CHEMBUR JYOTI CO-OPERATIVE HOUSING SOCIETY LTD,CHEMBUR vs. INCOME TAX OFFICER, VASHI RAILWAY STATION

This appeal filed by the assessee is directed against the order of the Ld. Addl./JCIT(A)-6, Delhi passed under section 250 of the Income- tax Act, 1961 ("the Act") dated 24.09.2025, arising from the order passed by the CPC under section 154 of the Act for the assessment year 2021- 22.

At the outset, there is a delay of 84 days in filing the present appeal. The assessee has filed a petition supported by an affidavit

We have considered the submissions and perused the condonation petition. In our considered opinion, the explanation offered constitutes a sufficient cause for not presenting the appeal within the prescribed period of limitation. The delay is neither deliberate nor attributable to any mala fide intention. Accordingly, adopting a liberal approach so as to advance substantial justice, we condone the delay of 84 days in filing the appeal and admit the same for adjudication on merits.

The effective grounds raised by the assessee are that the authorities below erred in treating the assessee, which is a Co-operative Housing Society, as a trust merely because the return of income was inadvertently filed in Form ITR-7 instead of Form ITR-5, thereby denying the correct status of the assessee, disallowing expenditure of Rs.3,39,711 and also not granting credit of TDS amounting to Rs.12,200.

Briefly stated, the assessee is a Co-operative Housing Society. For the year under consideration, it inadvertently filed its return of income in Form ITR-7 instead of the prescribed Form ITR-5. While processing the return under section 143(1), the CPC treated the assessee as a trust, denied the exemption claimed under section 11 and computed the total income without allowing the expenditure claimed by the assessee. The rectification application filed by the assessee under section 154 was also rejected. The Ld. CIT(A) confirmed the action of the CPC.

The Ld. Authorised Representative submitted that the return was inadvertently filed in the wrong ITR form. He submitted that because of the incorrect selection of the return form, the CPC has assessed the gross receipts by disallowing the entire expenditure incurred by the assessee. It was contended that even if the exemption claimed under section 11 is denied, the taxable income has to be computed in accordance with the commercial principles after allowing the admissible revenue expenditure and not by bringing the gross receipts to tax. In support of the above contention, reliance was placed on the decisions of the Delhi Bench of the Tribunal in New Delhi Public School vs. DCIT reported in 181 Taxmann.com 967 and Care Foundation Village vs. DCIT reported in 165 Taxmann.com 414.

Per contra, the Ld. Departmental Representative relied upon the findings recorded by the Ld. CIT(A) and submitted that no interference is called for in the impugned order.

We have heard the rival submissions and perused the material available on record. It is an admitted position that the assessee had inadvertently filed the return in Form ITR-7 instead of Form ITR-5. On account of the wrong return form, the exemption claimed by the assessee was denied and the income was computed without allowing the expenditure incurred by the assessee. In our considered opinion, even where the exemption claimed by an assessee is denied, the taxable income cannot be computed by assessing the gross receipts. The income has to be determined in accordance with the settled commercial principles after allowing the admissible revenue expenditure incurred for earning such income.

We, therefore, set aside the impugned order of the Ld. CIT(A) and restore the matter to the file of the Assessing Officer with a direction to

In the result, the appeal of the assessee is allowed for statistical purposes.