VERSOVA SANDEEP SAROVAR COOPERATIVE HOUSING SOCIETY LIMITED ,MUMBAI vs. INCOME TAX OFFICER, MUMBAI

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ITA 442/MUM/2026Status: DisposedITAT Mumbai30 April 2026AY 2008-095 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that disallowance under Section 40(a)(ia) and for non-production of bills is not applicable to a mutual undertaking that does not carry on business. The Tribunal followed its previous decision in the assessee's own case.

What were the facts?

The assessee, a cooperative housing society, appealed against the disallowance of expenses under Section 40(a)(ia) and for non-production of bills. The society claimed its income is exempt due to its mutual undertaking nature.

What were the issues?

Whether disallowances under Section 40(a)(ia) and for non-production of bills are applicable to a cooperative housing society operating on the principle of mutuality.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 143(3),Section 254,Section 148,Section 147,Section 144,Section 68,Section 139,Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “H(SMC

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI GIRISH AGRAWAL

For Appellant: Shri Satyanarayan Desai, CA
For Respondent: Shri Pravin Salunkhe, Sr. DR
Hearing: 04.03.2026Pronounced: 30.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “H(SMC)” BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER and SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 442/MUM/2026 Assessment Year: 2008-09 Versova Sandeep Sarovar Income Tax Officer, Cooperative Housing Society s Ward 32(2)(1), Limited Mumbai Plot no 13, RDP II, SVP Nagar, Mhada Layout, Four Bunglow, Mumbai - 400053 (PAN: AAAAV1292J) Appellant Respondent Present for: Appellant by : Shri Satyanarayan Desai, CA Respondent by : Shri Pravin Salunkhe, Sr. DR Date of Hearing : 04.03.2026 Date of Pronouncement : 30.04.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2024-25/1075162057(1), dated 28/03/2025, passed against the assessment order by the Income-tax Officer, Ward- 25(1)(4), Mumbai, u/s 143(3) r.w.s 254 of the Income-tax Act (hereinafter referred to as the “Act”), dated 31/03/2015, for Assessment Year 2008-09.

2.

Grounds taken by the assessee are reproduced as under:

2 ITA No. 442/Mum/2026 Versova Sandeep Sarovar Coop Hsg Soc Ltd. AY 2008-09 1. On the facts and circumstances of the case and in law, the CIT(Appeals) has erred in confirming the order of the Assessing Officer in disallowing a sum of Rs.5,67,429/- under section 40(a)(ia) ignoring the fact that the society is a mutual undertaking and its income is exempted from income-tax. 2. On the facts and circumstances of the case, the CIT(Appeals) has erred in confirming the order of the Assessing Officer by disallowing expenses of Rs.1,83,032/- on account of non-production of bills and vouchers ignoring the fact the society is a mutual undertaking and its income is exempted from income-tax.

3.

At the outset there is a delay of 233 days noted by the Registry in filing of this present appeal before the Tribunal for which petition for condonation of delay along with affidavit is placed on record. The reasons given in the affidavit refers to medical issues of the professional of the assessee engaged for taking care of the income-tax matters. Upon perusal of the same and hearing both sides, we deem it fit to condone the delay on the ground that there was sufficient cause for the said delay, to take up the matter for adjudication.

4.

Brief facts of the case are that assessee is a Cooperative Housing Society registered under the Cooperative Societies Act since 1994. Assessee did not file its return of income under the provisions of section 139 of the Act. Case of the assessee was taken up for reassessment by invoking the provisions of section 148 r.w.s. 147 for which notice u/s. 148 was issued on 31.12.2010. Assessment was completed ex parte u/s. 144 by making an addition of Rs. 3,57,80,150/-. The said addition was made based on taxable income determined u/s.68 for Assessment Year 2006-07 enhanced by 10% of the same which was contested before the ld. CIT(A) who confirmed the same. Against this, the matter went before the Coordinate Bench, who after due consideration restored the said reassessment back to the file of Assessing Officer for denovo assessment, by observing that assessee was prevented by reasonable and sufficient cause for not producing

3 ITA No. 442/Mum/2026 Versova Sandeep Sarovar Coop Hsg Soc Ltd. AY 2008-09 relevant details during the course of reassessment proceedings. Consequent to the restoration of the matter to the file of ld. Assessing Officer by the Coordinate Bench, notice u/s. 142(1), dated 08.09.2014 was issued by the ld. Assessing Officer to the assessee.

