2024 (4) TMI 313 - AT - Income Tax

Deduction u/s. 80P(2)(d) - interest income earned from other cooperative banks/societies - HELD THAT - As relying on KSHATRIY GADKARI MARATHA COOPERATIVE CREDIT SOCIETY LTD 2019 (4) TMI 1932 - ITAT MUMBAI and KALIANDAS UDYOG BHAVAN PREMISES CO-OP SOCIETY LTD. 2018 (4) TMI 1678 - ITAT MUMBAI we hold that the assessee a cooperative society is eligible for deduction u/s. 80P(2)(d) of the Act in respect of the interest income earned by the assessee from either any other cooperative society or from a cooperative bank. Principle of mutuality - Club House income and expenditure - We need to recognize that the society is housing society and the club house services are offered only to the members of the society and we observe that AO has recognized only the receipt from the members as income and not allowed any related expenses. We are aware that housing co-op societies are running under mutuality concept. Therefore the stand of the authorities are not proper. We direct the Assessing Officer to allow the expenses against the income under the mutuality concept. Accordingly Grounds raised by the assessee are allowed.

Summary

Issues Involved:
1. Assessment of total income.
2. Taxability of club house income.
3. Disallowance of expenses u/s 57.
4. Deduction u/s 80P(2)(d).
5. Application of interest u/s 234A, 234B, 234D and notice u/s 271(1)(c).

Summary:

1. Assessment of Total Income:
The learned Assessing Officer (AO) assessed the total income at Rs. 32,58,230/- against the returned income of Nil, thereby making an addition of Rs. 32,58,230/-.

2. Taxability of Club House Income:
The AO considered the club house income received from members as taxable, although the same is covered by the concept of mutuality. The Tribunal observed that the society is a housing society and the club house services are offered only to the members. The AO recognized only the receipt from the members as income and did not allow any related expenses. The Tribunal directed the AO to allow the expenses against the income under the mutuality concept.

3. Disallowance of Expenses u/s 57:
The AO disallowed the expenses incurred on the maintenance of the club house u/s 57 against the income from the club house assessed as taxable. The Tribunal directed the AO to allow the expenses under the mutuality concept.

4. Deduction u/s 80P(2)(d):
The AO disallowed the deduction u/s 80P(2)(d) on the interest income from cooperative banks. The Tribunal observed that the issue of whether a cooperative society is entitled to deduction u/s 80P(2)(d) on the interest income earned from other cooperative banks/societies has been decided by various Coordinate Benches in favor of the assessee. The Tribunal held that the provisions of section 80P(2)(d) are clear and the assessee is entitled to deduction u/s 80P(2)(d) in respect of interest or dividends received from investments made with any other cooperative societies.

5. Application of Interest u/s 234A, 234B, 234D and Notice u/s 271(1)(c):
The AO applied interest u/s 234A, 234B, 234D and issued a notice u/s 271(1)(c). The Tribunal did not provide specific details on this issue in the judgment.

Conclusion:
The appeal filed by the assessee was allowed, and the Tribunal directed the AO to allow the expenses against the income under the mutuality concept and to grant the deduction u/s 80P(2)(d) on the interest income earned from cooperative banks. The order was pronounced in the open court on 05th April, 2024.