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Facts
The assessee, a co-operative housing society, filed a 'Nil' income return after claiming a deduction of INR 9,70,353/- under Section 80P(2)(d). The entire claim was initially disallowed under Section 143(1), but a rectification order under Section 154 partially allowed it, confirming an addition of INR 7,96,970/-. The assessee appealed, contending that this amount represented member contributions, not taxable under the principle of mutuality, and was incorrectly claimed under Section 80P(2)(d).
Held
The ITAT acknowledged the assessee's argument that the disputed INR 7,96,970/- might be non-taxable member contributions based on mutuality, and that it was incorrectly claimed under Section 80P(2)(d). Noticing that neither the CIT(A) nor the Assessing Officer had adequately examined this specific aspect, the Tribunal restored the issue back to the file of the Assessing Officer for fresh adjudication after providing the assessee a reasonable opportunity to be heard.
Key Issues
Whether the amount received from members by a co-operative housing society, claimed as contribution, is exempt from tax under the principle of mutuality, and whether its erroneous claim under Section 80P(2)(d) warrants an addition.
Sections Cited
154, 143(1), 80P(2)(d)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “J (SMC
order : 27.06.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the Order, dated 07/03/2025, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’], whereby the Ld. CIT(A) had dismissed the appeal of the Assessee against the Rectification Order, dated 27/06/2023, passed under Section 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year 2018-2019.
By way of the present appeal Assessee has challenged the order of CIT(A) confirming the addition to the extend to INR.7,96,970/- made by the Assessing Officer.
The facts relevant for adjudication of the solitary ground raised by Assessment Year 2018-2019 the Assessee in the present appeal are that the Assessee had filed return of income for the Assessment Year 2018-2019 on 02/10/2018, declaring ‘Nil’ income after claiming deduction of INR.9,70,353/- under Section 80P(2)(d) of the Act. The return was processed under Section 143(1) of the Act and vide intimation, dated 31/05/2019, issued under Section 143(1) of the Act total income of Assessee was computed at INR.9,70,350/- by disallowing the entire deduction claimed under Section 80P(2)(d) of the Act. Being aggrieved, the Assessee filed a rectification application before the Assessing Officer which was disposed off by the Assessing Officer vide Rectification Order, dated 27/06/2023, passed under Section 154 by allowing only the part deduction of INR.1,63,142/- under 80P(2)(d) of the Act. Not being satisfied by the aforesaid partial relief granted by the Assessing Officer, the Assessee carried the issue in appeal before the CIT(A) which was dismissed vide Order, dated 07/03/2025, which has been impugned by way of the present appeal.
The contention of the Assessee is that addition/disallowance to the extent of INR.796,970/- confirmed by the CIT(A) represented an amount received from the members of the co-operative society as contribution and the same was not taxable in view of the principle of mutuality. The aforesaid amount was incorrectly claimed as deduction under Section 80P(2)(d) of the Act. Per contra, the Learned Departmental Representative submitted that this aspect required verification by the Assessing Officer as the same was not examined since the addition/disallowance was made under Section 143(1) of the Act on the basis of return filed by the Assessee.
We have considered the rival submissions and have perused the material on record. We find some merit in the contention advanced on behalf of the Assessee. On perusal of audited Income & Expenditure Account of the Assessee for the relevant previous year, Assessment Year 2018-2019 we find that the Assessee has disclosed following receipts as members contribution:
Income Current Year 2017-2018 By Member’s Contribution Towards 6,19,360.00 (i) Maintenance & Taxes 1,12,306.00 (ii) Municipal Taxes 43,800.00 (iii) Car Parking Charges 21,504.00 (iv) Repair Fund - 796,970.00 The Assessee had filed written submission before the CIT(A) wherein it was contended that an inadvertent mistake was committed by the Assessee while filing the return of income by claiming deduction under Section 80P(2)(d) of the Act in respect of amount of INR.796,970/- which was actually the contribution received from members. However, the aforesaid contention was rejected by the CIT(A) on the ground that the intimation was issued as per the information stated in the return of income and that the Assessee has failed to disclose true particulars of income. We note that no finding was returned by the CIT(A) in relation to amount of INR.796,970/- which was claimed by the Assessee to be in the nature of contribution from members. During the course of hearing the Learned Departmental Representative had pointed that this aspect required examination/verification by the Assessing Officer. Therefore, we deem is appropriate to restore this issue back to the file of the Assessing Officer with the directions to decide the issue afresh after granting the Assessee a reasonable opportunity of being heard. The Assessee is directed to placed before the Assessing Officer all material in support of the contention that INR.796,970/- was actually contribution received by the Assessee from members and that the same was not liable to tax in the hands of the Assessee on the principle of mutuality. The Assessing Officer would be at liberty to call for and examine such further material/information to determine the nature the aforesaid amount. In terms of the aforesaid, the addition/disallowance to the extent of INR.796,970/- Assessment Year 2018-2019 is set aside and Ground No.1 raised by the Assessee is allowed for statistical purposes.
In result, the present appeal preferred by the Assessee is allowed for statistical purposes.
Order pronounced on 27.06.2025.