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6.8 The facts of the appellant's case is squarely covered with the facts of the case decided by ITAT Pune Bench. Keeping in view the aforesaid decision and also the findings given in the assessment order with elaborate reasons, I hold that the appellant is not eligible to claim deductions under section 57 of the Act. Accordingly, the disallowance made in the assessment is confirmed,

7. In the result, the appeal is dismissed.

5. Still aggrieved, the assessee has now filed second appeal with the Tribunal , and the Ld. Counsel for the assessee submitted that the assessee is a Co-operative Housing Society. It was submitted that the assessee incurs maintenance expenses for maintaining the society under various heads , and the assessee collects maintenance charges from its members. The ld. Counsel for the assessee submitted that the assessee received interest from FDR with Nationalized Bank as well as rental income was received from Hutch from letting out Sohamnagar Co-Operative Housing Society Ltd. v. ITO of common terrace to Hutch(now Vodafone). The assessee has filed its copy of Audited Income and Expenditure account(placed on record in file), and it was submitted that the assessee has incurred total expenses under various heads towards maintenance of the housing society aggregating to Rs. 27,34,671/- , while the total receipts are to the tune of Rs. 28,08,191/- which included general maintenance of Rs. 11,13,600/- collected from its members, maintenance income of Rs. 65,000/- collected from tenants, paid parking of Rs. 1,07,000/- , other income of Rs. 22,400/- and transfer fee of Rs. 40,000/-. Apart from above , there is an income from interest on FDR of Rs. 3,82,193/- , Interest from members of Rs. 3,580/- , Rent from Hutch(net) of Rs. 10,62,390/- from letting out of common terrace to Hutch(now Vodafone), saving bank interest of Rs. 4,727/- , Torrent Interest income of Rs. 7,301/- . Thus, it was submitted that there is a surplus of Rs. 73,520/- (excess of total income over the expenditure) , and after claiming deduction of Rs. 50,000/- u/s 80P(2)(c)(ii), the income declared and offered for taxation by the assessee was Rs. 23,520/- in the return of income filed with Revenue. If the other income such as interest and rental income as above are excluded , there is a deficit as the expenditure towards maintenance were higher than maintenance collected from its Members/tenants. It was submitted that the assessee constructed 80 residential flats for its members , and in order Sohamnagar Co-Operative Housing Society Ltd. v. ITO to keep maintenance low, it collected deposit of Rs. 50,000/- from each of its members which amount was kept in FDR with nationalized banks, and the interest received thereon is utilized to bear the maintenance cost of the society under different heads. The assessee has also relied upon judgment and order of Hon'ble Punjab and Haryana High Court in the case of CIT v. Maruti Employees Co-Operative Housing Society Building Society Ltd. (2010) 320 ITR 254(P&H) , and the judgment and order of Hon'ble Karnataka High Court in the case of Totgars Co-Operative Sale Society Ltd. v. ITO (2015) 58 taxmann.com 35(Kar.), and it was submitted that the assessee is eligible for deduction u/s. 57 of the Act against the interest on deposit etc. received by the assessee. Thus, it was submitted that the assessee is to be allowed to set off interest/rental income and maintenance income etc. against the maintenance expenses of the society incurred under different heads. It was submitted that these maintenance expenses incurred for maintaining the society is for the benefit of the members of the society. The assessee submitted that either these expenses are to be allowed u/s 57 or Section 37 of the 1961 Act. Reference was also drawn to provisions related to set off and carried forward of losess including Section 70 and 71 of the 1961 Act The Ld. Sr. D.R. relied upon the decision of the Ld. CIT(A).

