u/s. 154 of the Act seeking rectif ication of the above order. However, Centralized Processing Centre, Bangalore has rejected the rectification application.14 ITA No. 6382 & 6383/Mum/2024
DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai
3. Aggrieved, assessee preferred an appeal before the Ld.CIT(A) and f iled a detailed written submissions during the course of the appellate proceedings. After considering the submissions of the assesseeLd.CIT(A) observed that the disallowance u/s. 80P(2) was made in the original Assessment Order u/s. 143(1) of the Act and not u/s. 154 of the Act. Therefore, the concept of merger will not be applicable in this case. Therefore, he is of the opinion that assessee cannot challenge the denial of deduction u/s. 80P under the order of section 154 by relying on certain decisions and assessee should have challenged the same u/s. 143(1) of the Act, accordingly, he dismissed the appeal filed by the assessee.
4. Aggrieved, assessee is in appeal before us and submitted details statement of facts. Assessee raised following grounds in its appeal: -
"1. On the facts, and in circumstances of the case, and in law, dismissing the appeal on the ground stating that "the effect of the subsequent rectification u/s 154 dated 15.01.2022 has to be read as forming part of original intimation u/s 143(1) dated 25.11.2021 only and not independently. therefore, the impugned claim of deduction u/s 80p denied originally vide intimation u/s 143(1) cannot be challenged by the appellant through the present appeal against order under section 154" without appreciating that, adjustment made in intimation under section 143 (1) was beyond the scope of the section 143 (1) it being not incorrect claim apparent from any information in return, and therefore refusal of application under section 154 was independent of Intimation under section 143 (1).
2. On the f acts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) erred in upholding action of the Assessing Officer in making disallowance of claimed under section 80P without appreciating that these were not incorrect claims apparent from any information in the Return of Income in terms of section 143 (1) of the Income-tax Act 1961.15 ITA No. 6382 & 6383/Mum/2024
DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai
3. On the f acts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) failed to appreciate that the Centralized Processing Centre (CPC), Bengaluru erred in disallowing the claim of deduction under Section 80P of the Income Tax Act, 1961 without mentioning any reasons for disallowance of the valid claim while processing the return of income under section 143 (1) of t the Income Tax Act, 1961 as in much as in order under section 154 of the Income-tax Act 1961.
4. On the f acts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) failed to the Centralized Processing Centre (CPC), Bengaluru erred in disallowing the claim of deduction under Section 80P of the Income Tax Act, 1961 in spite of the fact, that the appellant had filed return of income within the "second due date" applicable in terms of section 139 (1) of the Income Tax Act, 1961 and the intimation issued under section 143 (1) of the Income Tax Act, 1961 had also mentioned due date for filing return of income as "extended due date" since, book of accounts of your appellant were liable to audit under Section 81 of the Maharashtra Co- operative Society Act, 1960.
5. On the f acts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) failed to appreciate that, the Centralized Processing Centre (CPC), Bengaluru erred in disallowing the claim of deduction under Section 80P of the Income Tax Act, 1961 without considering the facts, that the appellant had made a rectif ication request under Section 154 of the Income tax Act, 1961 for re-processing the return of income but, the reprocessing of the return of income was considered on the same lines as intimation issued in terms of section 143 (1) of the Income Tax Act, 1961."
5. At the time of hearing, Ld. AR submitted that in 143(1) proceedings, claim of the assessee u/s. 80P(2) (d) was disallowed and he brought to our notice the findings of the Ld.CIT(A). However, Ld.CIT(A) has not decided the issue with regard to disallowance u/s. 80P(2)(d) and however, he has decided the issue on whether assessee should file the appeal 16 ITA No. 6382 & 6383/Mum/2024 DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai against the order u/s. 143(1) of the Act or u/s. 154 of the Act. Ld. AR prayed that the claim of the assessee may be allowed and in this regard he relied on the order of the Coordinate Bench in the case of Ashoka Palace Co-Op. Hsg. Soc. Ltd. v. ITO in ITA.No. 2062/Mum/2021 dated 31.10.2022.
