BHATTAD AUGUSTINE CO-OPERATIVE HOUSING SOCIETY LTD.,MUM vs. CENTRALISED PROCESSING CENTRE, BANGALORE

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ITA 20/MUM/2023Status: DisposedITAT Mumbai31 March 2023AY 2016-175 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the CIT(A)'s order, remanding the matter back for adjudication. The assessee was directed to provide the deficient documents to the CIT(A) for a decision on the mutuality principle.

What were the facts?

The assessee, a cooperative housing society, mistakenly declared surplus contributions from members as income. The CPC disallowed the exemption, leading to a tax demand. The CIT(A) upheld this decision due to a lack of documentary evidence.

What were the issues?

Whether the surplus contributions from members of a cooperative housing society are taxable or exempt under the principle of mutuality. Whether the CIT(A) erred in dismissing the appeal due to lack of documentary evidence.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 80P

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH,

Before: SHRI ABY T. VARKEY, JM

Hearing: 28/02/2023Pronounced: 31/03/2023

O R D E R

PER ABY T. VARKEY, JM:

1.

This is an appeal preferred by the assessee against the order of the Ld. CIT(A)/NFAC, Delhi dated 09.11.2022 for AY. 2016-17.

2.

The grounds of appeal

of the assessee reads as under: -

1. The Ld. CIT(A) erred in confirming the total income determined by the CPC, Bangalore pursuant to processing of return u/s 143(1) of the Act. 1.i. In doing so, the Ld. CIT(A) did not appreciate that the appellant is a cooperative housing society and while filing the return of income for the above year the appellant has erroneously declared the surplus left out of the contributions received from the member s towards maintenance charges, ‘sinking fund, property tax, etc. as income, though the same based on the principle of mutuality is not income under the 2 A.Y. 2016-17 Bhattad Augustine Co-op. provisions of the Act, and further erroneously claimed the said income as deduction u/s 80P of the Act and that the CPC, Bangalore in absence of proper facts has determined the said surplus as the total income while processing the return u/s 143(1) of the Act. 1.ii. Further in doing so, the Ld. CIT(A) erred in holding that audited financial statements were not filed which averment is contrary to the material available on record. 1.iii. The Ld. CIT(A) further did not appreciate that if a particular income is not taxable under the Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine and that if an assessee, under a mistake, misconception or on not being properly instructed, is over assessed, the authorities under the Act are required to assist him and ensure that only due legitimate taxes are collected and that acquiescence cannot take away from a party the relief he is entitled to where the tax is levied or collected without authority of law.”

3.

Brief facts are that the assessee is a Co-operative Housing Society and while filing the return of income for AY. 2016-17 it has mistakenly declared as income the surplus contribution received from the members to the tune of Rs.2,04,272/- which was processed by the CPC u/s 143(1) of the Income Tax Act, 1961 (hereinafter “the Act”) wherein the CPC disallowed the exemption which resulted in a demand of tax to the tune of Rs.60,029/-. Aggrieved, the assessee filed rectification application which did not find any response. Therefore, it preferred an appeal before the Ld. CIT(A) wherein the assessee claimed deduction u/s 80P of the Act on the basis of mutuality concept the excess contribution of members after expenditure. And claimed 3 A.Y. 2016-17 Bhattad Augustine Co-op. that the excess amount shown are not taxable. However, the Ld. CIT(A) has rejected the claim by observing as under: - “4. The submissions made by the appellant have been given careful consideration. The main contention of the appellant is that it is a cooperative housing society and during the F.Y.2015- 16 total contribution from the members was received at Rs.8,03,510/- inclusive of bank interest earned amounting to Rs.5,566/-. During the year the appellant society incurred Rs.4,87,804/- for operational expenses and Rs.1,17,000/- was transferred to “Sinking Fund Account’. Thus there was excess of income over expenditure at Rs.2,04,272/- which was the surplus contribution from its members. It has been claimed that excess amount of Rs.2,04,272/- is not its income but the contribution of its members and the same is exempt on the concept of principle of mutuality. 4.1 In its reply dated 02.09.2022, the appellant society has stated that audited annual report is attached for F.Y. 2015-16 but no such report has been filed. No documentary evidence has been filed during the appellate proceedings to establish that the appellant society had received contribution from its members at Rs.8,03,510/-. Hence, the claim of the appellant that surplus of Rs.1,98,706/-(Rs.2,04,272/- bank interest Rs.5,566/-) is exempt on the principle of mutuality. The action of the assessing officer in not allowing exemption of Rs.2,04,272/- claimed under Chapter VIA of the I.T. Act is held to be justified and is confirmed. Accordingly, the ground raised

by the appellant is dismissed.”

4. Aggrieved, the assessee is before this Tribunal.

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