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TMI Blog2023 (9) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... edule' i.e. Schedule EI of Return of Income. In 'Schedule -BP computation of Income from business and profession' of Return of Income vide Column A5 which reads as 'Income credited to profit and loss account which is exempt Rs 93,20,286 is mentioned. Appellant society was supposed to give details of such exempt income credited to profit and loss account in 'Exemption schedule of Return of Income. But in Exemption schedule (item 4(1)) appellant society mentioned maintenance charges from members which are exempt from tax" as Zero. Thus there is discrepancy in information between schedule BP & Schedule EI." Hence CPC, Bengaluru issued letter to appellant society vide letter number CPC/1920/G22/1971720995 dated 31-12-2019 calling for explanation for variation found i.e. why exemption claimed in profit and loss account is higher than Total exempt income earned by appellant society during the year as per 'Exemption schedule'. The Appellant society admittedly failed to give clarification to CPC within time allowed. If any new claims are made by assessees using 'Return data correction' option, the same will not be considered for rectification. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d). Smt Snehlata Jain v/s CIT 192 CTR 50 (J&K) e). TATA INDUSTRIES LTD vs. ITO dated 20th July, 2016,181 TTJ 0600 (Mumbai) Hon'ble bench has held in para 30 of the order as under:- 6. According to the Ld. AR, the assessee itself has offered disallowance in the return of income more than the exempt income earned and submitted that even if the assessee under misconception has over assessed itself in the return of income, the Appellate Authorities ought to have given relief to the assessee to the extent the assessee is over assessed and direct the lower authorities to tax the assessee as per the provisions of law. According to Ld. AR that ratio is given in the case of "National Thermal Power Co. Ltd." vs. CIT" 229 ITR 383 wherein the facts before the Hon'ble Supreme Court was that the assessee in that case offered the interest amount for taxation and the assessment was completed on that basis. Before the Ld. CIT (A), the assessee though had taken a number of grounds of appeal; however, the inclusion of the said amount of interest was not challenged. The inclusion of the said amount of interest was not objected to even in the grounds of appeal as originally filed before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same was spent for the purpose for which it was collected, which fact is discernable from profit & loss account. Hence according to him, Rs. 93,20,286 (Maintenance Charges) claimed as exempt on the principle of Mutuality was not taxable, as per the law laid by Hon'ble Supreme Court in the case of in ITO vs. VENKATESH PREMISES CO-OPERATIVE SOCIETY LTD. 402 ITR 670 (SC) wherein at para 10 held '.......The income of the assessee is contributed by its members. The assessee has been formed specifically with the object of providing a common effluent facility to its members. The income is not generated out of dealings with any third party. The entire contribution originates in its members and is expended only in furtherance of the object of the association for the benefit of the members. On these facts. both the CIT(A) and the Tribunal were justified in coming to the conclusion that the surplus so generated falls within the purview of the doctrine of mutuality and was not eligible to tax'. 7. The Ld. AR also drew our attention to page no. 23 to 90 of appeal set and especially to page no 44 wherein copy of the rectification return filed is found placed therein. From a perusal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e pleaded that on the principle of mutuality the receipts by the co-operative society from its members are exempt from income tax based on the mutuality concept. 9. Per contra, the Ld. DR supported the impugned action of Ld. CIT(A) and does not want us to interfere with the action of Ld. CIT(A). 10. We have heard both the parties and pursued the record. We note that the assessee is co-operative commercial premises co-operative society Ltd. For the relevant year under consideration i.e. AY 2019-20, the assessee society filed return of income with Nil business income. Return was processed u/s 143(1) (a) of the Act on 31.12.2019 treating amount of Rs. 3,41,90,136/- as business income, raising demand of Rs. 34,83,398/-. Aggrieved, assessee filed rectification before CPC dated 26.08.2020, which confirmed business income at Rs. 2,96,50,864/-. Aggrieved, assessee preferred as appeal before the CIT(A)/NFAC wherein it challenged the non-rectification of order passed u/s 143(1)(a) order and also taxing Rs. 93,20,286/- as a business income against Nil business income filed by the assessee co-operative society. And assessee also raised the ground of appeal for non-grant of benefit under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 154 or not and whether rectification sought by the appellant society falls within the scope of 154 or not but the scope does not extend to examine whether a new claim can be made by the appellant otherwise than by filing revised return and whether or not it can be entertained since the appeal under consideration is not an appeal against 143(1) order." 13. And the Ld. CIT(A) has dismissed the ground of appeal of the assessee regarding, it is claim of 'Mutuality' by holding as under: - "8. Vide second Ground of appeal it is contended by the appellant that the CPC erred in not giving benefit of 'Mutuality' in its order passed u/s 154. The question is whether the appellant claimed applicability of 'Mutuality concept' in its rectification application filed before CPC or not before deciding whether CPT erred in not giving that benefit to the appellant. It is beyond doubt that there is no separate rectification application filed by the appellant apart from 'Rectified data correction' filed in which details in exemption schedule were modified. Request for 'Mutuality benefit' was not possible in rectified data correction' and has not been made by the appellant. Rectification order passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciple of 'Mutuality' in respect of Rs. 93,20,286/- which it has collected from its members for various charges has been disallowed without examining whether it is exempt under the 'Principle of Mutuality' which even though Ld. CIT(A) held to be essential question of fact did not bother to examine the same on the ruse that impugned order before him was an order of CPC u/s 154 of the Act. Be that as it may, for the ends of justice and fair play, we restore this issue back to the file of AO to examine on facts whether the claim of assessee is allowable on the Principle of Mutuality in the light of plethora of decisions the subject and as per the decision of the Hon'ble Jurisdictional High Court in the case of CIT Vs. Bombay Oil Seeds & Oil Exchange Ltd. 202 ITR 198 and the Hon'ble Supreme Court decision in ITO vs Venkatesh Premises Co-operative Society Ltd- Civil appeal no. 3271 of 2018 order dated 12.03.2018. Since the claim raised by assessee is a mixed question of fact and law, the AO to examine the relevant facts as to determine whether Rs. 93,20,286/- is not taxable on the principle of Mutuality in the light of judicial precedence cited supra and in accordance to the law. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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