Sohamnagar Co-Operative Housing Society Ltd. v. ITO

6. I have considered the contentions of both the parties and perused the material on record. I have observed that the assessee is a Co-operative Housing Society engaged in maintaining and upkeep of Residential Housing Society consisting of 80 residential flats constructed by it for its Members. The assessee filed its return of income on 20.03.2018, showing total income of Rs. 23,520/-. During the course of assessment proceedings, the A.O. observed that the assessee is Co-operative Housing Society , its main activity is to collect maintenances charges from all the members and spend the said amounts for meeting of the common expenses of society maintenances and that there is no business activity carried out by the assessee. The assessee has also received FDR interest Rs. 3,82,193/- and received rental income(net) of Rs. 10,62,390/- from letting out of common terrace to Hutch(now Vodafone), Interest From Member of Rs. 3,580/-, the saving bank interest income of Rs. 4,727/- and Torrent Interest income of Rs. 7,301/-. There were income received from Members towards General maintenance to the tune of Rs. 11,13,600/- , Paid Parking of Rs. 1,07,000/- , Tenant Maintenance income of Rs. 65,000/- and income from Transfer Fee of Rs. 40,000/- . The assessee has incurred maintenance expenses under various heads to the tune of Rs.27,34,671/-, and as per income and expenditure account the assessee has excess of income over expenditure of Rs.

Sohamnagar Co-Operative Housing Society Ltd. v. ITO 73,520/-, if both the maintenance income as well rental/interest income are considered. The assessee has declared income of Rs. 23,520/- as taxable income in the return of income filed with Revenue, after claiming deduction u/s. 80P(2)(c)(ii) of Rs. 50,000/-. The A.O. did not allow the deduction of Rs. 14,60,191/- with respect to various interest income and rental income earned by the assessee as it was observed by the A.O. that the maintenance expenses etc. incurred by the assessee for maintaining the housing society are not incurred wholly and exclusively for the purpose of earning of interest income and rental income , and thus hit by Section 57(iii) (the assessee having declared its income under the head 'income from other sources' chargeable to tax u/s 56), and hence Rs. 14,60,191/- was disallowed and added to the income of the assessee by bringing the same to tax by the A.O.. The Ld. CIT(A) dismissed the first appeal filed by the assessee. The assessee is Co-Operative Housing Society and constructed 80 residential flats for its members, and now the maintenance and upkeep of the said housing society is carried out by the assessee. The assessee collects maintenance charges from its members and tenants, transfer fee on transfer of flat in the society, paid parking in the society etc. from members/tenants, and the said funds so generated are utilized for meeting common maintenance expenses of the housing society. The assessee has claimed that it collected interest free deposits of Sohamnagar Co-Operative Housing Society Ltd. v. ITO Rs.50,000/- from each of its members with a view to keep regular maintenance charges being recovered from its members on the lower side , which interest free deposits were claimed by to be invested as FDR with banks for earning of interest income to be utilized for meeting common maintenance expenses of the society . The assessee has also tenanted its common terrace area to Hutch(now Vodafone) on which rent income(net) of Rs. 10,62,390/- were received. As per audited Income and expenditure account(placed on record in file) , the assessee after considering all the receipts including rental and interest income , earned net surplus of Rs. 73,520/- . The assessee claimed deduction u/s 80P(2)(c)(ii) of Rs. 50,000/- and offered balance amount of Rs. 23,520/- for taxation. If the other incomes by way of rental and interest income are excluded, there is a deficit of Rs. 13,86,671/- being excess of common expenses incurred by the assessee for maintenance and upkeep of the housing society over the collection from members towards maintenance expenses. There are no surplus in the instant case if the receipts from Members towards maintenance of housing society are co- related with the common expenses incurred by the housing society for maintaining the housing society, and rather there is a deficit of Rs. 13,86,671/-, if interest income and rental incomes are excluded. The assessee has arranged its affairs in the manner that it has kept its regular maintenance charges Sohamnagar Co-Operative Housing Society Ltd. v. ITO recoverable from Members towards maintaining housing society at the lower levels , while deficit on account of excess of common maintenance expenses for maintaining housing society over maintenance charges recovered from its members are sought to be recovered from interest and rental income, and it could not be said that this arrangement of affairs are so organized by the assessee as an tax avoidance measure to evade taxes or to defraud revenue. The decision of Hon'ble Punjab and Haryana High Court in the case of Maruti Employees (supra) supports the stand of the assessee. No contrary decision is cited by Revenue before me. The claim of the assessee is for set off of the deficit being excess of common maintenance expenses incurred for maintaining the housing society and the collection from members towards maintenance charges , against rental and interest income is further fortified in the manner computation of income is made in the 1961 Act , wherein gross total income under the five heads of income are aggregated in the case of the tax-payers , and thereafter deductions under Chapter VI-A are allowed. Deduction u/s 80P is listed as one of the deductions allowed under Chapter VI-A for co-operative societies. The income is to be computed under the five different heads, and if there is a loss w.r.t. one source of income or under one head of income, set off of the said losses are allowed as provided under Chapter VI for 'Set off or Set off and carried forward of losses' Sohamnagar Co-Operative Housing Society Ltd. v. ITO in the manner so provided under the said chapter . The assessee has declared income with respect to its activities as Housing Society for maintaining the residential society under the head 'Income from other sources' , and there is a deficit from the said source of income to the tune of Rs.13,86,671/- (if rental income as well interest income are not considered). The said rental income and interest income are also offered to tax by the assessee and sought to be taxed by Revenue , under the head 'income from other sources'. I do not find any bar in Section 70 and 71 as also other sections under Chapter VI dealing with 'Set off or Set off and carried forward' for set off of the said loss of Rs. 13,86,671/- against income from rent as well interest income earned by the assessee. It could be said that the assessee income from collection of maintenance charges from its members is not chargeable to tax keeping in view the concept of mutuality as no body can make profits by dealing with itself and hence on the same analogy losses are to be ignored , as the said collection of maintenance charges are applied towards the incurring of maintenance expenses for the upkeep/maintenance of the housing society which is for the benefit of the members of the housing society and there is a direct correlation between participant and the contributors. So far its collection from members of maintenance charges falling short of incurring of expenses for maintaining the housing society is concerned , there is a deficit of Rs. 13,86,671/-

