JOKHIRAM CHAMBERS OWNERS ASSOCIATION,RANCHI vs. ITO,WARD-1(4), RANCHI

आयकर अपीऱीय अधिकरण, रााँची न्यायपीठ, रााँची IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, RANCHI श्री चन्द्र मोहन गगग, न्द्याययक सदस्य एवं श्री एऱ.पी.साहु, ऱेखा सदस्य के समऺ । BEFORE SHRI CHANDRA MOHAN GARG, JM AND SHRI L.P. SAHU, AM आयकर अपीऱ सं./ITA No.349/RAN/2018 (नििाारण वषा / Assessment Year :2016-2017) Jokhiram Chambers Owners Vs. ITO, Ward-1(4), Ranchi Association, Association of Persons, J.D.Compound, Main Road, Ranchi-834001 स्थायी ऱेखा सं./ जीआइआर सं./ PAN/GIR No. : AACAJ 1661 M (अपीऱाथी /Appellant) (प्रत्यथी / Respondent) .. निर्धाऩिती की ओर से /Assessee by : Shri P.S.Paul, CA राजस्व की ओर से /Revenue by : Shri P.K.Mondal, Addl.CIT(DR)

सुनवाई की तारीख / Date of Hearing : 27/08/2019 घोषणा की तारीख/Date of Pronouncement : 30/08/2019 आदेश / O R D E R Per Bench: This appeal has been filed by the assessee against the order of Commissioner of Income Tax (Appeals), Ranchi, dated 09.10.2018 for the assessment year 2016-2017, on the following grounds :- 1. That the Ld. Assessing Officer and the Ld. Commissioner of Income Tax (Appeals ) are not justified in denying the concept of mutuality of the assessee. 2. That the Ld. Assessing Officer and the Ld. Commissioner of Income Tax ( Appeals ) are not justified in denying basic exemption of Rs. 2,50,000/- to the assessee. 3. That the Ld. Commissioner of Income Tax ( Appeals ) is not justified in holding that Section 115JC is applicable on a simple Housing Maintenance Society. 4. That the Ld. Assessing Officer and the Ld. Commissioner of Income Tax (Appeals) are not justified in not considering the

2 ITA No.349/Ran/2018 Order of the Hon'ble Supreme Court and not giving any specific opinion on it. 2. Brief facts of the case are that the assessee has filed his return of total income electronically declaring total income of Rs.1,41,780/- on 05.08.2016. The return was processed u/s 143(1) by the CPC, and demand of Rs.38,750/- was raised. Against which the assessee appealed before the CIT(A) and the CIT(A) after considering the submissions of the assessee and findings of the Assessing Officer, dismissed the appeal of the assessee. 3. Further aggrieved from the order of CIT(A), the assessee is in appeal before the Income Tax Appellate Tribunal. 4. Ld. AR before us filed written submission which read as under :- “1. Ground No. 1 & 4 :- The copy of the Memorandum of Association, Bye Laws and the Rules & Regulations of the Association are attached as Annexures - 1 to 3. The assessee is a housing society whose main object is to take care of the interest of the unit holders. Point No.- 3 (a) to (o) of Annexure - 1. There is no intention to collect anything from any outsider. The assessee is a non-profit organisation and a mutual society consisting of only unit owners. The Association has no intention to make and distribute any profit. In other words, it is a premises society. Hence, the concept of mutuality comes into play as the assessee cannot make any profit from its constituent members. The sources of receipts of the society are maintenance charges, interest from bank & rent from generator space. Interest from bank and rent from generator space have been offered for taxation, being receipts from 3rd parties. The Ld. A.O. & The Ld. C.I.T.(A) are not justified in denying the concept of mutuality of the assessee. The copy of the judgment by the hon'ble Supreme Court in the case of ITO vs. Venketesh Premises Co-operative Society Ltd. (2018) 254 Taxman 0313 ( S.C.) is attached as Annexure - 4. The main finding of the hon'ble Supreme Court was that :- "............ there was no reason to take a view different from that taken by the High Court, that the notification dated 9-8-2001 is applicable only to co-operative housing societies and has no application to a premises society which consists of non-residential premises. In the result', all appeals preferred by the revenue were dismissed. Civil Appeal No. 1180 of 2015 preferred by the assessee, society was allowed."

