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Income Tax Appellate Tribunal, ‘C‘ BENCH
Before: SHRI M.BALAGANESH & SHRI AMARJIT SINGH
आदेश / O R D E R PER M. BALAGANESH (A.M): This appeal in ITA No.246/Mum/2021 for A.Y.2015-16 preferred by the order against the revision order of the ld. Principal Commissioner of Income Tax-19, Mumbai u/s.263 of the Act dated 26/02/2021 for the A.Y.2015-16.
2 ITA No.246/Mum/2021 M/s. Pritvi Apartments Co-Op. Hsg. Society Ltd.,
The only issue to be decided is as to whether the ld PCIT had validly assumed revision jurisdiction u/s 263 of the Act in the facts and circumstances of the instant case.
We have heard the rival submissions and perused the materials available on record. We find that the assessee is a co-operative housing society. We find from the computation of total income enclosed in page 1 of the paper book filed before us, that the assessee had shown Nil income under the head ‘income from business’ as under:- Net profit as per profit and loss account (-) 39,46,245 Add: Other disallowance u/s 36 39,46,245 ------------------ Business Income Nil ------------------
3.1. Apart from this, the assessee had declared income from other sources of Rs 25,46,867/- and had declared total income of Rs 1,83,478/- after claiming deduction u/s 80P of the Act to the tune of Rs 23,63,389/- in the return of income. The tax payable on the total income is covered by the TDS credit available with the assessee. The details of income from other sources are as under:-
a)Interest on deposit with ShamraoVithal Co-op Bank Ltd - 1,01,992 b) Interest on deposit with ShamraoVithal Co-op Bank Ltd - 4,69,708 c) Interest on deposit with ShamraoVithal Co-op Bank Ltd - 10,69,640 d) Interest on deposit with Bank of Baroda - 5,44,630 e) Interest on deposit with Bank of India - 1,77,419 Total Interest 23,63,389
3.2. We find that the assessee had claimed deduction u/s 80P of the Act for the aforesaid interest income of Rs 23,63,389/- in the return of income. Apart from the above, the assessee had also earned savings bank interest of Rs 1,83,478/- which had been duly offered to tax. The main
3 ITA No.246/Mum/2021 M/s. Pritvi Apartments Co-Op. Hsg. Society Ltd.,
source of income shown by the assessee is on account of interest income from Co-operative Banks and public sector banks. In the return of income, the assessee claimed deduction u/s 80P of the Act for the same and accordingly the return of income for the Asst Year 2015-16 was filed by the assessee on 21.9.2015 declaring total income of Rs1,83,478/-. The return was selected for limited scrutiny by issuance of notice u/s 143(2) of the Act. In the said notice, the deduction claimed by the assessee under Chapter VI of the Act was directed to be examined by the ld AO, among other items. Accordingly, the ld AO sought to examine the claim of deduction under Chapter VIA of the Act vide order sheet noting enclosed in page 22 of the paper book filed before us. We find that the details were duly submitted by the assessee and the ld AO on examination of the same ,while framing the scrutiny assessment u/s 143(3) of the Act dated 29.6.2017 made an addition of Rs 7,22,049/- (5,44,630 + 1,77,419) in respect of interest income derived by the assessee from Bank of Baroda and Bank of India as admittedly the same were not derived from a Co-operative Bank. We find that the ld AO held that in the case of an assessee, being a co-operative housing society, interest earned from a co-operative bank alone would be eligible for deduction u/s 80P of the Act . The ld AO also placed reliance on the decision of this tribunal in assessee’s own case for the Asst Year 2010-11 in ITA No. 7144/Mum/2014 dated 30.9.2015 in this regard. After making these observations, the ld AO determined the total income of the assessee at Rs 9,05,527/- ( 1,83,478 + 7,22,049).
3.3. This assessment was sought to be revised by the ld. PCIT on the ground that the order is passed without making inquiries or verification which should have been made and the order is passed allowing any relief without inquiring into the claim as per clause (a) and (b) of Explanation 2
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to section 263 of the Act . Accordingly, the ld PCIT concluded that the assessee is not entitled for deduction u/s 80P(2)(d) of the Act in respect of interest received from investments made with a co-operative bank.
