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Facts
The assessee, a co-operative housing society, declared income including interest earned from fixed deposits. They claimed a deduction under section 80P(2)(d) of the Income-tax Act for this interest. The Assessing Officer disallowed the deduction as the interest was earned from Axis Bank, not a co-operative society.
Held
The Tribunal restored the issue to the Assessing Officer to verify the quantum of interest earned from co-operative banks and whether it was declared as business income or income from other sources. The CIT(A) erred in not following the procedure for admitting additional evidence.
Key Issues
Whether interest earned from fixed deposits with a co-operative bank is eligible for deduction under Section 80P(2)(d) and whether the CIT(A) properly admitted additional evidence.
Sections Cited
80P(2)(d), 263, 46A, 5(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “H (SMC
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
This appeal by the assessee is directed against order dated 06.11.2024 passed by the Ld. Commissioner of Income-tax (Appeals) [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds:
On the facts and circumstances of the case and in law, the On the facts and circumstances of the case and in law, the On the facts and circumstances of the case and in law, the order passed by the Ld. order passed by the Ld. Commissioner of Income-tax, Appeal tax, Appeal Addl/JCIT (A) is bad in law. Addl/JCIT (A) is bad in law.
On the facts and circumstances of the case and in law, the Ld. On the facts and circumstances of the case and in law, the Ld. On the facts and circumstances of the case and in law, the Ld. Commissioner of Income Commissioner of Income-tax, Appeal Addl/JCIT (A) erred in not tax, Appeal Addl/JCIT (A) erred in not accepting the contention of the appellant that it is entitled to accepting the contention of the appellant that it is entitled to accepting the contention of the appellant that it is entitled to deduction u/s 80P(2)(d) of the Income duction u/s 80P(2)(d) of the Income-tax Act, 1961, as it is a tax Act, 1961, as it is a Co-operative Society and as per law the same is available as a operative Society and as per law the same is available as a operative Society and as per law the same is available as a deduction. deduction. 2. Briefly stated facts of the case are that the assessee is a co Briefly stated facts of the case are that the assessee is a co Briefly stated facts of the case are that the assessee is a co- operative housing society providing various services to its members. operative housing society providing various services operative housing society providing various services The assessee is having income by way of subscription service The assessee is having income by way of subscription service The assessee is having income by way of subscription service charges etc. from its members charges etc. from its members and interest on saving and fixed interest on saving and fixed deposits maintained with various banks. For the year under deposits maintained with various banks. For the year under deposits maintained with various banks. For the year under consideration, the assessee filed return of income on 28.10.2017 consideration, the assessee filed return of income on 28. consideration, the assessee filed return of income on 28. declaring total income at Rs.10,91,950/ declaring total income at Rs.10,91,950/- after claiming deduction after claiming deduction u/s 80P(2)(d) of the Act amounting to Rs.18,52,375/-. The return of u/s 80P(2)(d) of the Act amounting to Rs.18,52,375/ u/s 80P(2)(d) of the Act amounting to Rs.18,52,375/ income filed by the assessee was selected for scrutiny and statutory income filed by the assessee was selected for scrutiny and statutory income filed by the assessee was selected for scrutiny and statutory notices under the Act were issued and served notices under the Act were issued and served upon the assessee. upon the assessee. The assessee was specifically asked to justify deduction claimed u/s The assessee was specifically asked to justify deduction claimed u/s The assessee was specifically asked to justify deduction claimed u/s 80P(2)(d) 80P(2)(d) 80P(2)(d) of of of the the the Act. Act. Act. Despite Despite Despite providing providing providing more more more than than than three three three opportunities from August, 2018 to November, 2019 , there was no opportunities from August, 2018 to November, 2019 opportunities from August, 2018 to November, 2019 compliance on the part of the assessee. The Ass compliance on the part of the assessee. The Assessing Officer noted essing Officer noted that the interest income was earned from fixed deposits with Axis that the interest income was earned from fixed deposits with Axis that the interest income was earned from fixed deposits with Axis Bank and therefore it therefore it was not entitled for deduction u/s 80P(2)(d) of deduction u/s 80P(2)(d) of the Act. Accordingly he made addition in the assessment order the Act. Accordingly he made addition in the assessment order the Act. Accordingly he made addition in the assessment order passed on 03.12.2019. passed on 03.12.2019.
