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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
Before: Shri Shamim Yahya
This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-30 dated 01.05.2020 and pertains to assessment year 2019-20.
Grounds of appeal
read as under:-
1. The Learned C1T(A) has erred in confirming the disallowance of deduction u/s 80P(2)(d) of Rs. 737074 (including interest on Saving fund Rs. 3470) being amount received on account of interest from Co-operative Bank. Reasons assigned by him for confirming the same are wrong and insufficient
2. The learned CIT(A) has erred in confirming the disallowance of deduction u/s 80P(2)(c )(ii) of Rs. 50,000. Reasons assigned by him for doing the same are wrong and insufficient
3. He was further erred in not serving notice u/s 250 of the Income Tax Act, 1961 to the appellant and pass the order.
In this case, order passed u/s. 143(1) of the I.T.Act, assessee was denied deduction u/s. 80P(2)(d) of Rs. 7,37,074/- and 80P(c)(2) of Rs. 50,000/-. The National Faceless Appeal Centre (NFAC) noted that brief facts as per assessees submission as under:-
The Appellant is a Co- operative Housing Society. Return of income was filed on 26.09.2019 declaring Total Income of Rs. 8,73,560/-. Subsequently e proceedings were initiated us 143(1)(a) stating the error as In schedule VI A, under Part C deduction in respect of certain incomes in SI. NO. 2. m deduction is claimed under section 80P however return is not filed within due date, dated 14.02.2020. The response submitted the response submitted the response on 26.02.2020 i.e well within the 30 days period granted as follows, Walkeshwar Chandabala Co-operative Housing Society Limited being a co operative society whose accounts are required to be audited under the Maharashtra Co operative Societies Act 1960. Therefore the due date of filing of return of income us 139(1) is 30th September 2019 and society has filed return of income on 26th September 2019 within due date. Therefore it is not correct to say that return is not filed within due date. Furthermore deduction under 80P is allowed since inception of the society. Thereafter intimation us 143(1) dated 01.05.2020 was received on email on 06th May 2020. In the intimation appellant observed that deduction u/s.80P of Rs. 7,87,074/- claimed was not computed by the CPC. Appellant, Co operative Housing Society, have received interest from Co operative Bank amounting Rs. 7,37,074 (including interest on saving bank Rs. 3470). Appellant ijas claimed deduction us 80P(2)(d) Rs. 7,37,074. It also claimed deduction us 80P(2)(c)(ii) for Rs. 50,000 as it is other Co- op Society. While processing the return of income the CPC has disallowed deduction us 80P(2)(d) AND 80P(2)(c)(ii) of Rs. 7,37,074 and RS 50,000 and disallowed the claim of deduction u/s. 80P.
After noting the above submissions and the grounds raised by the assessee in this regard. The Ld.CIT(A) noted as under:-
“ The assessee is a Co-operative Housing Society and has claimed deduction u/s. 80P(2)(d) an amount of Rs. 7,37,074/- (including interest on saving fund Rs. 3,470/- being amount of interest from Co-operative. The appellant has also claimed deduction u/s. 80P(2)©(ii) of Rs. 50,000/-
Thereafter, section 80P was reproduced and finally, the Ld.CIT(A) has held as under:
“However, as the appellant is a Co-operative Housing Society situated in Mumbai and does not satisfy the clauses of section 80P mentioned above. The grounds of appeal of the appellant are dismissed.”
Against the above order, assessee is in appeal before the ITAT.
I have heard the Ld. DR and perused the records. It may be gainful to refer to provision of section 80P in this regard, section 80P “Deduction in respect of income of co-operative societies. 80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub- section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely :— (a) in the case of a co-operative society engaged in— (i) carrying on the business of banking or providing credit facilities to its members, or (ii) a cottage industry, or (iii) the marketing of agricultural produce grown by its members, or (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or (v) the processing, without the aid of power, of the agricultural produce of its members, or (vi) the collective disposal of the labour of its members, or (vii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members, the whole of the amount of profits and gains of business attributable to any one or more of such activities : Provided that in the case of a co-operative society falling under sub-clause (vi), or sub-clause (vii), the rules and bye-laws of the society restrict the voting rights to the following classes of its members, namely:—
(1) the individuals who contribute their labour or, as the case may be, carry on the fishing or allied activities; (2) the co-operative credit societies which provide financial assistance to the society; (3) the State Government; (b) in the case of a co-operative society, being a primary society engaged in supplying milk, oilseeds, fruits or vegetables raised or grown by its members to— (i) a federal co-operative society, being a society engaged in the business of supplying milk, oilseeds, fruits, or vegetables, as the case may be; or (ii) the Government or a local authority; or (iii) a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), or a corporation established by or under a Central, State or Provincial Act (being a company or corporation engaged in supplying milk, oilseeds, fruits or vegetables, as the case may be, to the public), the whole of the amount of profits and gains of such business; (c) in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause (b) (either independently of, or in addition to, all or any of the activities so specified), so much of its profits and gains attributable to such activities as does not exceed,— (i) where such co-operative society is a consumers' co-operative society, one hundred thousand rupees; and (ii) in any other case, fifty thousand rupees. Explanation.—In this clause, "consumers' co-operative society" means a society for the benefit of the consumers; (d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income; (e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of such income; (f) in the case of a co-operative society, not being a housing society or an urban consumers' society or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power, where the gross total income does not exceed twenty thousand rupees, the amount of any income by way of interest on securities or any income from house property chargeable under section 22. Explanation.—For the purposes of this section, an "urban consumers' co-operative society" means a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area or cantonment. (3) In a case where the assessee is entitled also to the deduction under section 80HH or section 80HHA or section 80HHB or section 80HHC or section 80HHD or section 80-I or section 80-IA or section 80J, the deduction under sub-section (1) of this section, in relation to the sums specified in clause (a) or clause (b) or clause (c) of sub-section (2), shall be allowed with reference to the income, if any, as referred to in those clauses included in the gross total income as reduced by the deductions under section 80HH, section 80HHA, section 80HHB, section 80HHC, section 80HHD, section 80-I, section 80- IA, section 80J and section 80JJ. (4) The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation.—For the purposes of this sub-section,— (a) "co-operative bank" and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949); (b) "primary co-operative agricultural and rural development bank" means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities.”
I note that a reading of section 80P nowhere provides that co-operative housing society situated in Mumbai does not satisfy the clause of section 80P. In this regard, query was raised by the Bench to the Ld. DR as to how where section 80P shows that Co-operative Housing Society situated in Mumbai does not satisfy the clauses of section 80P, he could not make any cogent answer and relied upon the Ld.CIT(A) order. Hence, I hold that denial of deduction u/s. 80P for sole reason of its being situated in Mumbai is not legally sustainable. Hence, the order passed by the Ld.CIT(A) is set aside and this appeal by the assessee stands allowed.