3.4. The ld PCIT also observed that the assessee had not deducted tax at source in respect of certain expenditure debited in the profit and loss account and hence the same is disallowable u/s 40(a)(ia) of the Act, which was not done by the ld AO, thereby making his order erroneous and prejudicial to the interests of the revenue.
From the perusal of the facts narrated hereinabove , we find that the ld AO had indeed made requisite enquiries on the subject mentioned issue of claim of deduction u/s 80P of the Act. Infact the return itself was selected for limited scrutiny for examining the said deduction, among others. The ld AO had indeed carried our requisite enquiries on the same and had duly applied his mind on the eligibility of assessee for claiming deduction u/s 80P of the Act by taking due cognizance of the fact that the assessee is a registered co-operative housing society deriving interest income from deposits kept with co-operative banks. Infact the ld AO had even applied his mind that in respect of interest income derived from public sector banks (viz Bank of Baroda and Bank of India), the assessee would not be entitled for deduction u/s 80P of the Act as the same is eligible for only for interest derived from co-operative bank. Hence in our considered opinion, the conclusion of the ld PCIT that no enquiries were indeed carried out by the ld AO cannot be accepted and hence the revision order passed by him u/s 263 of the Act in this regard, is hereby quashed. Reliance in this regard has been rightly placed by the ld AR on the following decisions:-
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a) Decision of Mumbai Tribunal in the case of Jai Hind Co-op Hsg.Soc. Ltd vs PCIT in ITA Nos. 1762 & 1763/Mum/2020 dated 12.2.2021 wherein it was held as under:- “10. Upon careful consideration, as already noted by us in para-6 above, a specific query was raised by Ld. AO during original assessment proceedings regarding deduction claimed u/s 80P(2)(d) which was duly responded to by the assessee. The decision of this Tribunal rendered in Lands End Co- operative Housing Society Ltd. (ITA No.3566/Mum/2014 dated 15/01/2016) was brought to the notice of Ld. AO in support of the deduction. The Ld. AO was clinched with the issue of deduction u/s 80P(2)(d) and assessee's claim was allowed after due application of mind and a view was already taken in the matter. Therefore, the allegation of Ld. Pr. CIT that the deduction was allowed without verification and necessary inquires is bereft of any merits. We find that it not a case of 'no inquiry' but it is a case wherein a plausible / possible view has been taken by Ld. AO after due consideration of issue of deduction u/s 80P(2)(d).”
b) Decision of Mumbai Tribunal in the case of ITO vs M/s Mig Co-op Housing Society Group in ITA Nos. 7325-7327/Mum/2019 dated 9.8.2021
“10. As regards the issue of denial of 80P(2)(d) deduction, we note that the issue is squarely covered in favour of the assessee. Learned Counsel of the assessee has submitted as under :- "1. The captioned appeals preferred by the Department were heard before Your Honours on June 2, 2021. One of the grounds of appeal raised by the Department in all three appeals is regarding allowability of deduction u/s. SOP claimed by the Respondent Assessee. During the course of the hearing, our learned authorized representative Mr. Yogesh Thar had argued that insofar as claim of deduction u/s. SOP of the Act is concerned, the same is covered in Assessee's favour by the decision of the Hon Jurisdictional Mumbai Tribunal in Assessee's own case for AY 2011-12 (ITA No. 896/M/2016, order dated February 17, 2017 (copy has been already filed in the factual paperbook on 21.05.2021). 2. During the course of the hearing, it fell from the Hon Bench that there is a recent full bench decision of the Hon Supreme Court wherein the Hon Supreme Court has elaborately dealt with the issue of allowability of s. SOP deduction in the context of different types of co-operative societies that are entitled to claim the said deduction. Accordingly, the Hon'ble Bench desired that the Assessee may furnish a note in the matter and the matter was treated as heard. 3. In deference to the aforesaid, we are filing this note together with a copy of the said decision of the Hon Supreme Court in the case of The Mavilayi Service Cooperative Bank Ltd. & Ors. Vs. CIT, Calicut & Ors. (Civil Appeal Nos. 7343- 7350 of 2019 dated 12.1.2021)(copy attached at Annexure 1 to this note). The crux of the said decision is that provisions of s.s. (4) to s. SOP cannot come in the way
