Case Law Details
Rushabh Apartment Co-op. Housing Society Limited Vs ITO (ITAT Mumbai)
Summary: The appeal was filed against the order of the Commissioner of Income-tax (Appeals) dated 28 December 2023 for Assessment Year 2012-13. The assessee challenged the refusal of the CIT(A) to condone the delay in filing the appeal and the dismissal of the appeal in limine. The assessee also contested the denial of deduction under Section 80P(2)(d) in respect of interest received from a co-operative bank and argued that the adjustment made under Section 143(1) was beyond the scope of permissible adjustments.
The assessee, a co-operative housing society registered under the Maharashtra Co-operative Societies Act, had filed its return declaring income of Rs. 79,910 after claiming deduction of Rs. 3,30,305 under Section 80P(2)(d). The Central Processing Centre (CPC), Bengaluru, while processing the return under Section 143(1), disallowed the deduction without giving any reason or opportunity to the assessee. The assessee filed a rectification application on 6 June 2013, which was rejected. A second rectification application was filed on 23 August 2013 and remained pending.
Subsequently, the assessee filed an appeal before the CIT(A) on 27 March 2023. The CIT(A) refused to condone the delay of nearly ten years and dismissed the appeal. The Tribunal observed that the disallowance of deduction under Section 80P was beyond the scope of prima facie adjustments permissible under Section 143(1). It further held that the pending rectification application constituted a reasonable cause for the delay, as the assessee was waiting for its disposal. The Tribunal noted that a screenshot dated 20 June 2024 showed that the rectification application remained pending since 23 August 2013.
Relying on a coordinate bench decision in Vishva Villa Co-operative Housing Society Ltd., the Tribunal held that the delay should have been condoned. It further observed that, for the relevant assessment year, disallowance of a deduction under Section 80P was not within the scope of adjustments under Section 143(1)(a).
Accordingly, the Tribunal directed the Assessing Officer to allow deduction under Section 80P(2)(d) in respect of interest income of Rs. 3,30,305 received from Maharashtra District Co-operative Bank Ltd. The appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 28.12.2023 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2012-13.
2. The assessee has raised following grounds of appeal:
“1. On the facts and the circumstances of the case and in law, the learning CIT(A) erred in not condoning the delay in filing an appeal though there was reasonable cause due to which the appellant was prevented for filing the appeal in time.
2. On the facts and the circumstances of the case and in law, the learning CIT(A) erred in not condoning the delay in filing appeal and dismissing the appeal in limine and not considering the merits of the case.
3. On the facts and the circumstances of the case and in law, the learning CIT(A) erred in not condoning the delay though there is good case and merits in the claim made by the appellant and the Courts have held that when there is merit in the case, the delay in filing appeal may be condoned.
4. The CIT(A) erred in not considering that the interest received of Rs. 3,30,305 from Co-operative Bank is allowable under section 80P(2)(d) of the Act.
5 The CIT(A) erred in not considering that CPC has wrongly made adjustment which is not envisaged u/s.143(1) of the Act and that too without giving any opportunity to the appellant.”
3. There is a delay of one day in filing of appeal before us, the same is condoned in view of the explanation given by the assessee. The brief facts of the case are that the assessee is a co-operative society, registered under the Maharashtra Co-operative Society’s Act. It had filed its return declaring income of Rs. 79,910/- for AY 2012-13 after claiming deduction u/s 80P(2)(d) of the Act amounting to Rs. 3,30,305/-. The Central Processing Centre, Bengaluru (CPC) vide order dated 26.02.2013 u/s 143(1) disallowed the 80P deduction without giving any reason/opportunity to the assessee. The assessee filed rectification application on 06.06.2013. The rectification request was processed without giving the requisite relief to the assessee with following remarks:
“The assessee has submitted an e-filed rectification request, ticking the category tax/interest computation’ box, under the rectification request type ‘no further data correction required, reprocess the case. As seen from the e-filed return of income filed by the assessee, the assessee has entered the various schedules pertaining to income under the different heads – salary/house property/business & profession/capital gains/other sources. the system has computed the income under each head, from the respective schedules and computed the total income, in such.part b-ti, after considering the deduction under chapter via, as entered in the schedules, such as 80g/801a/80ib/80ic/chapter via. the claim of set off of loss has also been considered from the details of the same entered in sch.part b-ti/cyla/bfla/cfl and accordingly computed tax on the same. hence, the assessee’s request for rectification under this type, cannot be accepted. in case, the assessee desires rectification of the mistake, pertaining to computation of income. the assessee is required to file an online rectification request, after logging in at http://www.incometaxindiaefiling.gov.in by opening the ‘my account tab therein and selecting the ‘taxpayer is correcting the data in rectification’, under the rectification request type. the assessee should then tick the appropriate box therein, for selecting the rectification reason, and then upload the rectification xml. after making the necessary corrections in the requisite schedules.”
