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Facts
Vile Parle Model Cooperative Housing Society Ltd. claimed deduction under section 80P(2)(d) for interest income earned from investments with cooperative banks for AY 2012-13, 2014-15, and 2016-17. The Central Processing Centre (CPC) disallowed this deduction via an intimation under section 143(1), a decision upheld by the CIT(A), leading to these appeals. The assessee challenged both the validity of the adjustment under section 143(1)(a) and their entitlement to the deduction.
Held
The Tribunal held that the adjustment under section 143(1) was not permissible as the claim for deduction under section 80P(2)(d) did not constitute an "incorrect claim" apparent from the return. It further ruled that cooperative banks qualify as "co-operative societies" under section 2(19) read with the Maharashtra Co-operative Societies Act, 1960, making the interest income from them eligible for deduction under section 80P(2)(d).
Key Issues
1. Whether disallowance of deduction under section 80P(2)(d) by way of intimation under section 143(1)(a) is legally permissible. 2. Whether interest income earned by a cooperative housing society from investments with cooperative banks is eligible for deduction under section 80P(2)(d).
Sections Cited
Income Tax Act, 1961: Section 143(1), Income Tax Act, 1961: Section 80P(2)(d), Income Tax Act, 1961: Section 80P(4), Income Tax Act, 1961: Section 139, Income Tax Act, 1961: Section 142(1), Income Tax Act, 1961: Section 2(19), Income Tax Act, 1961: Section 10AA, Income Tax Act, 1961: Chapter VI-A, Maharashtra Co-operative Societies Act, 1960: Section 2(10), Banking Companies Act, 1949: Section 5(1)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Mumbai “SMC” Bench, Mumbai.
ITA No 175-177/MUM/2024 AY 2012-13, 2014-15 & 2016-17 Vile Parle Model Coop Housing society Limited V ACIT 25(3)5), Mumbai IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “SMC” Bench, Mumbai. Before Shri Prashant Maharishi (AM) (A.Y. 2012-13) (A.Y. 2014-15) I.T.A. No. 177/Mum/2024 (A.Y. 2016-17) Vile Parle Model Cooperative Vs. ACIT, Housing Society Ltd. Ward-25(3)(5) A-7, Disha, Gulmohar Kautilya Bhavan Cross Road, 7 JVPD Bandra Kurla Scheme, Mumbai Complex, Bandra Maharashtra-400 049. East Mumbai-400 051. PAN : AAAJV0060B (Appellant) (Respondent) Assessee by Shri Devenra Jain Department by Shri R.R. Makwana Date of Hearing 03.06.2024 Date of Pronouncement 24.06.2024 O R D E R
These are the three appeals filed by Vile Parle model cooperative housing society Ltd Mumbai(the assessee/appellant against the appellate order passed by the additional Commissioner of income tax (appeals) – 5, Kolkata (the learned CIT – A) for assessment year 2012- 13, 2014-15 and 2016-17 on 22/11/2023 filed against the order passed under section 143 (1) of the income tax act by the central processing Centre not allowing the deduction to the assessee under section 80 P (2) (d) of the act on the interest earned on investment made by the assessee cooperative society with cooperative banks, were dismissed.
For assessment year 2012 – 13 the assessee filed its return of income on 22/8/2012 declaring a total income of rupees to lakhs 16,450. The -177/MUM/2024 AY 2012-13, 2014-15 & 2016-17 2 Vile Parle Model Coop Housing society Limited V ACIT 25(3)5), Mumbai due date of filing of the return was 31/8/2012. This return was processed by an intimation under section 143 (1) of the income tax act 1961 on 1/3/2013 wherein total deduction claimed by the assessee under section 80P (2) (d) of Rs. 909,014 was not granted. Assessee preferred appeal before the learned CIT – A wherein the claim of the assessee was not accepted and the order of the central processing Centre was confirmed holding that interest income on from cooperative banks are exempt and the assessee’s investment is not with cooperative banks. Therefore assessee is in appeal before us.
Assessee has made investment with Saraswat cooperative bank, Shamrao Vithal cooperative bank and Abhudaya Cooperative bank Limited. The first challenge of the assessee is that adjustment made under section 143 (1) (a) of the act is bad in law. Second challenges that even otherwise the assessee is entitled to deduction under section 80 P (2) (d) of the act.
