NEW SHANGRILLA CO-OPERATIVE HOUSING SOCIETY LIMITED ,MUMBAI vs. INCOME TAX OFFICER, WARD 25(3)(1), MUMBAI, MUMBAI

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: J(SMC) BEFORE HON’BLE SHRI PAWAN SINGH, JUDICIAL MEMBER AND HON’BLE SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 3371/MUM/2026 िनधा�रण वष�/Assmt. Year: 2013-14) INCOME TAX OFFICER, NEW SHANGRILLA CO- WARD 25(3)(1), MUMBAI OPERATIVE HOUSING SOCIETY LIMITED KAUTILYA BHAWAN, BANDRA-KURLA 1, NEW SHANGRILLA CHSL, COMPLEX, BANDRA NANABHAI MOOSA ROAD, Vs. NEAR COLABA POST OFFICE, (EAST) MUMBAI, MUMBAI-400005, MUMBAI-400051, MAHARASHTRA MAHARASHTRA (अपीलाथ� Appellant) (��थ� Respondent) Permanent Account Number of AAAAN2778D Assessee: िनधा�रती �ारा/Assessee represented by: Shri Rajesh S. Athavale, CA राज� व �ारा/Revenue represented by: Shri Ajit Kumar, Sr. DR

सुनवाई की तारीख / Date of conclusion of hearing: 19.05.2026 घोषणा की तारीख / Date of pronouncement: 08.06.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal is filed by the assessee against the order of ld. Addl JCIT(A)-2, Chennai vide DIN: ITBA/APL/S/250/2025- 26/1086127052(1) dated 17.02.2026 passed against the rectification order by the Centralized Processing Centre (CPC) of the Department,

ITA 3371/Mum/2026 New Shangrilla Co-Operative Housing Society Limited Assessment Year 2013-14 Bengaluru u/s 154 of the Income-tax Act, 1961 (hereinafter referred to as the Act) dated 17.04.2014, for the Assessment Year 2013-14.

“1. The learned CIT(A) erred in not condoning a delay in filing of the appeal by the appellant in the absence of reasonable cause. 2. The learned CIT(A) erred in not allowing the deduction claimed under Section 80P(2)(d) on the ground that the same is debatable and therefore, cannot be allowed by rectifying the intimation passed under Section 143(1). 3. The learned CIT(A) erred in not directing the learned CPC/AO to delete the additional tax demand as the same is not permissible under Section 143(1) of the Income tax Act, 1961 without issuing intimation to the assessee. 4. The learned CIT(A) erred in not directing the CPC/AO to allow deduction of INR 3,91,080 claimed under Section 80P(2)(d) of the Income tax Act in respect of interest earned on deposits kept with cooperative banks. 5. The learned CIT(A) erred in directing the CPC/AO to delete the interest charged under Sections 234A, 234B and 234C of the Income tax Act. 6. Each one of the above grounds of appeal is without prejudice to the above.” 3. Brief facts of the case as culled out from the records are that assessee is a Cooperative Housing Society. Return of income was filed on 26.09.2013 reporting total income at Nil after claiming deduction of Rs. 3,91,080/- u/s. 80P(2)(d) in respect of interest income received from co-operative banks. Return of income was processed by CPC for which intimation was issued u/s. 143(1), dated 17.04.2014, disallowing the claim made u/s. 80P(2)(d). Against this intimation, assessee filed a rectification application u/s. 154 both with CPC as an online application and manually, with the ld. Jurisdictional Assessing Officer (JAO). The rectification application was rejected, for which assessee had moved a grievance application through CPGRAM vide CBODT/E/2023/E/0016255 wherein in the remarks it was informed to the assessee by the concerned authority that this issue is a debatable issue hence, it does not come under the purview of section 154 of the Act. Section 154 deals with only the mistake apparent from

ITA 3371/Mum/2026 New Shangrilla Co-Operative Housing Society Limited Assessment Year 2013-14 record and not on debatable issue. It was advised to the assessee through the disposal of the said CPGRAM grievance that appropriate appeal may be filed before the concerned authority. Scanned copy of the CPGRAM grievance disposal communication is reproduced below:

ITA 3371/Mum/2026 New Shangrilla Co-Operative Housing Society Limited Assessment Year 2013-14 said delay, assessee furnished a petition for its condonation by explaining the factual position vis-à-vis response received by the assessee against its grievance filed before the CPGRAM. Ld. CIT(A) did not find the explanation so given “sufficient” for condoning the delay and thus, held that the appeal filed by the assessee is barred by limitation and is not maintainable. Thus, in Para 6.1.4, he held that the appeal is dismissed in limine as time barred.

4.1. However, despite such a dismissal, he proceeded to decide the issue raised by the assessee on merits, for which he dealt with the claim of deduction us/. 80P(2)(d) in para – 6.2. He noted that assessee has claimed deduction in respect of interest earned from deposits with cooperative banks. He further records that scope of rectification u/s. 154 is limited to mistakes apparent from record. Debatable issues requiring interpretation of law are not rectifiable u/s. 154. Claim of deduction u/s. 80P(2)(d) is subject to judicial debate and conflicting views and thus on merits, he upheld the rejection of rectification application.

ITA 3371/Mum/2026 New Shangrilla Co-Operative Housing Society Limited Assessment Year 2013-14 decide the issue holding it against the assessee. Hence, such an action of ld. CIT(A) is liable to be set aside.