7. Considered the rival submissions and material placed on record, we observe from the record that assessee has received income under the head income from the cooperative banks which are eligible to be claimed u/s. 80P(2)(d) of the Act. Since the disallowance was made u/s. 143(1) of the Act assessee filed a rectif ication application before Centralized Processing Centre, Bangalore, however, the same was denied without giving any proper reasons and assessee f iled the appeal before Ld.CIT(A) and Ld.CIT(A) has not decided the issue on merit, however, he proceeded to decide the issue on technical ground whether assessee should file the appeal u/s. 143(1) or u/s. 154 of the Act. After considering the overall facts on record and the issue under consideration in our view, issue is squarely covered in various decisions of the Hon'ble Supreme Court, various High Courts and Coordinate Bench. In this regard, we observe that Coordinate Bench has decided the issue in favour of the assessee in the case of Ashoka Palace Co-Op. Hsg. Soc. Ltd. v. ITO (supra) observing as under: -
"5. Both sides heard, orders of authorities below examined. The solitary issue raised by the assessee in appeal is with respect to assessee's eligibility to claim deduction u/s. 80P(2)(d) of the Act on interest income from deposits with Co- operative banks. It is not in dispute that the assessee has earned interest income from deposits with Co-operative Bank. The authorities below have denied the benefit of section 80P(2)(d) of the Act to the assessee on the premise that the interest income is not eligible for deduction u/s. 80P(2)(d) of the Act.
6. The issue whether interest income derived from deposits with cooperative banks is eligible for deduction under section 80P(2)(d) of the Act or not has been considered by Tribunal in catena of decisions. The Co-ordinate Bench in the case of 17 ITA No. 6382 & 6383/Mum/2024 DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai Kaliandas Udyog Bhavan Premises Co-op Society Ltd. Vs. ITO, 94 taxmann.com 15 (Mumbai) af ter considering various decisions by Hon'ble High Courts and the Tribunal and the provisions of the Act, has held that interest income derived by a co-operative society from investments with a co- operative bank, would be entitled for deduction under section 80P(2)(d) of the Act.
The relevant extract of the order reads as under: -
"7. We have deliberated at length on the issue under consideration and are unable to persuade ourselves to be in agreement with the view taken by the lower authorities. Before proceeding further, we may herein reproduce the relevant extract of the said statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us:
"80P(2)(d) (1) Where in the case of an assessee being a co- operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specif ied in sub-section (2), in computing the total income of the assessee.
(2) The sums referred to in sub-section (1) shall be the following, namely :--
(a) to (c)**
(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other cooperative society, the whole of such income;
Thus, from a perusal of the aforesaid Sec. 80P(2)(d) it can safely be gathered that income by way of interest income derived by assessee co-operative society from its investments held with any other cooperative society, shall be deducted in computing the total income of the assessee. We may herein observe, that what is relevant for claim of deduction under Sec. 80P(2)(d) is that the 18 ITA No. 6382 & 6383/Mum/2024 DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai interest income should have been derived from the investments made by the assessee co-operative society with any other cooperative society. We though are in agreement with the observations of the lower authorities that with the insertion of Sub- section (4) of Sec. 80P, vide the Finance Act, 2006, with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, but however, are unable to subscribe to their view that the same shall also jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of the interest income on their investments parked with a cooperative bank.
We have given a thoughtful consideration to the issue before us and are of the considered view that as long as it is proved that the interest income is being derived by a co-operative society from its investments made with any other cooperative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We may herein observe that the term 'cooperative society' had been defined under Sec. 2(19) of the Act, as under:--
'(19) "Co-operative society" means a cooperative society registered under the Cooperative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any state for the registration of co-operative societies;' We are of the considered view, that though the cooperative bank pursuant to the insertion of Subsection (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but however, as a co-operative bank continues to be a cooperative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being enforced in any state for the registration of co-operative societies, therefore, the interest income derived by a cooperative society from its investments held with a co-operative bank, would be entitled for claim of deduction under Sec.80P(2)(d) of the Act."[Emphasized by us]"19 ITA No. 6382 & 6383/Mum/2024
DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai
8. Respectfully following the above said decision, we are inclined to allow the claim of the assessee by holding that, the interest income derived by a cooperative society from its investments held with a cooperative bank, would be entitled for claim of deduction u/s. 80P(2)(d) of the Act.
