VASHI INFOTECH PARK PRMISES CO OP SOCIETY LTD, MUMBAI vs. ITO WARD 28(3)(1), MUMBAI

PDF · subscribers
ITA 308/MUM/2026Status: DisposedITAT Mumbai28 April 2026AY 2020-216 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the nature and character of the receipts comprising the surplus required proper verification by the Assessing Officer to determine the applicability of the doctrine of mutuality. The issue was therefore restored to the AO for de novo assessment.

What were the facts?

The assessee, a cooperative housing society, claimed a deduction under Section 80P(2)(f) on its surplus income. The Assessing Officer rejected this claim, and the CIT(A) upheld the decision. The assessee appealed to the ITAT, arguing the surplus arose from mutual dealings with members and was therefore not taxable.

What were the issues?

Whether the surplus income of a cooperative housing society arising from dealings with its members is taxable or exempt under the doctrine of mutuality. Whether sufficient opportunity of hearing was provided by the AO.

Which sections of the Income-tax Act were involved?

Section 80P,Section 143(3),Section 144B,Section 250,Section 234A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “H(SMC

Before: SHRI OM PRAKASH KANT & SHRI ANIKESH BANERJEE

For Appellant: Shri R.K. Jadeja
For Respondent: Shri Pravin Salunkhe (Sr. DR)
Hearing: 22/04/2026Pronounced: 28/04/2026

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H(SMC)”, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER ITA No.307/Mum/2026 (Assessment year: 2018-19) ITA No.308/Mum/2026 (Assessment year: 2020-21)

Vashi Infotech Park Primises vs ITO, Ward 28(3)(1), Mumbai Co OP Society Ltd. 3rd Floor, Vashi Income Tax Office- Plot No.16, Sector 30A, Behind 400703 Raghuleela Mall Vashi Navi Mumbai-400703 PAN:AABAV0843J APPELLANT RESPONDENT Assessee by : Shri R.K. Jadeja Revenue by : Shri Pravin Salunkhe (Sr. DR) Date of hearing : 22/04/2026 Date of pronouncement : 28/04/2026 O R D E R Per: Anikesh Banerjee (JM): The instant appeal pertains to the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2018-19 and 2020-21, date of both orders 19.11.2025. The impugned orders emanated from the order of the National e-Assessment Centre, Delhi (for brevity the ‘Ld. AO’)

2 ITA No.307 & 308/Mum/2026 Vashi infotech Park Premises Co Op Society ltd. order passed under section 143(3) r.w.s. 144B of the Act date of order 05.03.2021 and 07.09.2022 for A.Y. 2018-19 and A.Y. 2020-21 respectively.

2.

Both the appeals pertain to the same assessee and arising out from the common fact. For convenience both the appeals have taken together and heard together and disposed of by a common order. ITA 308/Mum/2026, AY 2020-21 is taken as lead case and the decision rendered therein should be applicable mutatis mutandis to the other appeals. 3. The brief facts of the case is that the assessee is a cooperative Housing Society and filed its return by declaring income nil. After the due deduction u/sec. 80P amount to Rs.44,70,687/-. Subsequently the case was selected for scrutiny through CASS under complete category. After due verification the Ld. CIT(A) has rejected the claim of deduction under Chapter VI-A, u/sec. 80P of the Act and added back with the total income. The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) uphold the impugned assessment order. Being aggrieved assessee filed an appeal before us. 4. The Ld. AR contended that it is a well-settled proposition of law that any surplus arising from mutual dealings between a society and its members is not taxable, by virtue of the doctrine of mutuality. Although such surplus, including members’ subscriptions, may partake the character of income or profits, the same is not exigible to tax owing to the mutual nature of the transactions. Even interest charged by the society on outstanding dues of its members constitutes a contribution from members and satisfies the test of mutuality, since the contributors and the participators are identical. The essence of the principle of