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while allowing deduction u/s. SOP of the Act to an assessee. being a co-operative society, as long as the said assessee is not a co-operative bank. 4. Following the said decision, the Hon Jurisdictional Mumbai Tribunal has allowed identical claim of deduction u/s. 80P(2)(d) and 80P(2)(c) of the Act in the case of New Ideal Cooperative Housing Society Ltd. v. ITO (1TA No. 2681/M/19, order dated 03.02.2021) (copy attached at Annexure 2 with this note). 5. The Appellant submits that since it is a cooperative housing society and not a cooperative bank, s, 80P(4) has no role to play and therefore deduction claimed u/s. 80P(2)(d) and 80P(2)(c) deserves to be allowed in entirety. 6. Similar is the ratio of the decisions of the Hon Jurisdictional Mumbai Tribunal in following cases; 6.1. Land End Cooperative Housing Society Ltd. v. ITO (46 CCH 52) (Mum); 6.2. Sea Green Cooperative Housing Society Ltd. v. ITO (ITA No. 1343/M/17, order dated 31.03.2017) (Mum); 6.3. Merwanjee Cama Park Cooperative Housing Society Ltd. v. ITO (ITA No. 6139/M/14, order dated 27.09.2017) (Mum); 6.4. ITO v. Ashoka Apt. C.H.S. Ltd. (ITA No. 2845/M/10) (Mum); 6.5. ITO v. Sagar Sanjog C.H.S. Ltd. (ITA No. 1972-74/M/2005)(Mum); 6.6. ITO v. Pancharatna Co. Op. Hsg. Soc. Ltd. (ITA 2858/Mum/2010) (Mum) 7. In view of the foregoing as also the decision in Appellant's own case for AY 2011-12, the Respondent Assessee most humbly submits that the claim of deduction u/s. 80P(2)(d) and 80P(2)(c) be allowed and appeals of the department be dismissed on that ground." Hence we find that the main reason for disallowing the claim here is by his mistaken invocation of section 80P(4) of the Act. This has been duly settled by Hon'ble Supreme Court that .in the case of Cooperative societies this section cannot be invoked as they cannot be held to be cooperative bank. When they have a lease from RBI to this effect. 11. Examining the learned CIT(A)'s order on the conspectus of aforesaid decisions, we do not find any infirmity in the order of learned CIT(A). Hence, we uphold the same.”
4.1. Moreover, we find from the computation of total income, the assessee had not claimed any expenditure as deduction, in view of the fact that the entire expenses in the sum of Rs 39,46,245/- had been disallowed by the assessee voluntarily in the return of income. Hence
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there cannot be any applicability of provisions of section 40(a)(ia) of the Act. This crucial fact has been completely overlooked by the ld PCIT while assuming revision jurisdiction u/s 263 of the Act. Hence we have no hesitation in holding that the action of the ld PCIT in assuming revisionary jurisdiction u/s 263 of the Act is bad in law and unwarranted and is hereby quashed.
4.2. In view of our aforesaid observations in the facts and circumstances of the instant case and respectfully following the judicial precedents relied upon hereinabove, we have no hesitation in quashing the revision order passed by the ld PCIT u/s 263 of the Act. Accordingly, the grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 12/10/2021.
Sd/- Sd/- (AMARJIT SINGH) (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 12/10/2021 KARUNA, sr.ps
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Copy of the Order forwarded to : The Appellant 1. The Respondent. 2. The CIT(A), Mumbai. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. 6. //True Copy//
BY ORDER,
(Asstt. Registrar) ITAT, Mumbai