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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED&
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD [CONDUCTED THROUGH VIRTUAL AT AHMEDABAD] BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. No. 619/Ahd/2019 (Assessment Year: 2015-16) Sun Divine Co. Op. Housing Vs. ITO Society Ltd., Sun Divine-1, Ward-4(2)(5), Unique City Home Gota, Ahmedabad Ahmedabad-382481 Mehta Lodha & Co., 105, Sakar-1, Ashram Road, Ahmedabad-380009 [PAN No.AAGAS9098H] (Appellant) .. (Respondent) Assessee by : Shri Prakash D. Shah, AR Revenue by : Shri R. R. Makwana, Sr. DR 13.06.2022 Date of Hearing Date of Pronouncement 15.06.2022 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeal filed by the assessee is directed against the order dated 25.02.2019 passed by the Commissioner of Income Tax (Appeals)-13, Ahmedabad arising out of the order dated 29.09.2017 passed by the ITO, Ward-4(2)(5), Ahmedabad under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for A.Y. 2015-16 with the following grounds: “1. That the learned CIT(A) has erred in law and facts by passing order under section 154 of the Act of the order passed by the under section 250 of the Act and therefore the original order passed by the learned CIT(A) under section 250 of the Act is to be restored and relief granted by the ld.CIT(A) is to be given. 2. Without prejudice to above Ground No.1, that the learned CIT(A) has erred in law and facts confirming the addition of interest income of Rs. 12,55,003/- u/s 56
ITA No. 619/Ahd/2019 Sun Divine Co. Op. Housing Society Ltd. vs. ITO Asst.Year –2015-16 - 2 - of the Act and therefore the ld.AO be directed to delete the same while computing the total income or he may be directed to compute the correct income as per law.” 2. The brief facts relating to the case is this that the assessee a society filed its return of income for A.Y. 2015-16 declaring total income NIL on 31.10.2015. The case has been selected for scrutiny and the notice under Section 143(2) of the Income Tax Act was issued on 02.08.2016. Thereafter notice under Section 142(1) of the Act was issued on 17.01.2017. The assessment was completed under Section 143(3) determining total income at Rs. 12,46,090/-. While determining the total income, the Ld. Income Tax Officer (hereinafter referred as the Assessing Officer) has made addition on account of saving bank interest of Rs. 9,415/-, fixed deposit interest of Rs. 12,65,003/- and interest on deposit of Rs. 1,452/-, aggregating to Rs. 12,65,870/- under Section 56 of the income tax Act, 1961. The learned AO has not considered the concept of mutuality and held the aforesaid interest income taxable under the head “income from other sources” under Section 56 of the Act.
It is relevant to mention that relying on the order passed by the predecessor in assessee’s own case for A.Y. 2013-14 the Ld. CIT(A) deleted the said addition. The order under Section 250 of the Act dated 21.01.2019 passed by his predecessor in appellant’s own case for A.Y. 2014-15 is on identical issues.
However, the Ld. CIT(A) is of the opinion that the impugned order was passed subsequent to the order passed by the Jurisdictional High Court which is in deviation to the ratio laid down by the Jurisdictional High Court’s order in the case of Rajpat Club Ltd. vs. CIT, reported in (1995) 211
ITA No. 619/Ahd/2019 Sun Divine Co. Op. Housing Society Ltd. vs. ITO Asst.Year –2015-16 - 3 - ITR 379 (Guj.) and the judgment passed by the Hon’ble Apex Court in the case of Bangalore Club vs. CIT, reported in (2013) 350 ITR 509 (SC) on similar issues. The Ld. CIT(A) was further of the opinion that this is an error which is rectifiable under Section 154 of the Act for A.Y. 2015-16 to bring the subject appellate order in terms with binding precedents of the Jurisdictional High Court.
The background of the assessee is this that the appellant is a Cooperative Housing Society and has received interest income of Rs. 12,65,870/- which is claimed to be income covered by principle of mutuality which was found to be taxable by the Ld. AO under Section 56 of the Act. The plea raised by the assessee before the appellate authority is this that the issue has been decided in appellant’s own case in favour of the assessee for A.Y. 2013-14 when the similar addition was deleted by CIT (Appeals)-4, Ahmedabad, vide order dated 08.05.2017 on the basis of the order passed by the Hon’ble Mumbai ITAT in the case of Hill Properties Ltd. in ITA No. 101/Mum/2010, dated 18.03.2011. Such decision was passed on the observation made by the Hon’ble Delhi High Court in the case of Oriental Bank of Commerce Welfare Society and the judgment passed by the Karnataka High Court in the case of Canara Bank Golden Jubilee Staff Welfare Fund.
It is relevant to mention that these two decisions were passed on the basis of the prevailing concept of mutuality prevailing in 2011 which has later on changed its view. It is pertinent to note that Hon’ble Delhi ITAT in the case of ACIT vs. New Vikas Cooperative Housing Building Society Ltd. in ITA No. 2217 & 2218/Del/2008, 1679/Del,2010, 3791/Del/2011
ITA No. 619/Ahd/2019 Sun Divine Co. Op. Housing Society Ltd. vs. ITO Asst.Year –2015-16 - 4 - vide order dated 29.06.2018 on identical facts following the decision of Bangalore Club (Supra) categorically held that interest earned by society is taxable and not covered by principle of mutuality. It is observed that decision is rendered by two member bench wherein they have categorically considered Bangalore Club rendered by Supreme Court hence this decision also in the case of Cooperative Housing Society has much larger weight as it is rendered by two member bench as against SMC Bench relied upon by appellant.