The learned authorized representative reiterated his submissions made before the learned lower authorities.
The learned departmental representative vehemently supported the orders of the lower authorities.
We have carefully considered the rival contention and perused the orders of the lower authorities. Undisputedly the fact shows that assessee is a cooperative society. The due date for filing of the return as per intimation itself shows that it was 31/8/2012 and assessee has filed its return of income on 22/8/2012 therefore, the return of the assessee is in time.As per provisions of section 143 (1) (a) permits following adjustment to the total income of the assessee:- 143. 67[(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:— (a) the total income or loss shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the return; 68[***] -177/MUM/2024 AY 2012-13, 2014-15 & 2016-17 3 Vile Parle Model Coop Housing society Limited V ACIT 25(3)5), Mumbai
(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; 69[(iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure 70[or increase in income] indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under 71[section 10AA or under any of the provisions of Chapter VI-A under the heading "C.— Deductions in respect of certain incomes", if] the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return:
The disallowance of deduction under chapter VI A can only be made under section 143 (1) (a) (v) of the act only on account of non- furnishing of return of income within the due date of filing of the return. This is not the reason.
Claim of the assessee cannot be said to be an incorrect claim in view of the explanation (a) which is as under:- (a) "an incorrect claim apparent from any information in the return" shall mean a claim, on the basis of an entry, in the return,— (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;
It is not the case that deduction under section 80 P (2) (d) is a deduction provided by any monitoring limit or percentage ratio or fraction. Thus, claim of deduction under section 80 P (2) (d) is also not classified as incorrect claim. -177/MUM/2024 AY 2012-13, 2014-15 & 2016-17 4 Vile Parle Model Coop Housing society Limited V ACIT 25(3)5), Mumbai
Thus, the adjustment of disallowance of deduction under that section is not permissible adjustment provided under section 143 (1) of the act. Therefore the intimation passed under section 143 (1) is not sustainable.
On the merits of the case, provisions of section 2 (19) define a co- operative society as under:- 19) "co-operative society"97 means a co-operative society registered under the Co- operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies ;
Thus, for the definition of the cooperative society whether covers the cooperative banks are not one has to look at the respective cooperative societies act is applicable.
THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960, Defines cooperative banks as per section 2 (10) of that Act as under :”- “Co-operative bank” means a Co-operative society which is doing the business of banking as defined in clause (b) of sub-sections (1) of section 5 of the Banking Companies Act, 1949 and includes any society which is functioning or is to function as an Agricultural and Rural Development Bank under Chapter X. 15. Thus it is apparent that cooperative banks are also a co-operative society. Only difference is that those cooperative societies are doing the business of banking as per the banking companies act 1949. Therefore, merely because these cooperative societies cooperative bank they do not lose their status as a co-operative society. 16. According to the provisions of section 80 P (2) (d) of the income tax act (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;
Thus, the assessee’s investment of earning interest income from such cooperative banks which are also cooperative societies whole of such income is deductible under this section. -177/MUM/2024 AY 2012-13, 2014-15 & 2016-17 5 Vile Parle Model Coop Housing society Limited V ACIT 25(3)5), Mumbai
It is not in dispute that assessee is not a cooperative bank and therefore provisions of section 80 P (4) of the act does not apply to it.
Thus the assessee is eligible for deduction under section 80 P (2) (d) of the act on its income received from all the above cooperative banks. Hence assessee is eligible for that deduction amounting to Rs. 909,014/–. 20. Accordingly solitary ground of appeal
in ITA number 175/M/2024 for assessment year 2012 – 13 is allowed. Accordingly appeal for that year is also allowed.
21. For assessment year 2014 – 15 in ITA number 176/M/2024 identical claim of Rs. 1,766,674/– and in ITA number 177/M/2024 for assessment year 2016 – 17 of Rs. 2,042,250/– are also allowable to the assessee, as there is no change in the facts and circumstances of the case. Accordingly solitary ground in those appeals and consequent those appeals are also allowed.
22. Accordingly, all the three appeals filed by the assessee are allowed.