On further appeal, the assessee filed break appeal, the assessee filed break-up of interest appeal, the assessee filed break earned from co-operative bank as well as non operative bank as well as non-co- -operative bank before the Ld. CIT(A). The Ld. CIT(A) after verification, following the before the Ld. CIT(A). The Ld. CIT(A) after verification, following the before the Ld. CIT(A). The Ld. CIT(A) after verification, following the decision of the Hon’ble Supreme Court in the case of Totgars Co-op. decision of the Hon’ble Supreme Court in the case of Totgars Co decision of the Hon’ble Supreme Court in the case of Totgars Co Sale Society Ltd. [2010] 188 Taxman 282 (SC) rejected the claim of Society Ltd. [2010] 188 Taxman 282 (SC) rejected the claim of Society Ltd. [2010] 188 Taxman 282 (SC) rejected the claim of the deduction of the assessee. Aggrieved the assessee is in appeal the deduction of the assessee. Aggrieved the assessee is in appeal the deduction of the assessee. Aggrieved the assessee is in appeal before the Income-tax Appellate Tribunal (in short ‘the Tribunal’) tax Appellate Tribunal (in short ‘the Tribunal’) tax Appellate Tribunal (in short ‘the Tribunal’) raising the grounds as reproduced above. raising the grounds as reproduced above.
val submissions of the parties and perused 4. We have heard ri We have heard rival submissions of the parties and perused the relevant material on record. the relevant material on record. Before us, the Ld. counsel for the Before us, the Ld. counsel for the assessee relied on the decision of the Co assessee relied on the decision of the Co-ordinate Bench of the ordinate Bench of the Tribunal in the assessee’s own case for assessment year 2015-16 Tribunal in the assessee’s own case for assessment year 2015 Tribunal in the assessee’s own case for assessment year 2015 wherein the Tribunal de Tribunal decided the issue of revision order u/s 263 issue of revision order u/s 263 observed that assessee was entitled for passed by the PCIT passed by the PCIT and observed that assessee was entitled deduction u/s 80P(2)(d) of the Act from the interest earned from deduction u/s 80P(2)(d) of the Act from the interest earned from deduction u/s 80P(2)(d) of the Act from the interest earned from investment made with the co investment made with the co-operative societies. In the instant case operative societies. In the instant case before the Assessing Officer no detail in respect of banks from the Assessing Officer no detail in respect of banks from the Assessing Officer no detail in respect of banks from whom interest was earned interest was earned, was provided. The Assessing Officer was he Assessing Officer was of the view that interest was earned from the Axis Bank which being of the view that interest was earned from the Axis Bank which be of the view that interest was earned from the Axis Bank which be not a co-operative society, h operative society, he disallowed the deduction of the c e disallowed the deduction of the claim u/s 80P(2)(d) of the Act. But before the Ld. CIT(A), the assessee has u/s 80P(2)(d) of the Act. But before the Ld. CIT(A), the assessee has u/s 80P(2)(d) of the Act. But before the Ld. CIT(A), the assessee has provided a chart of the interest earned from co provided a chart of the interest earned from co-operatives and non operatives and non- co-operative banks. But the Ld. CIT(A) did not follow the procedure operative banks. But the Ld. CIT(A) did not follow the procedure operative banks. But the Ld. CIT(A) did not follow the procedure provided under Rule 46A of the Income provided under Rule 46A of the Income-tax Rule tax Rules, 1962 for admitting the documentary evidence as additional evidence. admitting the documentary evidence as additional evidence. admitting the documentary evidence as additional evidence. Further, the Ld. counsel for the assessee asked to provide Further, the Ld. counsel for the assessee asked to provide Further, the Ld. counsel for the assessee asked to provide computation of the income to substantiate whether the interest computation of the income to substantiate whether the interest computation of the income to substantiate whether the interest income earned by the assessee is declared as income earned by the assessee is declared as ‘business income business income’ or ‘income from other sources income from other sources’. The said information ’. The said information was not readily available with the Ld. counsel for the assessee available with the Ld. counsel for the assessee and expressed inability in submitting inability in submitting. In view of the above facts and circumstances . In view of the above facts and circumstances and in the interest of substantial justice and in the interest of substantial justice, we feel it , we feel it appropriate to restore this issue back to the file of the Assessing Officer for restore this issue back to the file of the Assessing Officer for restore this issue back to the file of the Assessing Officer for deciding on following issues (i) the Assessing Officer to verify the deciding on following issues (i) the Assessing Officer to verify the deciding on following issues (i) the Assessing Officer to verify the quantum of the interest earned from co quantum of the interest earned from co-operative societies or co operative societies or co- operative bank carrying out business or ba operative bank carrying out business or banking as defined u/s 5(6) nking as defined u/s 5(6) of the Banking Regulation Act, (ii) the Assessing Officer to verify Banking Regulation Act, (ii) the Assessing Officer to verify Banking Regulation Act, (ii) the Assessing Officer to verify whether the interest income shown by the assessee has been shown whether the interest income shown by the assessee has been shown whether the interest income shown by the assessee has been shown as ‘business income’ or ‘income from other sources’ in the return of income filed for the income filed for the year under consideration. After der consideration. After verifying the above, the Assessing Officer above, the Assessing Officer is directed to decide the issue in is directed to decide the issue in accordance with law. accordance with law.
4.1 Accordingly, the grounds of the appeal of the assessee are Accordingly, the grounds of the appeal of the assessee are Accordingly, the grounds of the appeal of the assessee are allowed for statistical purposes. allowed for statistical purposes.
In the result, the appeal of In the result, the appeal of the assessee is allowed for the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 21 nounced in the open Court on 21/01/2025. /01/2025.