5.1. Further, the remark given by CPGRAM and acknowledged by the ld. CIT(A), the issue in respect of deduction u/s. 80P(2)(d) is debatable one, in itself holds in favour of the assessee when an upward adjustment had been made by CPC, while processing the return and denying the claim of deduction u/s. 80P(2)(d) in the intimation issued u/s. 143(1).

5.2. On the given set of facts, the issue before us is also covered by assessee’s own case in appeal for Assessment Year 2014-15 and 2015-16 in ITA Nos. 756 and 755/Mum/2024 vide order dated 28.06.2024. The Coordinate Bench on similar factual matrix held that adjustments made by CPC could not have been made for disallowing deduction u/s. 80P while processing return u/s. 143(1). Amendment to section 143(1) is brought by Finance Act, 2021 w.e.f. Assessment Year 2021-22 which includes disallowance of deduction claimed under Chapter-VIA. Thus, prior to Assessment Year 2021-22, no adjustment could be made for disallowing claim u/s. 80P. Hence, at the threshold, the adjustment itself is bad in law as the year under consideration is Assessment Year 2013-14.

5.3. Further, the issue in respect of claim of deduction u/s. 80P(2)(d) in respect of interest earned on deposits kept with cooperative banks is no longer res integra, as there is no dispute in respect of earning of interest by the assessee from the cooperative banks. The aspect of allowability u/s.80(2)P(d) is extensively dealt by the Hon'ble High Court of Karnataka in case of the PCIT vs. Totagar Cooperative Sales

ITA 3371/Mum/2026 New Shangrilla Co-Operative Housing Society Limited Assessment Year 2013-14 Society Limited [2017] 78 taxmann.com 169 (Kar). Relevant findings given in para 7 to 12 are as under: "7. However, the contention being taken by the learned counsel is untenable. For the issue that was before ITAT, was a limited one, namely whether for the purpose of Section 80P(2)(d) of the Act, a Co-operative Bank should be considered as a Co-operative Society or not? For, if a Co- operative Bank is considered to Co-operative Society, then any interest earned by the Co-operative Society from a Co-operative Bank wo necessarily be deductible under Section SOP(I) of the Act. 8. The issue whether a Co-operative Bank is considered to be a Co- operative Society is no longer res integra. For the said issue has been decided by the ITAT itself in different cases. Moreover, the word "Co- operative Society" are the words of a large extent, and denotes a genus, whereas the word "Co-operative Bank" is a word of limited extent, which merely demarcates and identifies a particular species of the genus Co- operative Societies. Co- Operative Society can be of different nature, and can be involved in different activities; the Cooperative Society Bank is merely a variety of the Co-operative Societies. Thus the Co-operative Bank which is a species of the genus would necessarily be covered by the word "Co-operative Society". 9. Furthermore, even according to Section 56(i)(ccv) of the Banking Regulations Act, 1949, defines a primary Co-operative Society bank as the meaning of Co-Operative Society. Therefore, a Co-operative Society Ban. would be included in the words 'Co- operative Society'. 10. Admittedly, the interest which the assessee respondent had earned was from a Co-operative Society Bank Therefore, according to Sec. 80P(2)(d) of the IT. Act, the said amount of interest earned from a Co- operative Society Bank would be deductible from the gross income of the Co-operative Society in order to assess it: total income. Therefore, the Assessing Officer was not justified in denying the said deduction to the assessee respondent. 11.The learned counsel has relied on the case of Totgars Co- operative Sale Society Ltd. v. IΠΟ (2010) 322 ITR 283/188 Taxman 282 (SC). However, the said case dealt with the interpretation, and the deduction, which would be applicable under Section 80P(2)(a)(i) of the I.T. Act. For, in the present case the interpretation that is required is of Section 80P(2)(d) of the L.T. Act and not Section 80P(2)(a)(i) of the IT. Act. Therefore, the said judgment is inapplicable to the present case. Thus, neither of the two substantial questions of la canvassed by the learned counsel for the Revenue even arise it is the present case. 12. For the reasons stated above, this Court does not find any merit in the present appeal. Hence, the appeal is dismissed.”

ITA 3371/Mum/2026 New Shangrilla Co-Operative Housing Society Limited Assessment Year 2013-14 5.4. We also find that the issue before us of whether a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) for the interest income derived from its investments held with a cooperative bank or not, is covered in favor of the assessee not only by the decision of Hon’ble High Court of Karnataka referred above but also in plethora of cases including few of the following cases: (i) Land and Cooperative Housing Society Ltd. v. ITO (2017) 46 CCH 52 (Mum) (ii) C. Green Cooperative Housing and Society Ltd. v. ITO 21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017 (iii) Marvwanjee Cama Park Cooperative Housing Society Ltd. v. ITO Range- 20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017.

6.1. We are of the considered view that though the co-operative bank pursuant to the insertion of Sub-section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P, however, since a co- operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law

ITA 3371/Mum/2026 New Shangrilla Co-Operative Housing Society Limited Assessment Year 2013-14 for the time being in force in any state for the registration of cooperative societies, therefore, the interest and dividend income derived by a cooperative society from its investments held with a co-operative bank, would be entitled for claim of deduction under Sec.80P(2)(d) of the Act.

Order is pronounced in the open court on 08 June, 2026

Sd/- Sd/- (Pawan Singh) (Girish Agrawal) Judicial Member Accountant Member Dated: 08 June, 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