EVERSHINE NO II CO-OP HSG SO LIMITED,MUMBAI vs. ITO WARD 25(1)(1), MUMBAI

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ITA 819/MUM/2025Status: DisposedITAT Mumbai06 May 2025AY 2014-15Bench: SMT. BEENA PILLAI (Judicial Member), SHRI OMKARESHWAR CHIDARA (Accountant Member)1 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 the issue of deduction under section 80P(2)(d) for interest income from cooperative banks is a debatable issue. Such debatable issues cannot be added under section 143(1) by CPC. Following judicial discipline and precedents from the ITAT, the addition made by the AO was deleted.

What were the facts?

The appellant society claimed deduction under section 80P(2)(d) for interest earned on fixed deposits with cooperative banks. The AO, through CPC, made an addition under section 143(1), denying this deduction and treating it as income from other sources. The appellant argued that this was a debatable issue and not subject to summary assessment under section 143(1) or rectification under section 154.

What were the issues?

Whether a debatable issue concerning deduction under section 80P(2)(d) can be added under section 143(1) by CPC, and whether interest income from cooperative banks to cooperative societies is eligible for such deduction.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 154,Section 80P(2)(d),Section 234A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “H(SMC

Before: SMT. BEENA PILLAI, JM & SHRI OMKARESHWAR CHIDARA, AM

For Appellant: Shri Bhupendra Shah
For Respondent: Shri Pravin Salukhe
Hearing: 20.03.2025Pronounced: 06.05.2025

“1. The learned A.O. erred in not granting deduction u/s 80P(2)(d) amounting to Rs. 4,55,531/- thereby passing rectification order u/s 154 by way of income from other sources in respect of interest earned on fixed deposit from/with Co-operative banks by also overlooking the fact that debatable addition cannot be sustained u/s 154 or 143(1) and also overlooking the fact that the appellant has been allowed deduction u/s 80P(2)(d) in the earlier years.

2. The learned A.O. erred in not granting deduction u/s 80P(2)(d) amounting to Rs. 4,55,531/- thereby passing rectification order u/s 154 by way of income from other sources in respect of interest earned on fixed deposit from/with Co-operative banks thereby

2 Evershine No. II Cooperative Housing Society Limited rejecting case laws of jurisdictional Tribunal. Mumbai in the case of Kshatriya Gadkari Maratha Co-operative Credit Society Ltd v. ITO in & 3647/Mum/2018 and Kalindas Udyog Bhavan Premises Co-op Hsg Society v. ITO in ITA No. 654/Mum/2017.

3. In the facts and circumstances of the case and in law, the learned AO erred in wrongly charging interest u/s 234A, B & C.

4. In the facts and circumstances of the case and in law, the learned Commissioner of Income Tax(A) erred in confirming the hereby not accepting the petition for condonation filed and by also overlooking the fact that debatable addition cannot be sustained u/s 154 or 143[1] and not granting an opportunity of being heard before passing the order.”

2.

The Ld. AR of the appellant has made two fold argument before the ITAT as follows : a) The deduction claimed by the appellant under section 80P(2)(d) of the Act is a debatable issue as the same was being contested by various appellants upto Hon’ble Supreme Court and hence the addition cannot be made by CPC under section 143(1) which permits the mistakes of undisputed and prima facie adjustments can be rectified.

b) The Ld. CIT(A) has dismissed its appeal by not condoning the delay in filing the appeal, despite there is valid reason and merits were not discussed. c) The Ld. AR of the appellant has also argued that in the subsequent years, viz., A.Y. 2015-16 to 2018-19 the first appellate authority has allowed the deduction under section 80P(2)(d) of the Act in similar circumstances.

3.

The Ld. DR relied on the orders of Ld. AO (CPC) and order of Ld. CIT(A)and requested the Bench to confirm the addition.

4.

Heard both sides. This issue of deduction under section 80P(2)(d) of the Act relating to interest received from the Cooperative Banks by the Cooperative Societies is covered in favour of appellant by the decisions of various Coordinate Benches of Mumbai ITAT including the decisions cited by Ld. AR of 3 Evershine No. II Cooperative Housing Society Limited the appellant in the grounds of appeal before the ITAT. Moreover, the issue is debatable and hence addition cannot be made under section 143(1) of the I.T. Act by CPC. Following the judicial discipline, as the issue is covered in favour of the appellant, in the cases of Kshatriya Gadkari Maratha Cooperative Society & 3647/Mum/2018 and Kalindas Udyog Bhavan Premises Cooperative Society the addition made by the Ld. AO is deleted.

5. The appeal of the appellant is allowed.

Order pronounced in the open court on 06-05-2025.

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