Sohamnagar Co-Operative Housing Society Ltd. v. ITO w.r.t. this source of income. In the instant case, the interest income as well rental income has a nexus and attributability with the conduct of affairs of the housing society , as the interest income has mainly arisen from the interest free deposit raised from its members which stood invested in FDR with banks as well rental income is also from letting of common terrace area of the housing society itself , and further that the proceeds of interest income as well rental income are also utilized for furtherance of the main objects of the society i.e. the maintaining the housing society for the benefit of the Members, as could be seen that there is only net surplus of Rs. 73,520/- , of which Rs. 73,520/- has been offered to taxation after claiming deduction u/s 80P(2)(c)(ii). Thus, in my view in the instant case based on peculiar factual matrix as is emerging from the records , I do not find any bar of set off of deficit arising from shortfall in collection from its members towards maintenance of society vis-à-vis expenses incurred for maintaining housing society, against rental and interest income earned by the assessee which has nexus and attributability to the conduct of the affairs of the assessee. There are no allegations by authorities below that the assessee's claim of expenses towards maintenance of the housing society in its Audited Income and Expenditure account to the tune of Rs. 27,34,671/- is bogus or inflated or Sohamnagar Co-Operative Housing Society Ltd. v. ITO not genuine. It is also not the case of the Revenue that the assessee has adopted an illegitimate device by seeking aforesaid set off as an tax avoidance measure or to evade taxes or to defraud revenue. It is also not the case of the Revenue that the surplus earned by the assessee to the tune of Rs. 23,520/- (after claiming deduction of Rs. 50,000/- u/s 80P(2)(c)(ii) ) was not offered for taxation. I find merit in the appeal filed by the assessee, which stood allowed., more so keeping in view judgment and order of Hon'ble Punjab and Haryana High Court in the case of Maruti Employees (supra) which supports the stand of the assessee. This appeal is decided on the peculiar facts as are emerging from records and shall not have precedential value. I order accordingly.