Further that the Hon’ble Jurisdictional High Court in the case of Gujarat Sports Club Ltd., reported in 171 ITR 504 held that the interest received by Blub from Bank FDs is not covered by principle of mutuality. The Hon’ble Jurisdictional High Court in the case of Rajpath Club Ltd., reported in 211 ITR 379 has held that interest derived from fixed deposits with banks by assessee club should not be said to be income from mutual activity and as such was eligible to tax as income from other sources. Relying upon these subsequent judgments as mentioned hereinabove whereby the said income has been decided to tax as income from other sources the Ld. CIT(A) has finally held the said income taxable.
The question before us as to whether the order passed under Section 154 of the Act against the order passed under Section 250 of the Act is justifiable or not.
The Ld.A.R before us submitted that the Co-ordinate Bench, Kolkata in the case of Daulal Kothari vs DCIT bearing ITA No.1065/Kol/2016 for
ITA No. 619/Ahd/2019 Sun Divine Co. Op. Housing Society Ltd. vs. ITO Asst.Year –2015-16 - 5 - A.Y. 2010-11 dated 07.03.2018 involving identical facts and circumstances has decided the issue in favour of the assessee
On the other hand, Ld.D.R relied upon the order passed by the authorities below.
We have heard the parties and perused the relevant materials available on record. We find that the issue is covered in the order passed by the Co-ordinate Bench, in the case of Daulal Kothari vs D.C.I.T(Supra), wherein it has been held that the finding of the facts cannot be disturbed by the Ld.CIT(A) by way of seeking recourse to section 154 of the Act in view of the specific rider or prohibition provided in section 154(1A) of the Act where rectification can be done only in relation to matter other than the matter which has been so consider/decided by the authorities earlier in his order. While dealing with the issue the Co-ordinate Bench was pleased to observe as follows: “….4. We have heard the rival submissions. The Id. AR placed reliance on the provision of section 154(1A) of the Act and accordingly pleaded that the relief sought to be withdrawn by the Ld. CIT(A) in the proceedings u/s 154 of the Act was not in accordance with the provision of section 154 of the Act. 3n response to this, the Id. DR vehemently relied on the order of the Ld. CIT(A). We find that the provision of section 154(1) and 1 54( 1 A) read as under: Section 154 - Rectification of mistake (1) With a view to rectifying any mistake apparent from the record an income- tax authority referred to, in section 116 may,- (a) amend any order passed by it under the provisions of this Act; (b) amend any intimation sent by it under sub- section (1) of section 143, or enhance or reduce the amount of refund granted by it under that sub- section.]
ITA No. 619/Ahd/2019 Sun Divine Co. Op. Housing Society Ltd. vs. ITO Asst.Year –2015-16 - 6 - (c) amend any intimation under sub- section (1) of Section 200A; (d)amend any intimation under sub-section (!) of sec lion 206CB.J Section 154 (IA) (1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub- section (1), the authority passing such order may, notwithstanding anything contained in any law for !he,, nine being in force, amend ihe order under that sub- section in relation to any matter other than the matter which has been so considered and decided.] From the plain reading of aforesaid provisions, we understand that the Ld. CIT(A) is also one of the Income Tax authorities referred 10 in section 116 and accordingly he is entitled to amend his order passed by him under the provisions of the Act. However, the rider has been placed in section 154(1A) of the Act, wherein, it stipulates that an order earlier passed by Income Tax authorities could be subject matter of amendment/rectification in terms of section 154(1), only in relation to matter other than the matter which has been so considered/decided by such authority earlier in his order. In the instant case, the Ld. CIT(A) had accepted the sale consideration reported by the assessee and also appreciated the fact that it was a distress sale made by the assessee after taking into account the existence of the dispute for 28 years and that the assessee was forced to sell subject mentioned properties to the existing persons who was occupying the subject mentioned properties itself. Hence, the Ld. C1T(A) has categorically given his finding in his original order dated 30.12.2015 with regard to the adoption of the sale consideration of the subject mentioned properties for the purpose of capital gains and also after appreciating the fact that the valuation officer had not considered the existing disputes over the subject mentioned properties , while valuing the property. Hence, the entire gamut of consideration of the subject mentioned properties has been duly considered and decided by the Ld. C1T(A) earlier in his order dated 30.12.2015. Hence, the said finding of facts cannot be disturbed by him by way of seeking recourse to section 154 in view of specific rider or prohibition provided in section 154(1A) as enumerated supra. If at all the revenue is aggrieved, against the earlier order passed by the Ld. CIT(A) dated 30.12.2015, the proper recourse would be to prefer to such appeal before Tribunal which the revenue had not filed. 5. In view of the aforesaid facts and with reference to specific provisions of Section 154(1A) of the Act, we hold that the Ld.CIT(A) was not authorized as per law to pass an order u/s.154 of the Act by withdrawing the relief already granted to the assessee in the instant case. Accordingly, grounds raised by the assessee are allowed….”.
Hence, respectfully relying upon the same, the order passed by the Ld.CIT(A) under section 154 of the Act is found to be not justiciable. Thus,
ITA No. 619/Ahd/2019 Sun Divine Co. Op. Housing Society Ltd. vs. ITO Asst.Year –2015-16 - 7 - we set aside the impugned order passed by the Ld.CIT(A) and allow the appeal preferred by the assessee. Hence, assessee’s appeal is allowed.
In the result, the appeal preferred by the assessee is allowed.
This Order pronounced in Open Court on 15/06/2022
Sd/- Sd/- (WASEEM AHMED) (Ms. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 15/06/2022