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Facts
The appellant, a cooperative housing society, claimed deduction under Section 80P(2)(d) for interest income. The Dy. Director of Income Tax denied this claim. The appeal was filed with significant delay, which was initially not condoned by the CIT(A).
Held
The Tribunal condoned the delay in filing the appeal, acknowledging the appellant's bonafide belief that the CPC would rectify their application and the lack of full-time management. The Tribunal further held that the appellant is entitled to the deduction under Section 80P(2)(d) based on various judicial precedents, including a Supreme Court decision.
Key Issues
Whether the delay in filing the appeal should be condoned and whether the cooperative society is entitled to deduction under Section 80P(2)(d) on interest income.
Sections Cited
80P(2)(d), 143(1)(a), 139(1), 154
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Income Tax Appellate Tribunal, Mumbai “K(SMC
Before: Smt. Kavitha Rajagopal (JM) & Shri Omkareshwar Chidara (AM)
2. The learned Dy. Director of Income Tax, CPC has grossly erred in making this adjustment to the returned income filed by the appellant and denying the claim of the assessee in an order u/s. 143(1)(a) of the Income Tax Act, 1961.
3. The learned Dy. Director of Income Tax, CPC has grossly erred in considering the due date of filing of Return of Income u/s. 139(1) as 7th September 2015 as the appellant is a Co-operative Society whose accounts have to be audited under the Maharashtra Co operative Societies Act and hence the due date of u/s. 139(1) for A.Y. 2015-16 was 31st October 2015.
4. The CPC has erred in not disposing of the Application for rectification u/s. 154 of the Income Tax Act, 1961 dated 19th May 2016.
2 Datta Sadan Cooperative Housing Society Ltd.
At the time hearing before the ITAT, Ld. AR of the appellant has stated that the appeal of the appellant-society was dismissed by the Ld. CIT(A) because of inordinate delay in filing the appeal before the first appellate authority. The appellant has stated that the main reason for delay in filing the appeal is that, they have filed an application for rectification under section 154 of the I.T. Act before the CPC and they have waited for CPC to process their application. The rectification application filed by the appellant was not processed till date and hence they filed an appeal before the first appellate authority. Ld. CIT(A) is not satisfied with the reasons given by the appellant-society and dismissed the appeal by not condoning inordinate delay.
Aggrieved by the order of Ld. CIT(A), appellant-society filed an appeal before the ITAT with grounds of appeal mentioned at page No. 1 of this order.
During the hearing before the ITAT, Ld. AR of the appellant filed written submission and also an affidavit in which they mentioned the reasons for delay in filing the appeal. The reasons for filing the appeal with delay was two-fold. First being that, they have waited for the order of CPC in pursuance of the application made by them under section 154 of the Act and the second being the appellant society does not have full-time Manager nor they were conversant with the Income Tax Law and hence they took legal opinion of the Chartered Accountant Mr. Ajay A. Wadke and filed an appeal. The Ld. AR of the appellant has pleaded that the delay was not intentional and as they are not doing any business as such, the delay may be condoned and justice be done by setting aside the order of Ld. CIT(A) as the issue relating to deduction under section 80P(2)(d) of the Act is covered in favour of the appellant by several decisions of the Tribunal including the decision of Hon'ble Supreme Court in the case of The Mavilayi Service Cooperative Bank Ltd. & Ors Vs. ITO in which it was held that the cooperative societies are entitled for deduction under section 80P(2)(d) of the Act. The Ld. AR of the appellant has also filed a copy of the decision of the Coordinate Bench in the 3 Datta Sadan Cooperative Housing Society Ltd. case of M/s. Palmera Cooperative Housing Society Ltd. and M/s. Vishva Villa Cooperative Housing Society Ltd. 683 & 684/Mum/2024, where it was held that inordinate delay was condoned in identical facts and circumstances where the appellant society has a bonafide belief that the disallowance made by CPC would be rectified under section 154 of the Act.