4.1. Ld. Assessing Officer concluded the assessment after taking into consideration submissions made by the assessee called for, pursuant to the directions of the Coordinate Bench which included among other things, addition made u/s. 40(a)(ia) of Rs.5,67,429/- and of Rs.1,83,032/- for expenses disallowed on account of non-production of bills and vouchers. Ld. CIT(A) confirmed the disallowance/addition so made against which assessee is in appeal before the Tribunal.

5.

Ld. Counsel for the assessee at the outset pointed out in reference to ground no.1, that the same is squarely covered by the decision of Coordinate Bench in assessee’s own case in ITA no. 3328/Mum/2025 dated 30.09.2025 for A.Y. 2006-07, wherein the Coordinate Bench observed that disallowance u/s. 40(a)(ia) should not be made in case of assessee which is a mutual undertaking, not carrying on any business activity. While giving this finding, reliance was placed on another decision of Coordinate Bench in the case of DCIT vs. Ganesh Khan Udyog in ITA no.3030/AHM/2013. Relevant extracts from the decision of Coordinate Bench in assessee’s own case (supra) is as under: “Ground No. 2: Disallowance u/s. 40(a)(ia) - Rs. 3,33,093/- 6 With respect to the disallowance made by the Ld. AO of Rs. 3,33,093/- in respect of lift maintenance charges (Rs 1,53.335/-) and security charges (Rs. 1,77,758/-) it is seen that the disallowance was made by invoking the provisions of section 40(a)(ia) of the Act. It has been argued by the Ld. AR that the provisions of this section are not applicable in the case of the assessee since it is a mutual association and does not carry out on any business. In this regard, reliance has been placed on the decision of the coordinate bench in the

4 ITA No. 442/Mum/2026 Versova Sandeep Sarovar Coop Hsg Soc Ltd. AY 2008-09 case of DCIT vs Ganesh Khan Udyog in ITA No. 3030/AHM/2013, wherein the coordinate bench as held as under: “Cooperative society enjoys special status that it has own individuality and distinctness in the scheme of the IT Act. A Co-operative society is a voluntary AOP, a is economic institution formed for social purpose and not motivated by entrepreneurial profits by distinguishes from the association of business" Ld. DR on the other hand, has relied on the orders of lower authorities. 7. After careful consideration of the facts and circumstances of the case, we are of the view that the disallowance u/s. 40(a)(ia) in respect of Rs. 3.33.093/- should not be made in the case of assessee which is a mutual undertaking not carrying any business activity and the same is accordingly deleted.” 5.1. In respect of ground no. 2 also, it was pointed out that it is squarely covered by the decision of the Coordinate Bench in assessee’s own case (supra). wherein it was held that disallowance of expenses relating to the society for the benefit of its members by collecting the contribution from the members is not called for. Relevant extracts in this regard are as under: “Ground No. 3: Disallowance of expenses - Rs. 1,25.970/- 8. Ld. AO has further made a disallowance in respect of certain expenses amounting to Rs. 1,25,970/ on the ground that supporting documentary evidences were not produced. In this regard, Ld. AR has argued that since the assessee is a cooperative housing society and its income is exempt. Therefore, no disallowance should have been made on account of non-availability of supporting documentary evidences since, in any case, the entire income of the assessee would be exempt under the principle of mutuality. Ll. DR on the other hand, has strongly relied on the orders of lower authority. 9. After careful consideration of the rival submissions we are of the view that disallowance of expenses relating to the society for the benefit of its members by collecting the contribution from the members was not called for. Accordingly, the disallowance of expenses of Rs. 1,25,970/- is hereby deleted.”

6.

We have heard both the parties and perused the material on record. We have given our thoughtful consideration to the orders of the authorities below as well as of the Coordinate Bench in assessee’s own case (supra). We note that there is no difference in the factual matrix and position of law. Also, nothing is brought on record to

5 ITA No. 442/Mum/2026 Versova Sandeep Sarovar Coop Hsg Soc Ltd. AY 2008-09 controvert the same by the Revenue. In the conspectus of the above discussion and by following the principles of consistency, more particularly, in view of the judicial pronouncement in assessee’s own case, ground nos. 1 and 2 raised by the assessee are allowed.

7.

In the result, appeal filed by the assessee is allowed.

Order pronounced in the open court on 30.04.2026.

Sd/- Sd/- [Narender Kumar Choudhry] [Girish Agrawal] Judicial Member Accountant Member Dated: 30 April, 2026 MP, Sr.P.S. Copy to: 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai

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