3 ITA No.307 & 308/Mum/2026 Vashi infotech Park Premises Co Op Society ltd. mutuality lies in the complete identity between the contributors to the common fund and the participants in the surplus, who are also its beneficiaries. In simple terms, a person cannot make a profit out of himself; therefore, any amount received from oneself cannot be regarded as income liable to tax. Consequently, income falling within the ambit of the doctrine of mutuality is not chargeable to tax. In the present case, the surplus has arisen solely out of mutual dealings between the society and its members. The doctrine of mutuality squarely applies, as all contributors to the common fund are entitled to participate in the surplus, and all participators are contributors thereto. There exists a complete identity between contributors and participators, thereby attracting the principle of mutuality. Accordingly, the surplus of Rs.44,70,687/- cannot be treated as taxable income in the hands of the society. Respectful reliance is also placed on the judgments of the Hon’ble Supreme Court in ITO v. Venkatesh Premises Co- operative Society Ltd. reported in [2018] 91 taxmann.com 137 (SC) Non- occupancy charges received by assessee-cooperative society from its members utilised for mutual benefits towards maintenance of premises, repairs, infrastructure and provision of common amenities, would be governed by doctrine of mutuality and, thus, same were not exigible to tax 5. The Ld. DR argued and contended that the assessee had made a wrong claim u/sec. 80P(2)(f) of the Act in return of income. So, the assessee is not eligible for the said claim u/sec. 80P in the return of income. He stands in favor of the revenue authorities. The Ld. DR invited our attention in the observations made by the Ld. CIT(A) in para no.6.3 which is reproduced as below:

4 ITA No.307 & 308/Mum/2026 Vashi infotech Park Premises Co Op Society ltd. “6.3 against the Ground No 1,2 & 3 were raised against the action of AO in making addition of Rs.44,70,688/- by denying deduction u/s 80P of the Act by passing assessment order u/s 143(3) r.w.s 144B of the Act. After careful consideration of the facts, written submissions the appellant a cooperative society whose objectives will not fall under any of the provisions of the section 80P of the Act to claim benefit of deduction. I am of the considered opinion that there is no infirmity in the action of AO in disallowing an amount of Rs.44,70,688/- i.e the deduction u/s 80P of the Act as claimed by the appellant. The rightly followed the procedure laid down in the act in completing the assessment u/s 143(3) r.w.s 144B of the Act. Accordingly, the grounds raised on this issue are dismissed. 6.4 Ground no 4 was raised against the action of AO for not giving the sufficient opportunity of hearing.On perusal of the available material on record it was noticed that the AO had given 4 dates of hearing spanning over a period 1 year. Therefore, the contention of appellant sufficient time was not given by the AO is not acceptable. Accordingly, ground raised on this issue is dismissed. 6.5 Ground Nos 5 was raised against the action of AO in levying the interest u/s 234A, 234B, 234C of the Act. The action of AO is statutory and consequential in nature. Accordingly, the grounds raised on this issue are dismissed.”

6.

We have heard the rival submissions and perused the material available on record. The assessee is a Co-operative Housing Society which filed its return of income declaring ‘Nil’ income after claiming deduction of Rs.44,70,687/- under section 80P(2)(f) of the Act. The assessee contended that the impugned income represents surplus arising from members’ contributions to the common fund, including maintenance charges paid by members, and that after meeting the expenses, the balance surplus was retained in the common fund. Accordingly, it was argued that the doctrine of mutuality squarely applies, as the contributors and the participators are identical. The assessee further placed reliance on the judgment of the Hon’ble Supreme Court in Venkatesh Premises Co-operative

5 ITA No.307 & 308/Mum/2026 Vashi infotech Park Premises Co Op Society ltd. Society Ltd. (supra) in support of its contention. However, on perusal of the assessment order, it is observed that the assessee had originally claimed deduction under section 80P(2)(f) of the Act, which was rejected by the Ld. AO. Subsequently, the assessee has taken an alternative plea that the surplus represents mutual contributions from members and is thus exempt on the principle of mutuality. In our considered view, the nature and character of the receipts comprising the impugned surplus require proper verification at the end of the Ld. AO, particularly to examine whether the conditions for applicability of the doctrine of mutuality are satisfied. Accordingly, we deem it appropriate to restore the issue to the file of the Ld. AO for de novo verification of the nature of the assessee’s funds and to examine the applicability of the doctrine of mutuality in accordance with law. Needless to say, the assessee shall be afforded a reasonable opportunity of being heard and to furnish the requisite evidences in the set-aside proceedings. We clarify that we have not expressed any opinion on the merits of the case. So, the appeal of the assessee is allowed for statistical purposes.

7.

In the result, the appeal of the assessee bearing ITA Nos.307 and 308/Mum/2026 are allowed for statistical purpose. Order pronounced in the open court on 28th day of April 2026. Sd/- Sd/- (OM PRAKASH KANT) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 28/04/2026 SAUMYASr.PS Copy of the Order forwarded to:

6 ITA No.307 & 308/Mum/2026 Vashi infotech Park Premises Co Op Society ltd. 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI

More judgments on Section 80P

All 5,069 judgments and leading authorities on Section 80P →

Recent GST High Court judgments

Search GST case law →