The Ld. DR relied on the orders of CPC and the first appellate authority and argued that the delay should not be condoned for the reason mentioned in the order of the first appellate authority. But the Ld. DR did not controvert the fact that the CPC has not processed application of the appellant society filed by them under section 154 of the Act till now.
Heard both sides. It is an undisputed fact that there was huge delay of more than 3000 days but this delay is attributable to the bonafide belief of the appellant-society that the CPC would rectify the application under section 154 of the Act and they waited for a very long time. Secondly, from the affidavit filed by the appellant-society it is observed that the office bearers of the cooperative societies are working on an honorary capacity and are not conversant with the Income Tax Laws coupled with the fact that they do not have full time manager or accountant to look after the affairs of the society. Being a housing society, it works on contribution made by the members for common expenses and is not profit a making organisation. It was also mentioned in the affidavit that the present management committee of the society which is also not conversant with income tax laws, approached the Chartered Accountant Shri Ajay Wadke and took a decision to file the appeal. The Ld. AR of the appellant has filed a copy of two decisions of the Coordinate Bench mentioned above and it is observed that in similar and identical circumstances, delay in filing the appeal was condoned. In view of the same, the delay is condoned by this Bench also. Coming to the merits of the case, it is observed that the appellant-society claimed deduction under section 80P(2)(d) of the Act on the interest income derived by the appellant
4 Datta Sadan Cooperative Housing Society Ltd. society from its investment held with the Cooperative Bank to the extent of Rs. 45,990/-. Ld. AR of the appellant filed written submission in which it was stated that Hon'ble ITAT Mumbai has examined this issue in a catena of cases and held that interest income earned by the Cooperative Society is eligible for deduction u/s. 80P(2)(d) of the Act. Some of the cases where the Coordinate Benches of Mumbai held that the deduction was allowed as follows :-
(i) M/s Solitaire CHS Ltd. Vs. Pr.CIT, dated 29.11.2019 (ITAT "G" Bench, Mumbai); (ii) M/s Petit Towers Co-op. Housing Society Ltd. Vs. Income Tax Officer, dated 01.09.2021 (ITAT "C" Bench, Mumbai) (iii) Land's End Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum.) (iv) M/s Sea Green Cooperative Housing and Society Ltd. Vs. ITO, Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017. (v) Merwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO, (ITA NO. 6139/Mum/2014, dated 27.09.2017.) (vi) Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, Mumbai (ITA No. 6547/Mum/2017). (vii) Palm Court M Premises Co-op Society Ltd. Vs Principal Commissioner of Income Tax, Mumbai (ITA No. 561/Mum/2021) (viii) Amore Commercial Premises Co-op Society Ltd Vs Central Processing Centre Bangalore Karnataka.
The Ld. AR of the appellant has laid emphasis on decision in the case of M/s. Solitaire CHS Ltd. Vs. PCIT (ITA No. 3155/Mum/2019 dated 29.11.2019) where the issue relating to claim of deduction u/s.80P(2)(d) of the Act was exhaustively looked into by “G” Bench of the ITAT, Mumbai and held that the appellant-society is entitled for deduction as claimed. Respectfully following the decisions mentioned above, it is decided that the appellant society is entitled for deduction u/s. 80P(2)(d) of the Act and order of Ld. CIT(A) is set aside. Moreover, now the issue is squarely covered by the 5 Datta Sadan Cooperative Housing Society Ltd. decision of Hon'ble Supreme Court in the case of Mavilayi Services Cooperative bank Ltd. (431 ITR 1)(SC) in favour of the appellant society when it was held that the appellant is entitled for deduction under section 80P(2)(d) of the Act. Thus the delay in filing the appeal was hereby condoned for the reasons mentioned above and the addition is also deleted on merits.
The appeal of the appellant is allowed.
Order pronounced in the open Court on 24/02/2025.