9. In the result, appeal f iled by the assessee is allowed".
7.In another important decision Hon'ble ITAT, Mumbai Bench has also decided the issue in the favour of the assessee in ITA No.1976/M/2024 in Dheeraj Gaurav Heights Co-operative Housing Society Limited. Relevant pars are extracted as below:
"The assessee in the grounds claimed that on the facts and circumstance of the case, under the provisions of Section 143(1)(a), the ADDL/JCIT(A) erred in confirming the rejection of claim under section 80P(2)(d) in the Intimation 143(1)(a) without appreciating the fact and law that the CPC was mandated to make only prima facie adjustments as provided in clauses (i) to
(v) of Section 143(1)(a) and too by providing prior intimation/notice to the Appellant, for such denial, in writing or in electronic mode as per first proviso to Section 143(1)(a). We have considered the above submissions and found that the coordinate benches of Hon'ble ITAT, Mumbai in several cases have decided the issue of 80P (2) (d) in favour of the cooperative societies. In one of the cases of Blue Rose Industrial Premises Cooperative Society v. CIT Appeal, ITAT No. 4059 of 2023 it was held as under:
"11. In the present case, there is no dispute that the assessee is a Co-Operative Society. Thus, if any income as referred to in sub- section (2) to section 80P of the Act is included in the gross total income of the assessee, the same shall be allowed as a deduction. It is pertinent to note that since the assessee is registered under the Maharashtra Co-operative Societies Act, 1960, it is required to invest or deposit its funds in one of the modes provided in section 70 of the aforesaid Act, which includes investment or deposit of funds in the District Central Co- operative Bank or the State Co-operative Bank. Accordingly, the 20 ITA No. 6382 & 6383/Mum/2024 DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai assessee kept the deposits in Co-operative Banks registered under the Maharashtra Co-operative Societies Act and earned interest, which was claimed as a deduction under section 80P(2)(d) of the Act. The AO denied the deduction under section 80P(2)(d) of the Act on the basis that the Cooperative Bank is covered under the provisions of section 80P(4) of the Act.
7. Therefore, respectfully following the decision of the coordinate bench of the cited supra, we direct the AO to grant a deduction under section 80P(2)(d) of the Act to the assessee in respect of the interest on FDR and savings account earned from the Co- operative Banks. Accordingly, the impugned order is set aside and grounds no. 1 raised by the assessee is allowed."
8. It is also noticed that inthe case of Sterling Court in ITA No.72- 75/Mum/2024 dated 11.06.2024 'SMC, Mumbai bench has allowed the appeals on exactly similar ground. After detailedanalysis of similar facts and the provisions of section 143(1) of the Act,it has been decidedthat adjustment of disallowance of deduction u/s 80P(2)(d) is not permissible adjustment under section 143(1) of the Act.
9. Respectfully following the view taken by the Hon'ble Coordinate Benches of Mumbai Tribunal, we hold that the CPC was not justif ied in disallowing the claim of decision u/s 154/143(1) of the order. We set aside the order of the ld.CIT(A) and allow the deduction claimed by the assessee u/s 80P(d)(2) of the Act.
23. Respectfully, following the view taken by the Hon'ble Coordinate Benches of Mumbai ITAT, I hold that CPC was not justified in disallowing the claim of deduction. Therefore I set aside the order of CIT(A) and allow the deduction claimed by the assessee u/s 80(P)(2)(d) of the Act. Consequently, this grounds raised by the assessee stands allowed.
21 ITA No. 6382 & 6383/Mum/2024DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai
24. In the result the appeal filed by the assessee stands partly allowed for statistical purposes.
ITA No. 6383/Mum/2024, A.Y 2023-2425. As the facts and circumstances in these appeals are identical to ITA No 6382/Mum/2024 for the A.Y 2020-21 (except variance in figures) and the decision rendered in above paragraph would apply 'mutatis mutandis' for these appeals also. Accordingly, the grounds of appeal of the assessee are partly allowed for statistical purposes
26. In the result, both the appeals filed by the assessee are partly allowed for statistical purposes.
Order pronounced in the open court on 18.02.2025.
Sd/-
(SANDEEP GOSAIN) JUDICIAL MEMBER Mumbai, Dated 18/02/2025 KRK, PS 22 ITA No. 6382 & 6383/Mum/2024 DSK Madhuban (Wing A&B) Co-Op Housing Society, Mumbai आदे श की ितिलिप अ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. थ / The Respondent.
3. सं बंिधत आयकर आयु / The CIT(A)
4. आयकर आयु (अपील) / Concerned CIT
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, मु बई / DR, ITAT, Mumbai
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER, स ािपत ित //True Copy//
1. उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु बई / ITAT, Mumbai