3 ITA No.349/Ran/2018

The copy of the judgement Som Vihar Apartment Owners Housing Maintenance Society Ltd. v CIT ( 1997 ) 060 ITD 0392 ( Del - Trib ) as Annexure - 5 in which it has been held that "In the facts and circumstances of the case, principle of mutuality is applicable in the assessee's case, therefore, amount representing contribution of members and licence fee and electricity charges received from licensees of shops and bank, etc., jointly owned by members of assessee-society is exempt from tax." 2. Ground No. 2 & 3 :- Since the assesse is a premises society without profit motive, hence Sec.115JC has no applicability. While filing the return form electronically (which is mandatory), the column of Sec.115JC is filled automatically by the system. The assesse has no option to negate the figure filled in column of Sec.115JC and therefore, the return had to be submitted with figures in column of Sec.115JC. Since the assesse is a simple association persons, hence the basic deduction of Rs. 2,50,000/- has to be allowed. Copy of the rates of applicable taxation is attached as Annexure - 6. The Ld. CIT(A) was not justified in not appreciating the fact that law shall prevail over the computer software. Please find enclosed a copy of the Chapter - XII - BA, Sec - 115JC of the Income Tax Act, 1961 attached as Annexure - 7. If at all taxable u/s 115JC the tax rate should have been 18.5% and not 30%. In addition to this, ld. AR also request for sending back the matter to the file of Assessing Officer for necessary rectification. 5. On the other hand, ld. DR relied on the order of Assessing Officer. 6. After hearing both the sides and perusing the material available on record, we notice that the return of income was processed u/s.143(1) of the Act in which income from other sources has been determined at Rs.1,41,778/- and in which 30% of tax has been charged. The assessee is an association of persons. Before us, the AR of the assessee filed paper book containing 32 pages. On perusal of the documents placed before us, we notice that the assessee had declared interest on Fixed Deposits income of Rs.1,41,778/-. We observe from the acknowledgement issued by the CPC u/s.143(1) of the Act that the threshold limit of exemption of Rs.2,50,000/- has not been given to the

4 ITA No.349/Ran/2018 assessee. We accept the contention of ld. AR of the assessee that this matter should go to the file of Assessing Officer for necessary verification as to why the assessee has not been given benefit of threshold limit of exemption. Accordingly, we remit the matter to the file of Assessing Officer for giving benefit of threshold limit of exemption after due verification. Needless to say, the assessee may be given sufficient opportunity of hearing and the assessee is also directed to cooperate with the Assessing Officer for early disposal of the case. 7. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 30/08/2019. Sd/- Sd/- (C.M.GARG) (L.P.SAHU) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER रााँची Ranchi; ददनांक Dated 30/08/2019 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अपीऱाथी / The Appellant- . 1. Jokhiram Chambers Owners Association, Association of Persons, J.D.Compound, Main Road, Ranchi-834001 प्रत्यथी / The Respondent- 2. ITO, Ward-1(4), Ranchi 3. आयकि आयुक्त(अपील) / The CIT(A), आयकर आयुक्त / CIT 4. निभधगीय प्रनतनिनर्, आयकि अपीलीय अनर्किण, रााँची / DR, ITAT, Ranchi 5. गार्ग फाईऱ / Guard file. 6. सत्यापपत प्रयत //True Copy// आदेशािुसार/ BY ORDER, (Senior Private Secretary) ITAT Cuttack Bench, Cuttack Camp at ITAT Ranchi Bench, Ranchi