Thereafter, the assessee another request for rectification on 23.08.2013 which remains pending as on date.
4. Subsequently, the assessee filed an appeal before the Ld. CIT(A) on 27.03.2023 as no rectification order was received. However, the Ld. CIT(A) observed that no justification was given by the assessee for the inordinate delay of nearly 10 years in filing of the appeal. Accordingly, the request for condonation of delay was rejected and the appeal of the assessee was dismissed in limine.
Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us.
5. We have heard the rival submissions and perused the facts of the case. At the outset, it may be mentioned that the disallowance of claim u/s 80P is beyond the scope of prima facia adjustments allowable u/s 143(1). On this ground alone, the assessee deserves relief. Even otherwise, on merits, considering that the assessee’s rectification application filed on 23.08.2014 is pending even as on date, there was a reasonable cause for the assessee to wait for its disposal before filing of appeal. We, therefore, are of the opinion that there was a reasonable cause for belated filing of appeal before the Ld. CIT(A) and the delay should have been condoned. In this regard, Ld. AR has submitted a screenshot dated 20.06.2024 showing that the rectification application is pending since 23.08.2013. We find that in similar cases, the decisions of the co-ordinate benches have been in favour of the assessee. The facts of this case are similar to the case of Vishva Villa Co-operative Housing Society Ltd. in ITA No. 682/Mum/2024 in which the co-ordinate bench has decided as under:
“7. We heard both the parties and also peruse the relevant material based on record. First of all the assessee has explained the reason for delay in filing of the first appeal before CIT(A) that earlier CA of the assessee had filed rectification application u/ 154 before the AO/CPC, then assessee was under bonafide belief that the adjustment would get rectified and even CA also did not advice the society to file an appeal when application was disposed of for certain period. It is later on when demand notice was issued then assessee was advised to file an appeal. Thus, looking to the fact that assessee is cooperative housing society and it was under a bonafide belief that it has filed a rectification which was not disposed of till date, therefore delay in filing of first appeal cannot be held to latches on part of the assessee. Thus, delay in filing appeal before the first appellate authority is condoned.
8. On merits in both the years, adjustment has been made by the CPC u/s. 143(1) treating the interest received from the Co- operative Bank as income from other sources by disallowing the claim of section 80P(2)(d).
9. First of all prior to assessment year 2021-22 there was no such provision for disallowing the claim of deduction within the scope of section 143(1)(a). Prima adjustment was permissible only with regard to claim of deduction u/s. 10AA, 80 IA, 801AB, 801B, 80IC, 801D or section 80-IE. It was from the Finance act 2021 with effect from A.Y. 2021-22, disallowance of claim of deduction under chapter VIA can be made, if the return has been furnished beyond the due date of return of income filed u/s. 139(1). Here in this case the CPC has treated the due date of return of income as on 31/08/2012 for A.Y. 2012-13 and 05/08/2013 for A.Y. 2014-15, whereas the return has been filed by the assessee on 02/09/2012 and 20/09/2013 respectively.
10. Admittedly assessee is a Co-operative Housing Society registered under Maharashtra Society act 1960 and as per the said act of the Cooperative Housing Societies have to get their accounts audited ones there is requirement to furnish and audit before from Charted Accountant, and therefore the due date was 31/10/2012 and 31/10/2014 for the A.Y 201223 and 2014 15 respectively and thus assessee had filed the return of income within the due date of under section 139(1). Thus even under amended provision no prima facie adjustment have been made no prima facie adjustment on account of deduction u/s.80P could have been made. In the early provision of adjustment u/s. 143(1)(a) no such disallowance could have been made. Accordingly, we hold that disallowance made by the CPC u/s. 143(1)(a) on the claim of deduction u/s. 80P is beyond the scope of adjustment u/s. 143(1) accordingly the adjustment is deleted.”
6. Respectfully following the decision of the co-ordinate bench, we hereby direct the AO to allow the claim of deduction u/s 80P(2)(d) of the Act in respect of interest income received on deposits with co-operative banks. As per the details furnished by the assessee, out of the total interest income of Rs. 4,10,218/- earned during the year, interest of Rs. 3,30,305/- which received from Maharashtra District Co-operative Bank Ltd. is eligible for deduction u/s 80P(2)(d) of the Act.
7. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 18.11..2024.
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